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Commodities Briefing 27.Aug 2013

Posted on 27 August 2013 by VRS |  Email |Print

Macro hedge funds have aggressively reduced their commodities position to a net short for the first time since June according to the latest research from Bank of America Merrill Lynch. Macro funds have instead opted to increase their exposure to the S&P500 and NASDAQ. Data also shows that both long short & market neutral strategies have disinflationary expectations.
The investible Hedge Fund Composite Index was down 0.57% for the month, as of Aug 21, compared to a -3.6% return for the S&P 500 index. In terms of strategies, Convertible arbitrage performed the best, up 0.16% while Equity Long Short performed the worst, falling 0.93%. Market Neutral funds decreased market exposure to 9% net long from 15% net long. Equity Long/Short also reduced market exposure to 34% from 42% net long; slightly below the 35-40% benchmark level………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

What happens to a forest after a forest fire? More often than not, it grows back even healthier than before. Trees damaged in a fire typically die within two years, and dead vegetation falls to the ground. The remaining snags provide a habitat for wildlife and eventually fall to the forest floor, becoming a long-term source of nutrients. It’s a process of creative destruction.
Financial markets can behave the same way. They can crash and burn, clearing out irrational excess in order to build a foundation of sustainable growth. Two prime examples: the tech bubble of the late 1990s and the so-called commodities supercycle………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Saudi Arabia has secretly offered Russia a sweeping deal to control the global oil market and safeguard Russia’s gas contracts, if the Kremlin backs away from the Assad regime in Syria.
The revelations come amid high tension in the Middle East, with US, British, and French warships poised for missile strikes against Syria, and Iran threatening to retaliate. The strategic jitters pushed Brent crude prices to a five-month high of $US112 a barrel………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

China’s three largest oil refiners reported a year-on-year profit increase for the first half, which was mainly due to the introduction of a new fuel pricing mechanism in March that allows them to set prices that are closer to international rates, analysts said Monday.
Sinopec Corp on Monday reported a first-half net profit of 29.4 billion yuan ($4.81 billion), up 24.1 percent year-on-year. PetroChina said Thursday that its first-half net profit grew 5.6 percent year-on-year to 65.52 billion yuan, the highest profit among the three firms………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Right now, the market is caught up in this whole idea of the Federal Reserve tapering its bond-buying program and when they will do it … September or December. Keep in mind, that even if the Fed institutes tapering, it’s still going to be printing money. They’re not stopping what they’re doing.
In other words, it’s like me driving a car at 70 mph and I ease my foot off the gas pedal to where I’m only doing 55 mph. I’ve still got my foot on the accelerator and I haven’t tapped the brakes yet………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Iran’s oil exports are being hurt by current high prices that make it more economical for rivals like the United States to produce more costly oil, Iran’s new energy minister said in an interview published by his ministry’s website on Saturday.
A week into the job, returning oil minister Bijan Zanganeh, who previously filled the post under the reformist president Mohammad Khatami, told oil ministry news service Shana that current prices of over $106 a barrel were a worry. His comments represent a shift in stance from those of Iran’s previous oil minister who repeatedly said he wanted oil prices to remain above $100 and played down the impact of sanctions on exports………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Iran’s new administration is set to invite international companies for talks as it looks to mitigate the effects of Western sanctions that have damaged the country’s energy sector, a senior oil ministry official in charge of international affairs was reported as saying Monday.
“Given the establishment of the new government and the positions taken by the President [Hassan Rowhani], our approach towards the international arena has majorly changed,” Mansour Moazami, caretaker deputy minister for international and commercial affairs, was quoted as saying by oil ministry news service Shana………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

US policymakers have long struggled with the challenge of unlocking cheap capital for energy efficiency projects. Can California make it happen? In the depths of the Great Recession three years ago, California’s chief fiscal officer John Chiang gathered his deputies and posed a question: “Is there any way we can put capital on the ground in California to put people back to work in ways that would make sense for the long term?”
After some debate, they settled on what they called “the holy grail” – energy efficiency. Retrofit projects would employ many of the 100,000 construction workers looking for work and put money into the pockets of the state’s cash-strapped residents. But the policymakers soon hit a snag: they realized that to scale up a statewide program, they would need money – lots of it………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

A glimmer of light has emerged in the much-maligned gold exploration sector, with three Perth juniors yesterday banking much-needed share price gains. Gold Road Resources was joined by Bullabulling Gold and Azumah Resources as it recorded some positive movements for shareholders, who have watched gold values slide since April.
Driving yesterday’s rebound was an improving gold price, which hit a 2½-month high yesterday, closing at $US1396 an ounce. The improvement in the Australian dollar gold price is even more pronounced, courtesy of the domestic currency’s decline, to value bullion at a five-month high of $1546/oz………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

The sharp depreciation in the rupee and the desperate measures taken by the Reserve Bank of India (RBI) to curtail its fall have ravaged NehaKohli’s investment portfolio. The equity and debt funds in the portfolio of this Delhi-based research associate have declined in value.
However, there is some relief from gold, which has rallied smartly in these difficult times. “I was sceptical, but my financial planner persuaded me to invest in gold ETFs a few months ago,” she says gratefully. Her investment in gold has appreciated nearly 15%………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

In January myself and other commentators felt confident enough about silver that we all wrote about how 2013 would be silver’s year. It was a hard sell even then, the price had climbed to $33 at the beginning of December 2012 to then just above $29. But that drop seems like nothing compared to the fall to $18.61/oz we saw at the end of June.
Why is it down by so much? At the beginning of the year top analysts were predicting the price to climb 29% in 2013. Their optimism was not surprising, and it is even less so today. Compared to gold the environment appears pretty welcoming to the precious metal………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Invariably, as the price of silver and gold begins moving higher, more investors will be drawn in to the mostly paper precious metals market. Most of these buyers will be looking only at the price and could therefore be setting themselves up for a substantial disappointment. Many will simply take their losses and exit the market feeling scorned, perhaps never to return.
Those who see few alternatives, or who perhaps actually take delivery of physical metal will be faced with a steep learning curve that will hopefully be overcome by necessity at the least, and curiosity at best………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Since the beginning of July, we have seen a steady push higher in gold prices and one of the central market questions at this stage is whether or not these moves mark a short term correction in the latest downtrend or a true reversal that can be supported with fundamental arguments.
At the very least, we can say that there is a number of opposing factors that should be taken into consideration, and that the backdrop is not entirely negative. But valuations in the SPDR S&P 500 Trust ETF (SPY) are still lower by nearly 16% even with these latest rallies, so the broader picture shows that there is still a lot of ground to make up before we can say that the bear run seen in the early parts of the year has been overcome………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Speculators returned as buyers in all precious and base metals futures and options traded on the Comex division of the New York Mercantile Exchange and the Nymex, according to U.S. government data, spurred in part by a rise in prices.
For the week ended Aug. 20, speculators in the Commodity Futures Trading Commission’s weekly commitment of traders report added to their gold and silver net-long positions for the third week in a row, while funds continue to amass bullish positions in platinum group metals. Speculators added to the newly established copper net-long position in the disaggregated report and are now nearly flat in the legacy report………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Like the oversold iron ore and gold sectors before it, copper has provided fleet-of-foot traders spectacular share price gains in the past couple of months.
Sold off strongly in the first six months of the year for good reason (the copper price tanked 16 per cent to a low of $US3.02 a pound on June 24), copper stocks have since been putting on some big gains in response to a price recovery to about $US3.37 a pound, more if the impact of the fall in the Aussie dollar is factored in………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Recent copper price strength can largely be attributed to pipeline restocking, strong demand from the US power sector and tight scrap supplies Barclays says. But, the bank cautions against too much optimism.
Writing in its latest Metals Magnifier note, the bank says that while the rally has come amid positive sentiment around Chinese demand, “recent big price increases in the base metals have been less a reflection of new bullish positions being established on signs of economic stabilisation in China and more a symptom of extreme short positioning when sentiment was overly bearish………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

The U.S. equity market continues its uptrend on the back of signs of recovery in the global economy. Now commodities are also showing a comeback after a steep fall earlier this year, and have caught investor attention in the past few weeks. This is especially true in the commodity producer segment like steel.
These producers usually act as leveraged plays on the underlying commodities. So when commodities are rising, these firms are truly the winners………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

The National Stock Exchange (NSE) has sold an over 2 per cent stake in Multi Commodity Exchange (MCX) in small tranches over past few weeks, even as speculations are rife about a potential buyout of the country’s largest commodity bourse by some rival entity or private investors.
As per MCX’s latest shareholding disclosure, top stock exchange NSE held 12.5 lakh shares, or a 2.45 per cent stake, in the commodity exchange as on June 30, 2012. Out of this, the NSE is believed to have sold more than 12 lakh shares and is left with only a few thousand shares, as it did not see any further value proposition in this long-held investment, sources said………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Corn jumped the most in 14 months and soybean futures rallied the most since 2011 as hot, dry Midwest weather threatens to erode crop yields in the U.S., the world’s biggest grower. Wheat also advanced.
Temperatures will average as much as 14 degrees Fahrenheit above normal during the next 10 days, with little rain expected in the Midwest, T-Storm Weather LLC said in a note to clients today. July and August will be the driest since 1936 in Iowa, Illinois and Indiana………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

The euro edged lower against the dollar on Monday as investors took profits from recent gains on signs support for the single currency was gaining momentum. Having climbed 0.4 per cent last week, outperforming against a broadly stronger dollar, the euro gave back 0.1 per cent to $1.3373 on Monday.
Data from the Commodity Futures Trading Commission on the trading positions of institutional investors, however, showed confidence in the euro had built to such an extent over the last five weeks, that net long positions – the number of investors betting on further gains minus those betting on losses – had risen to the highest levels since May 2011………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

U.S. regulators and law enforcement agencies met on Monday with an advocacy group for Bitcoin, a digital currency that has been under fire for its purported role in facilitating anonymous money transfers.
Jennifer Shasky-Calvery, director of the Financial Crimes Enforcement Network (FinCEN), said her unit hosted a presentation by members of the Bitcoin Foundation, an advocacy group of Bitcoin-related businesses………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Two short years ago, Brazil had a terrible problem with its currency – it was far too strong. Local factories, unable to compete with Chinese imports made cheaper by the real’s appreciation, were closing their doors. Fernando Pimentel, the trade minister and a close adviser to President Dilma Rousseff, declared that “Brazil has joined the team of countries with strong currencies” and urged industries to adapt to the new reality.
Now, as global investors shed assets in emerging markets worldwide, Brazil’s problem has abruptly turned upside-down………………………………………..Full Article: Source

Posted on 27 August 2013 by VRS |  Email |Print

Buses, lorries and ships: Hong Kong can do much to control these sources of its local pollution problem. But it has limited influence over the other significant source of its poor air quality: smog from mainland China. Thus, many Hongkongers have reason to be happy - in theory, at least - that Shenzhen and Guangdong are at the forefront of China’s fledgling efforts to limit carbon emissions.
Seven cities and provinces around China are starting trial carbon-trading schemes. Shenzhen launched its pilot in June; Guangdong and other locations (including Beijing and Shanghai) are due to begin their own pilots later this year. Rationing permits to pollute and then letting companies trade them depending on their needs, at market prices, ought to spur carbon-emissions cuts………………………………………..Full Article: Source

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