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Commodities Briefing 01.Jul 2015

Posted on 01 July 2015 by VRS |  Email |Print

The outlook for smaller crop supplies sent corn and soybean prices surging, spurring the biggest gain for raw-material prices since February. The Bloomberg Commodity Index of 22 components rose 1.9 percent to 102.69 as of 3:30 p.m. in New York, on pace for the largest advance since Feb. 3. Corn soared the most since 2010, climbing 7.7 percent, the biggest gain among the asset class on Tuesday.
Heavy rains have slowed crop planting across the U.S. Midwest, while expanding livestock herds mean that there’s more grain being used in feed supplies. American farmers planted fewer corn acres than estimated three months ago, and domestic inventories as of June 1 were smaller than analysts were forecasting, a report from the U.S. Department of Agriculture showed Tuesday………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

We expect coal, copper, and iron ore prices to remain below long-term averages as China continues to shift away from an investment-led economy. The basic materials sector is trading close to our aggregate fair values at a median price/fair value of 0.97 compared with a market price/fair value of 0.99.
Mined commodity prices tied to China’s sun setting infrastructure and housing boom are unlikely to recover, but we see uranium as an exception to this story as China builds out its fleet of nuclear reactors. While we expect China’s housing market to eventually falter, the outlook for U.S. residential construction is better than most think, with implications for lumber and coatings companies………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Commodity prices have been largely flatlined in the past few months, and even on the year, would appear to be on life-support. Nevertheless, analysts see scope for commodity recovery in the second half of 2015 and point to several factors that could revive global investor interest.
The Thomson Reuters Jefferies CRB index stands at 227.2176 Tuesday afternoon, on the high side of a 223.1627 to 226.4730 range. The TRJCRB closed at 229.9579 December 31, and fell to 211.2690 January 29, covered to 229.5511 in mid February and then put in a 2015 trough of 206.8126 on March 18, the day the Fed took the word “patient” from the accompanying statement………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

A final accord to curtail Tehran’s nuclear ambitions could lead to a glut of Iranian oil hitting an already “oversupplied market,” which would serve to pressure prices, oil expert John Kilduff said Tuesday, as negotiators in Vienna face a deadline that’s expected to be extended.
Returning to the talks after consultations at home, Iran ’s chief diplomat insisted Tuesday he has a mandate to finalize a nuclear agreement, despite increased signs of backtracking. “Right now the happy talks is flowing … that things are looking good for a deal,” said Kilduff, founding partner of Again Capital, an alternative investment manager specializing energy and metals………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

U.S. oil prices rose on Tuesday, posting a 25% quarterly gain, after Iran and six world powers extended the deadline for nuclear talks until July 7. Prices posted their largest single-quarter percentage gain since 2009 on expectations of a drop in U.S. production and growing demand after slumping to near-six-year lows earlier in the year.
So far, however, U.S. oil output hasn’t slowed, and prices have stabilized around $60 a barrel in recent weeks as traders looked for direction. The U.S. benchmark fell 1.4% this month. The Iranian talks, aimed at blocking the country’s path to a nuclear weapon in exchange for lifting international sanctions, could eventually allow Iran to increase its oil exports………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Shale output in the United States will prove resilient to low oil prices likely to be prolonged by the prospect of half a million barrels per day of Iranian crude making its way back to the market, BP’s chief economist said on Tuesday.
Talks in Vienna between world powers trying to end sanctions on Tehran in return for limits on Iran’s most sensitive nuclear activities could bring a significant increase in Iranian oil exports. BP’s Spencer Dale, however, told Reuters that it would probably take time for any easing of sanctions to filter through to oil markets if an Iran deal is agreed………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

The NYMEX oil price remains bullish and could be headed for $63, technical analysis shows. It’s developed a double bottom pattern near $45 as the downtrend consolidation developed. When the height of the double bottom is measured, this value is projected above the peak of the double bottom pattern near $53. This pattern is also called a W trend reversal pattern.
The upside target for the double bottom rebound is near $63. This target has not been achieved as the price has consolidated between $58 and $61. But this remains a bullish chart pattern because support at $58 is consistent. The consolidation behavior is a pause in the full development of the double bottom pattern so the $63 target remains achievable………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Massive downward revisions to oil output in Brazil and Iraq have increased the risks for oil markets of going from the current feast to famine within just a few years, leading to a price spike that would give a new boost to the U.S. shale industry.
Brazil and Iraq had been expected to add over 2 million barrels per day to global supply by 2020 and another 2.5 million by 2025, becoming the two biggest contributors to help meet rising global demand, according to the long-term forecast of the International Energy Agency………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

A rare occurrence now happening on oil markets might be a huge opportunity for investors who play it right, says Tim Pickering, president and chief investment officer at Auspice Capital Advisors Ltd.
Pickering said Canadian crude prices are currently in “backwardation,” which means the future price is expected to be lower than the spot price, but every other crude oil market in the world is in contango, meaning the future price is expected to be higher than the spot. “For long-term investors in oil, this is a positive thing because it means they will not lose money as the market rolls over time,” he said in a commentary to clients………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Iraqi crude production climbed to a record this month, helping send OPEC output to the highest level since August 2012. Output by the Organisation of Petroleum Exporting Countries climbed 744,000 barrels to 32.134 million a day this month, according to a Bloomberg survey of oil companies, producers and analysts. Last month’s total was revised 189,000 barrels lower to 31.39 million a day, because of changes to the Saudi, Iraqi, Algerian and Nigerian estimates.
OPEC has been boosting supply as it seeks to force higher-cost producers to cut output. The 12-member group agreed on June 5 to retain its collective output target of 30 million barrels a day, a level that it’s exceeded for 13 months, according to data compiled by Bloomberg………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

OPEC oil supply in June has climbed to a three-year high due to record or near-record output from Iraq and Saudi Arabia, a Reuters survey found, underlining the focus of the group’s top exporters on market share.
The boost from the Organization of the Petroleum Exporting Countries puts output further above its target of 30 million barrels per day (bpd) and comes despite outages in Libya and Nigeria that curbed supplies. OPEC supply has risen in June to 31.60 million bpd from a revised 31.30 million bpd in May, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

In the face of historic monetary stimulus from nearly every major central bank in the world over the past few years, an investment in gold would have seemed to be a “no-brainer.” Yet the precious metal’s price, around $1,178 per ounce, has barely budged. Now may be the time to give gold a fresh look. Fundamental drivers appear in place for long-term upside, and technical support could provide a near-term catalyst.
Moreover, shares of gold mining companies are selling at steep discounts to historical multiples and the slightest hint of stabilization could bring investors back in a big way. A confirmation of fundamentals for gold prices would send gold mining shares soaring………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

The situation on the gold market calmed down quickly again yesterday following the initial turmoil and the gold price shed all of its gains again. This morning sees gold trading at $1,175 and €1,050 per troy ounce respectively. Clearly, gold market participants are expecting Greece to remain in the Eurozone.
If the Greek population were to vote “Yes” in next Sunday’s referendum, we would doubtless see renewed negotiations with the EU on further aid payments. The Greek government announced yesterday evening that it would not be making the €1.6 billion repayment that is due to the IMF today, thus cutting Greece off from further financial assistance from the IMF………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

A decade after China kicked off a series of gold market reforms, plans to establish a yuan price fix mark one of Beijing’s biggest step so far to capitalise on the country’s position as the world’s top producer and a leading consumer.
While no immediate threat to the gold pricing dominance of London and New York, the benchmark could ultimately give Asia more power over bullion trade, particularly if the yuan becomes fully convertible, industry sources say. The yuan fix is due to launch by the end of 2015 via the Shanghai Gold Exchange (SGE), which last year allowed foreign players to trade gold using offshore yuan………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Silver has moved sideways for about nine months, after it moved sideways from a slightly higher level for about 14 months. Boring! The big events in the past 5 years have been: August 2010: Silver began a huge move from under $18 to nearly $50. April 2011: Silver hit a 30 year high just under $50.00.
May 2011: Silver crashed to about $34. HFT left fingerprints at the scene. January 2013: Silver dropped below $30. April 2013: President Obama met with a group of influential bankers in the White House. The price of silver crashed the next day and by June silver had dropped to about $19. (If it happens in politics, it was planned…) November 2014 & March 2015: Silver made a double-bottom at about $15. Few noticed………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

As Greece descends into financial crisis, its citizens and investors globally are turning to hedges old and new. European demand for the age-old safe haven of gold coins has risen in recent weeks, as has the relatively new concept of investments in digital bitcoins, market participants say.
As the situation in Europe grows more precarious, the price of both have risen in recent weeks as concerns have grown about the threat to banks in Greece and the risk that turmoil could spread to other countries in the eurozone and elsewhere………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Industrial metals from aluminum to tin capped the longest run of quarterly losses since 2001 on concern that a sputtering economy will erode demand in China, the world’s top consumer, while turmoil in Greece mounts.
This quarter, the London Metal Exchange’s gauge of six prices fell 5.5 percent, the fourth straight decline and the longest slump since September 2001. On June 27, China’s central bank cut its benchmark lending rate to a record and lowered reserve-requirement ratios for some lenders after equities plunged and local government bond sales drained liquidity………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

The four biggest exchange-traded funds (ETFs) on the Shanghai Stock Exchange attracted nearly 10 billion yuan ($1.6 billion) worth of subscriptions on Monday, when major indexes slumped more than 3 percent.
The huge single-day money flows into ETFs tracking China’s key indexes triggered speculation that state-backed institutions were stepping into the market to prop up shares of blue chips amid the market’s recent sell-off. Intensive subscriptions were seen on Monday for the four major ETFs - China AMC 50 ETF, Huatai-PB CSI300 ETF , China AMC CSI300 ETF and Hua An Shanghai 180 ETF, exchange data showed………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

After a rough patch over the last six months thanks to a stronger dollar and accelerated crop plantation on a favorable weather outlook, agricultural ETFs seem to have turned the corner. Last week was great for the beaten down agro-based commodities, as worries over wet weather in America’s key growing belts led traders to bet on the contracts of several agricultural commodities.
Almost all agro-based commodities added gains last week (as of June 26, 2015) and are likely to see more surges in the short term. Fears that led to this spike revolved around weather in the key grains growing states in the Midwest. Existing wet and cold weather and predictions for more rains are causing delay in the planting of this year’s crops by farmers………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

With Grexit looming for Greece, how would the country bring a new currency into circulation as quickly as possible? The drachma was the world’s oldest existing currency before it was replaced by the euro on January 1, 2001. And it may be about to make a comeback. This Sunday’s referendum is described by European leaders as a vote for or against the euro. If Greece votes “oxi”, the country may soon be looking for a new currency.
Haris Theoharis, a politician in the centrist party To Potami, said: “There’s already a team within the prime minister’s office, with staff from the general accounting office, right now working on the drachma.”……………………………………….Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Greece is poised between remaining a member of the eurozone or leaving it. In fact, there are five possible future currency arrangements for Greece. Here they are: Greece stays in the eurozone: This is the option likely to cause the smallest short-term disruption to the Greek economy. The Greek central bank would retain access to liquidity from the European Central Bank, and the Greek banks would stay on life support.
This looks increasingly likely to be accompanied by some kind of further negotiated debt relief. To get it, Greece would almost certainly have to agree to more conditions of the sort successive Greek governments have found it hard to accept. Greece keeps the euro, but sits outside the eurozone: Jacob Funk Kierkegaard of the Peterson Institute for International Economics in Washington calls this the “Montenegro option” and argues this is the most likely outcome should Greece exit the eurozone………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

Asian powerhouse to submit higher reductions than expected today as contribution to global emissions reduction deal. South Korea has confirmed plans to cut emissions 37 per cent against a business as usual baseline, up from the 15 to 30 per cent reduction it had initially proposed.
The target is set to be submitted to the UN today, officially confirming the country’s Intended Nationally Determined Contribution (INDC) that it is prepared to sign up to as part of a new global emissions reduction deal that is set to be agreed at the Paris conference in December………………………………………..Full Article: Source

Posted on 01 July 2015 by VRS |  Email |Print

In a big leap towards ensuring a climate deal in Paris this winter, the world’s biggest carbon dioxide emitter China on Tuesday submitted a comprehensive action plan to check its rising carbon flow into atmosphere including peaking of its emissions by 2030.
Apart from peaking year, China in its plan to the United Nations also said that it will lower its carbon dioxide emissions per unit of GDP by 60-65% from the 2005 levels and will increase share of non-fossil fuels in primary energy consumption by around 20% by 2030………………………………………..Full Article: Source

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