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Commodities Briefing 10.Oct 2013

Posted on 10 October 2013 by VRS |  Email |Print

Commodities traders who buy and sell as much as $5.67 trillion of raw materials a year say the benchmark prices for everything from oil to iron ore to gasoline are wrong as often as 27 percent of the time. In a Bloomberg News survey conducted during the past eight weeks, 85 traders and analysts said they have little confidence in the assessed prices of crude, metals and iron ore.
Regulators, including European Union Competition Commissioner Joaquin Almunia, may examine commodities markets, having already increased investigations of manipulation of benchmarks for interest rates, derivatives, foreign exchange and oil………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

As firms face increasing regulatory pressure and globalization continues to rise, commodity trading operations worldwide face significant impact. SunGard has identified six key trends that will shape the future of commodities trading over the next 12-18 months:
Low correlation across commodities is driving hedge fund managers to reevaluate their strategies with a micro approach, instead of riding the commodity super cycle. Safe havens from collateral charges in the over-the-counter (OTC) marketplace will become scarce under new regulatory requirements, prompting a need for collateral management systems in both hedging and trading operations………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

U.S. politics have stolen the spotlight, but fundamentals are still backing commodity and commodity currency price patterns. Oil and the Aussie dollar have traded in volatile ranges over the past few days, due to uncertainty over the debt ceiling in the U.S. Looking further out at a daily chart, however, the price patterns show logical formations.
The first chart below is of United States Oil (USO). Oil has developed what looks to be a head-and-shoulders reversal formation at yearly highs. Summer has ended and the Syrian violence premium has all but diminished, as oil struggles to maintain its lofty price levels………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

A cold winter may plunge Europe into an energy crisis because of the over-reliance on renewable energy and the shutting of natural gas-fired generators, Cap Gemini SA (CAP) said in a report.
Gas-fired generators are running at utilization rates that are too low to meet their fixed costs as grids favor subsidized renewable power, the Paris-based management consultancy said today. About 60 percent or 130,000 megawatts of Europe’s gas-generation capacity is at risk of closing by 2016, it said, citing IHS Inc. (IHS) estimates………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

As the government shutdown lingers, Bank of America Merrill Lynch says we will see US oil prices fall below $100 a barrel, CNBC’s Sharon Epperson reports.……………………………………….Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

Fall is always a welcome change of pace for most people after a long, hot summer. Not only from the temperatures, but fall almost always brings relief at the gasoline pump. Pundits frequently notice this phenomenon during election years, and assume that vested interests are trying to manipulate prices to win elections. But there is a more straightforward explanation to what’s going on, and it isn’t limited to election years.
Everyone knows that gasoline evaporates. What you may not know is that there are numerous recipes for gasoline, and depending on the ingredients, the gasoline can evaporate at very different rates. And because gasoline vapors contribute to smog, the Environmental Protection Agency (EPA) seasonally regulates gasoline blends to minimize emissions of gasoline vapors………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

OPEC crude output fell below 30 million b/d for the first time in more than two years in September as maintenance work at Iraq’s southern facilities slashed the country’s exports and Libyan production was further reduced by ongoing strikes and protests, a Platts survey of OPEC and oil industry officials and analysts showed Wednesday.
The oil producer group’s 12 members pumped an average 29.91 million b/d in September, down 370,000 from estimated output of 30.28 million b/d in August, the survey found. OPEC output was last below 30 million b/d in mid-2011, when the Platts survey estimated June volumes at 29.57 million b/d………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

A recent article in the Wall Street Journal (WSJ) reported: The U.S. is overtaking Russia as the world’s largest producer of oil and natural gas, a startling shift that is reshaping markets and eroding the clout of traditional energy-rich nations.
There are many recent similar claims along with others more critical of any notion of increased clout for the US. Much has been made of a technological revolution in extraction methods (non-conventional petroleum or NCP) as a source of resurgent US global power………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

The recent week was tough for the U.S. currency. Investors avoided the dollar as uncertainty over the U.S. government shutdown and the upcoming debate on the debt ceiling weighed on sentiment. The shutdown, with its suspension of funding for government workers and some programs, could hamper U.S. growth and delay tapering.
Therefore, some investors buy gold as a safe haven or alternative to the U.S. dollar on the view that it will outperform other assets during political or economic turmoil. However, looking at chart of gold, it seems that these circumstances have had a limited effect on the gold market. “(…) Sentiment remains hesitant towards gold, which has been reflected in the market positioning………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

Gold Prices dipped below $1300 per ounce for the first time in 1 week Wednesday afternoon in London, dropping 2.6% from yesterday’s high after news broke that Janet Yellen is set to lead the US Fed when Ben Bernanke steps down as chairman in February 2014.
The US Dollar rose, and European shares fell into the red for the day after earlier recovering losses. US stocks also dropped. Commodities ticked lower, as did major government bonds. Short-term US debt set to mature this month, after the October 17th debt ceiling deadline, fell hard to drive T-bill yields higher again to 0.36%. They were negative as recently as late September………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

It is worth remembering that Goldman, to much fanfare and media attention, “told clients” in November 2007, to sell gold. On November 29, 2007, Goldman recommended that investors sell gold in 2008 and it named the strategy as one of its ‘Top 10 Tips’ for the year.
Gold subsequently rose nearly 6.4% in December 2007 alone - from $783.75/oz to $833.92/oz. Gold then rose another 5.8% in 2008 - from $833.92/oz at the close on December 31, 2007, to close at $882.05/oz on December 31, 2008………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

The current silver price is US$22 per ounce. This is a truly astonishing number for a few reasons. To begin, let’s take a quick look at the history books. In 1980 an ounce of silver reached a high of $49.95. So despite all the money printing and financial chaos in the world in the past 33 years, silver has gone backwards. This is truly shocking.
But when put into context it becomes even more ridiculous: If you went to fill up your car in the US in 1980, an ounce of silver could buy 180 litres of fuel. Fast forward 33 years and the same ounce would buy you just 26 litres of fuel………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

Copper has been the most popular base metal in a survey taken at LME Week‒an annual gathering hosted by the London Metal Exchange‒since 2008, but it lost out to lead and tin this year, as industry participants see supply of the metal rising sharply.
Only 17% of 325 LME survey respondents said copper was their favorite this year compared with 55% last year, Macquarie Group, which conducted the survey on Oct. 7, said in a statement. A surplus of copper concentrate will likely subdue copper’s prospects relative to lead and tin, which were tied as favorites, each selected by 28% of respondents, said Colin Hamilton, head of research at the Australian bank……………………………………….Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

Leading copper miners and traders have said they expect supply to outstrip demand next year as a wave of new projects begins production, a development that suggests prices will continue falling for the benchmark industrial metal.
The price of copper, used in electrical wiring, has fallen 30 per cent from record highs in 2011 amid slowing Chinese demand and rising supply………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

The steel industry established a set of eight sustainability indicators in 2003 to measure its environmental, social and economic performance, in recognition of the industry’s responsibility to meet the growing demand for steel in a sustainable way.
Sustainability reporting at a global level is a major programme that the steel industry undertakes to manage its performance, demonstrate its commitment to sustainability, enhance transparency and show responsibility in dealing with global challenges,” said Edwin Basson, Director General of worldsteel………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

Base metal markets face a period of transition as quantitative easing in the US gives way to tapering and fundamentals return to play a more prominent role in driving prices, Standard Bank said in its base metals report produced for the 2013 LME dinner.
“As QE in the US gives way to tapering and a slow normalization of monetary policy, real consumption now has to emerge if commodity prices are going to be supported,” Standard Bank said in the report. The bank notes that the “liquidity fueled era” that started in 2009 saw base metals surge to multi-year highs and dislocated the traditional link between fundamentals and prices………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

The Federal Reserve’s decision to leave its monetary stimulus program intact, together with positive momentum in the domestic manufacturing sector and bullish data from the Chinese economy have strengthened oil prices to 2-year highs of around $110 per barrel.
Partly offsetting this favorable view has been a spike in U.S. production - now at its highest levels since 1989 - and easing Syrian tensions. The immediate outlook for oil, however, remains positive given the commodity’s constrained supply picture. And, while the Western economies exhibit sluggish growth prospects, global oil consumption is expected to get a boost from sustained strength in China, the Middle East, Central and South America that continue to expand at a healthy rate………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

A new report from Bank of Montreal’s Global Asset Management group says competition in the Canadian exchange traded fund industry is heating up, with new entrants popping up and larger providers conceding market share.
According to the report, smaller players, which include everyone but dominant fund seller BlackRock Inc., increased their share of Canada’s ETF business from 26 per cent to 32 per cent in the first nine months of the year. BMO Global Asset Management issued its bi-annual ETF outlook report on Tuesday………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

JPMorgan Chase & Co (JPM.N) has launched the sale of its physical commodities business, circulating offering documents to potential buyers and valuing the assets at $3.3 billion, according to a person familiar with the matter.
JPMorgan’s sales pitch comes after the bank announced it was exiting physical commodity trading in July, as Wall Street faces heightened scrutiny from regulators and politicians on their role in the natural resources supply chain………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

More than two dozen parties, including pension funds and trading houses, have expressed interest in JPMorgan Chase’s physical commodities operations following the bank’s decision in July to divest the business.
First round offers for the business, one of Wall Street’s biggest traders of cargoes of oil, coal and natural gas, are due before the end of the month, according to people familiar with the situation………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

Bank Indonesia said it will regulate currency hedging by individuals and companies, including state-owned firms, to help stabilize Asia’s most-volatile currency.
The central bank will require Indonesians and corporations to present documents to show underlying economic activity, such as international trade, foreign debt and investments, to conduct hedging transactions with lenders, it said in a statement posted on its website today. The amount and duration of the hedges will be limited by the underlying activity, it said………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

The forex market is in a constant state of flux and although a certain amount of chance is involved, the right strategy can be the difference between success and failure.
To succeed in currency trading, it is indispensable for traders to know the currency market they are going to trade properly, including the features of the market and the elements that can move the market. Traders need to know all the economic data, political decisions and social moves that can have great influence on the price movements. They also need to know about interest rate changes and international trade………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

The world is facing unprecedented challenges from climate change and implications are particularly severe in the sphere of agriculture. The sector faces unpredictable and extreme weather patterns, which are having a devastating impact on the lives of farmers in developing countries and global food security.
Agriculture is one of the largest economic sectors in the world, particularly in developing countries - for example in sub-Saharan Africa as much as 60 percent of people depend on agriculture for their livelihoods………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

The world must eliminate emissions from burning fossil fuels in the second half of this century to lower the economic cost of climate change, the Organization for Economic Co-operation and Development (OECD) said on Wednesday.
Leading economist and climate change expert Nicholas Stern has said that investment equivalent to 2 percent of global gross domestic product a year is needed to limit and adapt to climate change………………………………………..Full Article: Source

Posted on 10 October 2013 by VRS |  Email |Print

“Dr Copper” is in town. And he has given the global economy a clean bill of health. The mood at LME Week, which sees as many as 10,000 miners, smelters and traders descend on London, offers an unrivalled barometer of the state of the global economy: the wide range of uses of industrial metals across manufacturing and heavy industry mean that metals traders are often the first to witness shifts in the economy.
At the seminars, meetings and cocktail parties this year, one message has been clear: whisper it quietly, but after years of lurching from one crisis to another, the world economy appears to be on a more stable footing………………………………………..Full Article: Source

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