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Commodities Briefing 09.Jan 2014

Posted on 09 January 2014 by VRS |  Email |Print

Commodities were not exactly the place to be in 2013. While the S&P 500 rose nearly 30 percent, the S&P GSCI Commodity Index dropped 3.5 percent. But in 2014, some investors are playing for that trade to turn around.
“I do think there are some reasons why you could be somewhat optimistic about the possibilities for commodities in 2014,” said James Paulsen, of Wells Capital Management, who expects the asset class to outperform stocks and bonds in 2014. “First of all, they got crushed over the last year and a half, and we kind of revalued the commodity market. So I think there’s good value here for the first time.”……………………………………….Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Commodities, which include everything from industrial and precious metals to agricultural goods and energy supplies, fared badly almost across-the-board in 2013, according to a Capital Economics research note on Wednesday.
“Dismal returns” confronted commodities investors by the end of 2013, as key benchmark indices like the S&P GSCI index fell significantly, led by poor precious metals and agricultural prices. Gold fell 28 percent in its worst year since 1981, while corn had its worst year since 1970………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Australia, the world’s top shipper of iron ore and coal, has revised higher its forecasts for natural resource exports, but this isn’t necessarily all good news for battered commodity investors.
While the increase in commodity export volumes and values forecast by the Bureau of Resources and Energy Economics (BREE) in its December update is impressive, as usual the devil is in the detail………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

OPEC crude oil production will continue to decline by 0.5 million barrels per day (mbd) in 2014, as some OPEC countries, led by Saudi Arabia, reduce production to accommodate the non-OPEC supply growth in 2014, the U.S. Energy Information Administration’s (EIA) Short-Term Energy Outlook said.
EIA predicts OPEC oil production at 29.49 mbd in 2014 compared to 29.96 mbd in 2013. In 2015 EIA expects OPEC oil production to slightly increase to 29.51 mbd………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Global liquid fuels consumption is forecast to increase by 1.2 million b/d in 2014 and by another 1.4 million b/d in 2015, according to the US Energy Information Administration’s Short-Term Energy Outlook (STEO), released this month.
Countries outside of the Organization for Economic Cooperation and Development, led by China, account for nearly all consumption growth over the forecast period, EIA said. OECD consumption is expected to decline by 0.1 million b/d in 2014 and remain flat in 2015………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

A major ratings agency says the credit worthiness of several Canadian miners is under threat as it lowers its forecast of where it expects gold prices to be for the next several years to $1,110 US an ounce. Moody’s has reduced its assumption for the average price of gold and silver in 2014 and beyond to $1,100/oz and $18/oz, respectively. Both figures are about 10 per cent below previous expectations.
After peaking at over $1800 an ounce in 2012, gold prices have steadily declined, with the spot price dropping by 30 per cent last year alone. Gold miners spent heavily seeking out new production when prices were high, and are now saddled with high costs for those projects even as their revenue declines because of the lower price………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Moody’s Investors Service will use a lower gold price on which to base its ratings of producers of the precious metal. Delivering another blow to the struggling gold industry, the credit rating agency said it will now use $1,100 (U.S.) an ounce instead of $1,200 to reflect the significant deterioration in gold prices.
Last year’s 30-per-cent drop in bullion to around $1,200 an ounce triggered gold producers to overhaul operations, write down assets, cut jobs, and suspend dividends and projects. The move puts the credit ratings of Canada’s largest gold producers in jeopardy………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Citi is not bullish on gold at this stage. The early signs of growth in Europe, the pickup in growth in the U.S. and the improvement in global economy suggest that people are becoming more risk seeking. Hence in all probabilities, they may shed their gold holdings, which normally are considered as defensive bet.
According to Citi data, FII flows slowed across Emerging Markets. At this point, FIIs prefer Developed Markets over Emerging Markets. The global firm also believes that flows into India will be slow when compared to relative markets………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

It’s been one of the worst years for gold in a generation. A flood of outflows from gold ETFs, endless tax increases on gold imports in India, and the mirage (albeit a convincing one in the eyes of many) of a supposedly improving economy in the US have all contributed to the constant hammering gold took in 2013.
Perhaps worse has been the onslaught of negative press our favorite metal has suffered. It’s felt overwhelming at times and has pushed even some die-hard goldbugs to question their beliefs… not a bad thing, by the way………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Gold prices are falling, and yet investors and collectors can’t seem to buy enough of the precious metal. Gold prices fell to a six-month low heading into 2014 (standing at $1,228.60 per ounce Wednesday morning). On Wednesday, just two days after the debut of a British gold bullion coin, the Royal Mint announced that the Sovereign 2014 is out of stock, but it expects to stock the coin again by the end of the month.
“Since the dip in the price of gold, we have seen increased demand for our gold bullion coins from the major coin markets, and this presently shows no sign of abating,” the mint said in an email. “The Royal Mint continues to supply to its customers and is increasing production to accommodate the higher demand.”……………………………………….Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

It is a law that few people in the commodities industry expected to be enacted. But it now looks likely that Indonesia, one of the world’s most important sources of minerals used to produce industrial metals, will implement an export ban on unprocessed mineral ore.
Flows of nickel ore and bauxite are expected to stop, though the government in Jakarta is considering a range of exemptions, particularly for copper producers………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

There are several long-term issues that impacted copper and the other base metal spaces in 2013, and those long-term issues will persist for the foreseeable future. Allow me to explain the basics via a few examples:
Indonesia recently stopped the export of intermediary products, such as pig iron nickel. The country’s leadership is increasingly practicing resource nationalism by restricting mining firms to in-house processing and to shipping only finished products. It is also unsettling that Intrepid Mines Ltd. lost control of its project this year to an Indonesian partner!……………………………………….Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

JPMorgan Chase & Co, the world’s biggest dealer in over-the-counter metals derivatives, has added its metals futures brokerage to the sale of its physical commodities business, sources familiar with the matter said. A JPMorgan spokesman initially declined to comment, but later said: “JP Morgan’s metals futures brokerage is not up for sale and we continue to be committed to that business.”
The sources said the sale would include its London Metal Exchange (LME) open outcry floor trading team, one of the largest on the world’s premier metals marketplace. A deal could come later this month………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

The value of gold ETPs halved in 2013, dropping $71bn (£43.25bn) to $76bn, as investors sold out of the declining metal, ETF Securities data shows. The massive drop drove global commodity ETP asset levels to $128bn, an annual fall of almost 40 per cent.
Over that time the price of gold fell almost 30 per cent. Gold ETPs are now back at 2010 levels. Most of 2013’s outflows and largest price falls were in Q2 with asset levels leveling out in the second half of the year. Non-gold ETP investor outflows accounted for just 1 per cent of the decrease in overall commodity ETPs………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Broad commodities ranging from bullion to agriculture failed to perform in 2013 thanks to Fed tapering concerns, strengthening dollar and continued bullishness in the stock market. In fact, gold suffered its biggest annual loss in three decades plunging about 28% on the year. This also represents the end of 12-year bull run for the yellow metal.
The pickup in global activity has encouraged a brighter economic outlook. As investors pour money into stocks over commodities, gold investing may stay out of favor in 2014………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

The ETF universe continues to expand in size and popularity as more and more investors have grown comfortable with utilizing exchange-traded funds for everything from establishing core exposure in desired asset classes to using them as tactical trading tools.
ETFs have rightfully earned their “easy-to-use” reputation as they have allowed for self-directed investors to access niche corners of the global market as well as other sophisticated strategies that were once out-of-reach for most………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

2013 was choppy for commodity investors due to Fed tapering talks, strengthening dollar and continued bullishness in the stock market. Despite this sluggish trend, natural gas emerged as a solid performer, and ended the year with impressive gains of about 30%.
Whether natural gas will continue this surge in 2014 depends on the broad commodity trends and supply/demand balance………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Latest official statistics show that the value of Iran’s Mercantile Exchange (IME) has increased by 60 percent in the last 9 months. “Our biggest reason for the past months’ recent success is because of Iran’s extreme increase in national production; our hottest commodities are industry and mine, petroleum, crude oil and agriculture,” said IME Deputy of Operations Mehrzad Namdari.
Since March 2013, trade volume has increased by 19 percent at IME, despite the illegal US-engineered sanctions against Iran, especially those targeting its oil and banking sectors, over the country’s nuclear energy program………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

The bitcoin saga took an unpleasant turn last month, when China’s central bank banned financial institutions from dealing in the virtual currency. Bitcoin was enjoying a surge of popularity in the country. By the end of November, Chinese exchanges were responsible for almost two-thirds of worldwide traffic. The central bank’s decision sent the currency tumbling.
Then Indian regulators joined the fray. The Reserve Bank of India issued a public warning on the dangers of bitcoin. India’s largest exchange was promptly shut down, and its operator raided by local authorities………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

A Reserve Bank of India (RBI) working paper says regulation of commodity futures markets has to evolve concomitant to the changing dynamics of commodity markets. And, that only an emphasis on over-the-counter market reforms, mainly covering swap dealers, might be insufficient.
It says financialisation of commodity markets and some fundamental factors have driven commodity price inflation. Financialisation means a long-term shift in an economy from production to finance………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

The German Minister of Agriculture paid a visit to his French counterpart in Paris yesterday (7 January) in a show of unity between the two sides. But divisions remain deep on social dumping, an issue that is expected to become hotter in France as the EU elections approach.
Hans-Peter Friedrich, the new German minister of agriculture, met his French counterpart, Stéphane Le Foll, yesterday (7 January) in Paris to prepare the forthcoming Franco-German summit, scheduled for 19 February………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

Cryptocurrency creators have reportedly received a cease-and-desist letter from the rapper’s law firm, accusing them of infringing on West’s trademark. Kanye West has made attempts to shut down the virtual currency that uses his name. The anonymous programmers behind the Bitcoin alternative Coinye West have reportedly received lawyers’ letters accusing them of infringing on the rapper’s trademark.
Billed as a “PROPER and FAIR … [currency] for the masses”, Coinye West was due to get its official launch on 11 January. But after receiving a cease-and-desist letter from West’s law firm, Pryor Cashman, the cryptocurrency’s creators pushed forward the release, issuing the first coins last night………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

It will become more expensive for businesses in the European Union to burn fossil fuels this year after the 28-country bloc decided Wednesday to beef up its carbon trading system. The agreement ended a year of bickering over how to amend what is Europe’s prime tool in the fight against climate change and the world’s biggest emission trading system.
Under the cap-and-trade scheme, companies pay per ton of carbon dioxide they release into the atmosphere, with the pollution certificates traded on the market. The EU now decided to postpone the sale of 900 million additional carbon allowances — a move that will tighten supply and likely drive up prices of carbon allowances by 10 to 15 per cent, according to analysts………………………………………..Full Article: Source

Posted on 09 January 2014 by VRS |  Email |Print

China’s large state-owned power firms have taken the lead in the country’s nascent carbon offset market, leveraging preferential procedures to cut the cost of complying with new rules capping greenhouse gas emissions.
The central government will issue offsets, known as Chinese Certified Emissions Reductions (CCERs), under a new programme to reward projects that can prove they cut carbon emissions………………………………………..Full Article: Source

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