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Commodities Briefing 19.Dec 2013

Posted on 19 December 2013 by VRS |  Email |Print

For commodities traders, it would seem something else is certain apart from death and taxes: banks’ repeated entry into, and exit from, the commodities trading world. When Benjamin Franklin famously said that the only things that are certain in life are death and taxes, he clearly wasn’t thinking about the commodity business. For commodities traders, it would seem something else is certain: banks’ repeated entry into, and exit from, the commodities trading world.
Around the world, for two decades, banks have entered commodities with great fanfare. And then, many times, they’ve also exited, sometimes with their tails between their legs, citing various reasons for their departure. Catalogue of entrants History shows that some banking forays into base metals trading have not lasted………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Rio Tinto Group (RIO) expects a decline next year in the price of iron ore, the source of most of its earnings, saying global supplies will increase.
“There will be capacity coming on next year,” including at Rio, the London-based company’s 63-year-old Chief Executive Officer Sam Walsh said in an interview in the city. “I expect that iron-ore prices will soften a bit next year but it will still be a good business to be in.”……………………………………….Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

In its Annual Agri Commodity Outlook report, Rabobank on Tuesday indicated that commodity markets are expected to be stable into 2014, a change of pace from the past decade. Record prices and extreme volatility, which have been staples of the ag markets since the early 2000s, Rabobank says, will likely be replaced by more balanced fundamentals and narrower trading ranges in 2014.
Overall, recent high prices have made it beneficial for farmers to increase planted acreage for grains and oilseeds, and with few production setbacks in 2013, production has outpaced consumption. Rabobank says while most of the price easing has already taken place, grains and oilseeds prices will continue some easing into 2014………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

A couple of interesting events the last few weeks from the established oil basins of the North Sea. It appears that a number of high-profile E&Ps are moving out of the mature fields here.
U.S. oil major Marathon said last week that it is beginning the process to sell its North Sea holdings. A significant portfolio that’s expected to go for $3 billion. Elsewhere in the basin, stalwart European producer Wintershall (a subsidiary of chemical maker BASF) said it is also down-sizing its North Sea assets. Selling $375 million in properties to Hungarian energy firm MOL Group………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

In part one I wrote about the 3 oil patch sub-sectors I’m most bullish on, and how I’m trading them: refineries, oilfield services, and heavy oil producers. Today, my outlook for the remaining oil and gas sub-sectors—from best to worst…
Here’s the dilemma with them: improvements in fracking are enabling a lot more production—so much so it’s dropping the light oil price. But the technology is also dropping the break-even price of said oil—so I don’t think cash flows will drop as much as people think. At first. ;-) — let’s see just how far the oil price drops………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

The United States again is one of the world’s great energy powers. On Monday, the U.S. Energy Information Administration projected that American crude oil output will peak at nearly 10 million barrels per day by mid-decade, up from 6.5 million last year.
Last month, the International Energy Agency figured that the United States would overtake Saudi Arabia as the top oil producer, at least for a time. Yet some politicians remain unwilling to let the country reap the full benefits of this boon………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Crude oil is trading at 97.66 climbing 18 cents this morning after the release of the weekly American Petroleum Institute’s inventory report. The American Petroleum Institute late Tuesday reported a 2.5 million-barrel fall in U.S. crude supplies for the week ended Dec. 13, according to data from sources.
Analysts had forecast a decline of 4 million barrels in crude supplies. Sources also said the API reported gasoline stockpiles down 481,000 barrels, while distillate supplies fell 434,000 barrels. Analysts were looking for gasoline supplies to rise by 1.4 million barrels and distillate inventories to decline by 1 million barrels………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Gold may be slumbering, but when it awakens, watch out. I remain confident on gold’s future prospects thanks largely to China, the world’s No. 1 gold buyer. In October China bought a near-record 130 tons. In the first ten months of 2013 China bought more than 950 tons, making a 1,150 ton tally likely this year, far above past gold-buying records for any country, including gold-crazy India.
Remember, that covers only readily trackable gold passing through Hong Kong. China almost certainly imports still more through other conduits………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Demand for physical gold bullion, especially in China, will remain strong in 2014, but it could lose its ability to support prices in the first quarter, said an Australian analyst.
Victor Thianpiriya, commodity strategist from Australian New Zealand Bank (ANZ), said China and India to continue to dominate the physical market in 2014. China, in particular, has a long way to go before the desire to own the yellow metal is abated………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Most market eyes are focused on the outcome of today’s FOMC meeting and whether or not Ben Bernanke will give anything away in terms of the Fed’s tapering plans, which seems an appropriate way to end 2013, as the will-they-won’t-they taper saga has been looming ominously close to the gold price for much of the year.
And, it is unlikely to be a great deal different in 2014. Head of Research at BullionVault, Adrian Ash says nticipation of monetary policy is going to remain a key driver of prices in 2014………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Calendar year 2013 will be a year many gold bugs would rather forget. After a sustained multi-year rally, the gold price touched a 52-week high of US$1703/oz near the start of 2013. Since then it has been in a consistent downtrend with the precious metal currently trading just US$50 above its year low of US$1180/oz.
The decline has certainly unwound much of the exuberance that had been on display in the gold sector, with the US$1180/oz level reducing the metal back to where it traded in the aftermath of the Global Financial Crisis. While the decline in the gold price has been dramatic, the effect on gold producers and explorers has been nothing short of horrifying………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

For investors having a rooting interest in the price of gold, the catalyst for a recovery may be in sight. “Buy gold if you believe in math,” Brent Johnson, CEO of Santiago Capital, recently told CNBC viewers.
Johnson says central banks are printing money faster than gold is being pulled from the ground, so the gold price must go up. Johnson is on the right track, but central banks have partners in the money creation business—commercial banks. And while the FFed has been huffing and puffing and blowing up its balance sheet, banks have been licking their wounds and laying low. Money has been cheap on Wall Street the last five years, but hard to find on Main Street………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

The Federal Reserve’s balance sheet is set to exceed a whopping $4 trillion today, prompting warnings its ultra loose monetary policies are inflating asset price bubbles and will lead to a devaluation of the dollar and significant inflation in the coming years.
The Fed’s assets rose to a record $3.99 trillion on December 11, up from $2.82 trillion in September 2012, when it embarked on a third round of bond buying. It’s balance sheet has ballooned by more than $3 trillion or 300% since September 2008 when it was at just $0.91 trillion………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Nickel prices are likely to be pushed higher in 2014 if Indonesia introduces an export ban on laterite nickel ore, which would tighten supply particularly for China, according to Dan Loughner, the head of Australian nickel producer Western Areas.
“The latest technology of Chinese nickel pig iron, being rotary kiln electric arc furnace (RKEAF), relies solely on Indonesian laterite due to its high grade nickel and low iron content,” he said in a Tuesday interview posted on the Western Areas website and distributed by public relations firm FTI………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

The price of the cryptocurrency has swung from north of $1,200 late last month to as low as $455 Wednesday morning. At last check it’s at $583, according to Mt. Gox. Sheesh!
Bitcoin’s gyrations alone are worth noting — a plunge of 20% this morning — which is roughly double the already rocky daily average swing of 10%. Most investors can’t stomach those kind of moves, which is one reason it’s so premature to talk about building a Bitcoin exchange-traded fund. It’s also part of the rationale for keeping investment in Bitcoin, for now, in the realm of hedge fund managers………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

China’s Bohai Commodity Exchange, a local government-backed online trading platform for spot commodities, plans to launch cross-border trading in yuan for natural rubber and iron ore.
It announced the plans in Hong Kong Tuesday during a roadshow to promote the new trading system, an exchange official said in an interview Wednesday. In April, the exchange became China’s first non-financial organization to get approval from the central government to offer yuan-based cross-border trading………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

In a blow to the founder of India’s largest commodity exchange, the country’s market regulator on Tuesday barred Financial Technologies India Ltd. from running Multi Commodity Exchange of India Ltd in the wake of alleged trading irregularities at another exchange.
Forward Markets Commission ordered Financial Technologies to pare down its stake to 2% from 26% in the exchange, saying there was evidence of misconduct at its subsidiary company National Spot Exchange Ltd………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

There is much confusion about the various types of commodities related investment vehicles. They sound alike but have scant similarity in construction, function and performance. Commodities futures and managed futures (including financial index futures) are sold by commodities brokers. ETFs, managed futures mutual funds, and certain commodity indices are sold by stock brokers.
Commodities futures are contracts to buy or sell, at a predetermined price and date, a set amount of a commodity including: grains, meats, metals, energies, softs, stock indexes, financials and currencies. Futures’ liquidity and price discovery is found in worldwide markets that trade 24/7………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Goldman Sachs Group Inc has appointed two senior executives to run its global metals and commodities businesses, sources said on Tuesday, the latest in a series of high-level changes at Wall Street’s No. 1 bank for commodities.
London-based Charles McGarraugh, who is currently head of European mortgage product trading, will be global head of metals trading, running one of the world’s biggest metal derivatives desks, two sources familiar with the matter said………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Canada’s dollar is emerging as the Group of Seven currency with the most at stake as traders debate the effect of the U.S. Federal Reserve’s decision today to reduce its unprecedented monetary stimulus.
The loonie, which extended declines versus the greenback after the Fed announcement, and U.S. 10-year Treasury notes yields are the most inversely correlated since August 2004, increasing faster in 2013 than any other G-7 peer apart from the U.S. dollar………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

A new approach to carbon trading described in a recently issued patent entitled “Systems of Systems for Monitoring Greenhouse Gas Fluxes” seeks to change the economic and ecological determinants of deforestation. The enigma of deforestation, a global source of CO2 to the atmosphere, has steadily increased over the past decades reducing biodiversity and gobbling up natural lands of indigenous peoples despite expensive policies designed to stop it.
The patented technology, assigned to Planetary Emissions Management Inc. of Cambridge, MA, provides for the direct measurement of the three forms of carbon that make up the carbon cycle (e.g., carbon 12, carbon 13 and carbon 14—the “3C’s of the Carbon Cycle) and their transformation to financial products for global markets. (Press Release)

Posted on 19 December 2013 by VRS |  Email |Print

A year ago, this column described the state of New Zealand’s climate policy as a shambles and a disgrace. A year later there is no reason to eat those words.
The past year has seen the scientists, in the form of the United Nations’ Intergovernmental Panel on Climate Change (IPCC), give an update on the state of science which ought to have swept away any remaining complacency about the physical and economic challenge………………………………………..Full Article: Source

Posted on 19 December 2013 by VRS |  Email |Print

Kitco News brings back EDC’s Chief Economist Peter Hall to get his outlook on the global economy as well as gold and other commodities. Last time Hall was on Kitco News, he said gold below $1,000 was a possibility. “We really haven’t seen fit to change our outlook [on gold] at all,” Hall says.
“Our stance was confirmed by the reaction of the global markets to the mention of tapering by the Federal Reserve Board.” With regards to an economic recovery, Hall is optimistic about the U.S. economy. In fact, the Export Development Canada economist says that as the U.S. economy continues to gain momentum, he expects it to add momentum to the European, Japanese and eventually the emerging market economies………………………………………..Full Article: Source

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