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Commodities Briefing 20.Nov 2013

Posted on 20 November 2013 by VRS |  Email |Print

Asian investors believe commodities are in for a bad year, with just 2 per cent surveyed rating them as their favourite asset class for 2014. Bank of America Merrill Lynch gained responses from 272 investors who attended finance conferences in Beijing, Singapore and Hong Kong last week — with two-thirds favouring equities.
They were as bearish about government bonds as about commodities. Their favourite equity market within Asia is China, backed by 39 per cent, followed by Japan at 26 per cent, the ASEAN countries (12 per cent) and South Korea (11 per cent)……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Randeep Somel, who replaced Graham French as sole lead manager of the £4.2 billion M&G Global Basics fund, is backing commodities to bounce back despite a falling copper price and fears of slowing infrastructure spending in China.
Amid speculation that Somel would change the underperforming fund’s focus and look to other sectors, he said he would keep its large allocation to basic materials, currently its largest overweight position……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Nearly everyone believes that oil prices will trend higher and higher, allowing increasing amounts of oil to be extracted. This belief is based on the observation that the cost of extraction is trending higher and higher. If we are to continue to have oil, we will need to pay the ever-higher cost of extraction.
Either that, or we will have to pay the high cost of some type of substitute, if one can be found. Perhaps such a substitute will be a bit less expensive than oil, but costs are still likely to be high, since substitutes to date are higher-priced than oil……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

In its “Short-Term Energy Outlook,” the US Energy Information Administration forecast that prices for crude and oil-based fuels will continue to fall through the end of the year and will average lower in 2014.
The EIA lowered its projection for the average price of regular gasoline for the fourth quarter of 2013, cutting it by 10 cents to $3.24 per gallon Since the beginning of September, the weekly national average price of gasoline has dropped by more than 40 cents. For the year, EIA expects gasoline to average $3.50 per gallon, down 13 cents from last year’s average. The agency expects it to fall further in 2014, averaging $3.39……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

The Bakken crude oil formation spread out over North Dakota and Montana should give up more than 1 million barrels of oil per day next month. North Dakota is already the second-largest crude oil producer in the country behind Texas.
A string of reports out last week said oil production in states like North Dakota is putting a dent in OPEC’s market influence. A break from the grips of Middle East oil producers was put on the U.S. table 40 years ago and politicians and pundits alike are heralding recent developments as an energy revolution. What develops after the revolution is over, however, is something policymakers may have to consider in the not too distant future……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Investors got less bullish on gold as hedge funds doubled their short holdings just before prices erased a weekly loss and Janet Yellen pledged to press on with economic stimulus if confirmed as Federal Reserve chairman.
The net-long position in gold slumped 37 percent to 55,456 futures and options in the week ended Nov. 12, U.S. Commodity Futures Trading Commission data show, the biggest drop since February. Short bets climbed to 54,143, the highest since mid-August, from 26,490 a week earlier……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Citi Research looks for gold to average $1,255 an ounce in 2014, falling early in the year on expectations for tapering of Federal Reserve quantitative easing but drawing support from continued Chinese buying. The bank lists palladium as its favored metal for the precious complex.
Citi said investors collectively are focusing on a global economic recovery, with debate over the timing of tapering of quantitative easing by the U.S. Federal Open Market Committee considered a question of “when,” not “if.” The bank said it views March as the earliest possible date for a possible tapering announcement……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

In our coverage of Chinese gold imports in the past we have noted that all the figures quoted by the mainstream analysts like GFMS appear to tally closely to the only official import statistics available – those through the entry port of Hong Kong which are published monthly.
However the central government in Beijing does not produce any figures on gold imports for mainland China itself (although the People’s Bank of China (PBOC) does produce annual figures on gold consumption) and here on Mineweb we have always suggested that imports through Hong Kong do not present the complete picture with gold imports to mainland China through other ports of entry as well……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Tin is the top base metal pick for 2014 as increasing global demand outstrips supply, according to Morgan Stanley, which highlighted a decline in inventories and China’s role as a net importer.
“You’ve got recovering electronic demand for lead-free solder, you’ve got substantial reduction in inventory that’s taken place over the course of this year,” said Peter Richardson, Melbourne-based chief metals economist. “China is no longer self-sufficient in refined- or mined-tin production.”…………………………………..Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

In recent years, exchange-traded funds (ETFs) have seen consistent growth in assets. Institutional investors in Europe carry out their trades both over-the-counter (OTC) and on exchanges, while the introduction of electronic request-for-quote (RFQ) trading has increased transparency and improved access to liquidity for the European ETF market.
In the US, ETFs and exchange-traded products (ETPs) are well-established investment vehicles, with combined assets now totalling US$1,641 billion, according to 31st October 2013 figures released by ETFGI. Most trading takes place on exchanges by retail and institutional investors alike……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Would you like to invest in the Nordic countries and don’t know how? Rest easy, because the db X-trackers Concept Fund Solutions Plc DBXT MSCI Nordic UCITS ETF 1D, a recently launched ETF from Deutsche Asset & Wealth Management that tracks the MSCI Nordic Countries Index could be your investment vehicle of choice.
The above is just an example of how pervasive Exchange Traded Funds (ETFs) have become. You can find one for practically any kind of investment strategy or focus you can think of……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Embattled Financial Technologies (India) Ltd is selling its Singapore Mercantile Exchange (SMX) unit to Intercontinental Exchange Group Inc for $150 million.
Analysts had expected Financial Tech would shed some of its ownerships in exchanges to protect its core trading platforms business as the company faces regulatory scrutiny that has sent its shares down more than 80 per cent this year……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

The economic offences wing (EOW) of the Mumbai Police has initiated an inquiry against the National Commodity & Derivatives Exchange (NCDEX) after Betul Oil, one of the members of the bourse, filed a complaint alleging cheating.
According, the complaint has been filed by Vineet Chopra of Betul Oil who is also one of the members of the Kalimirch Vyapari Association in Madhya Pradesh. The complaint alleged his company had been duped of Rs 237 crore. NCDEX refuted the allegations and said that Betul Oil and some of the members of the association are being investigated for price manipulation on the exchange……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Morgan Stanley’s talks to unload its commodities business are heating up against after months of fruitless negotiations with potential buyers. The bank is said to be in talks with Russian trading outfit Rosneft for its volatile commodities platform, which it has been trying to sell for more than two years, sources told The Post.
The story was first reported on industry trade site Spark Spread. Talks between the Rosneft and Morgan Stanley are said to be in advanced stages but could still fall apart. A Morgan Stanley spokesman declined to comment……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Last week, the nominee for next chairperson of the US Federal Reserve, Janet Yellen, delivered a very dovish speech to the Senate Banking Committee. The main gist of her message centered around the message of “no set time for tapering” and “long-term unemployment being the biggest problem for the US recovery.”
Although the bond-buying program may seem to artificially hold down interest rates and induce risky behavior, Yellen added that the Fed doesn’t see a broad build up in leverage that might pose a risk to financial stability at this point……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Latin American currencies slipped on Tuesday after a recent rally, while the Chilean peso weakened on bets that the central bank would cut interest rates, which it did by a quarter of a percentage point after the market close.
Mexico’s peso pulled back from a three-week high while the Brazilian real retreated from its strongest level against the dollar in two weeks. Reports on U.S. retail sales, existing home sales and consumer prices due on Wednesday will influence expectations about when the U.S. Federal Reserve could start cutting back on a bond-buying program that has increased investor appetite for emerging markets over the past few years……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

Bank of Canada Deputy Governor John Murray said that even though currencies and other assets have periods where they overshoot fundamental values, the relationship between exchange rates and retail prices is working as it should.
“As with any asset price, bouts of temporary overshooting and excess volatility are common,” Murray said in a speech at Mount Allison University in Sackville, New Brunswick. “However, the broad trends and behavior of these markets are more positive than many believe and earlier evidence might indicate.”…………………………………..Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

The global carbon market, once hailed as a promising solution to greenhouse gas emissions, may be dying a slow death, as turmoil in the European trading arena has at least 10 London banks scaling back or closing their carbon desks.
London, which had been seen as the main provider for Europe’s trading scheme, over the past four years lost its grip as workers employed on carbon desks fell by 70 percent, the Financial Times reported Monday……………………………………Full Article: Source

Posted on 20 November 2013 by VRS |  Email |Print

European Union and Californian emissions markets have shown China how to avoid the pitfall of oversupply in its own carbon-trading programs, said the vice mayor of the city of Shenzhen.
Permit prices on the EU Emissions Trading System plunged 80 percent the past five years, according to data from the ICE Futures Europe exchange in London. Officials from China examined why this happened, said Tang Jie, vice mayor of the southern Chinese city that has a population of 13 million and average income of $20,000……………………………………Full Article: Source

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