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Commodities Briefing 10.Jan 2014

Posted on 10 January 2014 by VRS |  Email |Print

Commodities will gain the most since 2010 this year and climb at a faster pace next year as the global economy strengthens, Hermes Fund Managers Ltd. said.
The Standard & Poor’s GSCI Total Return Index of 24 commodities will rise 2.7 percent this year and 6.7 percent in 2015, Hermes said in a report today. While it expects gold to remain under pressure, platinum and palladium “look more attractive” and sugar should rebound later this year, it said……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

A Senate panel will hold a hearing next week to question financial regulators over Wall Street’s role in physical commodity markets, drawing fresh attention to a controversy over the possible risks posed by the involvement of the largest U.S. investment banks.
The January 15 hearing by a subcommittee of the powerful Senate Banking Committee is to include testimony by top oversight officials with the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission and an official from the Federal Reserve’s banking supervision arm……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will cut crude shipments to the lowest level since September as refineries trim imports before conducting maintenance in the spring, according to Oil Movements.
OPEC, supplier of about 40 percent of the world’s oil, will reduce sailings by 390,000 barrels a day, or 1.6 percent, to 23.71 million barrels in the four weeks to Jan. 25, the researcher said today in a report. That compares with 24.1 million in the period to Dec. 28. The figures exclude two of OPEC’s 12 members, Angola and Ecuador……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

In recent history the Middle East has always been an area of turmoil, where wars came and went and conflicts were interrupted by long periods of stability and progress. That, regretfully, no longer seems to be the case.
Today, the turmoil remains and the stability that interjected itself between times of conflict and that allowed people in this region to overcome the difficulties of political instability and open warfare is becoming something of a rarity……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

The Iran-US bonhomie may be bad news for traditional Iran-baiters like Saudi Arabia and Israel, but it certainly is good news for oil-importing developing countries like India and China as international oil prices are unlikely to see major spikes and may even go southwards if Iran has its way.
Apart from Iran, countries like Iraq and Libya too are bent upon roiling the Opec politics and challenge the dominance of Saudi Arabia in consistently keeping the international oil prices above $100 per barrel. The Indian basket has been ruling around the $104-$110 mark……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Thanks to the rapidly increasing production from the Eagle Ford Shale and the Permian Basin, Texas reached another milestone in September, 2013: As a separate nation, Texas would now rank as the 9th largest oil producing country in the world.
As reported here by Dr. Mark Perry, according to the International Energy Agency (IEA), in the year preceding last September, Texas oil production surpassed that of oil-producing giants like Brazil, Venezuela, Nigeria, Mexico and Kuwait to move into the hypothetical Top Ten oil producing nations on earth……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Barclays on Thursday introduced its 2014 average price forecast for precious metals, and said it expects gold prices to test 2010 lows this year. The bank forecast the 2014 average gold price at $1,205, silver at $19, platinum at $1,539, and palladium at $768 per ounce.
“From both macroeconomic and underlying fundamental perspectives, gold is likely to struggle to find supportive catalysts in 2014,” Barclays analyst Suki Cooper said in a note to clients……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

In one of the first, if not the first, calls on gold GCG4 this year, Bank of America Merrill Lynch slashed its average 2014 forecast for the shiny stuff by 11% to $1,150 an ounce on Thursday, with a warning it could get even uglier.
Gold plunged 28% in 2013 to just above $1,200, snapping a 12-year annual winning streak and recording its worst annual performance in nearly three decades. Silver, which also didn’t escape the chop from Bank of America Merrill Lynch, suffered a 36% loss in 2013, its worst since at least the early 1980s. The investment bank cut its forecast for silver SIH4 by 21% to $18.38 an ounce……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Bank of America Merrill Lynch wasn’t the only investment bank to offer a downbeat outlook on gold prices. HSBC, Barclays and MKS were on the bandwagon too. Analysts at HSBC lowered their average gold-price GCG4 forecasts — to $1,292 an ounce from $1,435 for 2014 and to $1,310 from $1,395 for 2015. They “see scope for only a modest recovery in gold prices and see the metal trading in a wide range of $1,105 to $1,390 this year.
On Thursday, gold settled higher for the first time in four sessions, rising $3.9 to $1,229.40 an ounce. MKS Group analysts said gold will likely strengthen in the first half of this year on the back of physical demand for the metal, but there’s limited upside potential……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Anyone tempted to believe that, after a year like the last one, things cannot get worse for gold should think again.
That was the message from Bank of America Merrill Lynch’s yesterday as the broker hacked back its estimates for the average price of gold and silver in 2014 by 11 and 21 per cent respectively. …………………………….Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

A break from a short holiday for a comment on gold and on some of the views put forward by the pro-gold fraternity. It’s rainy here in Madeira today but at least a reasonable temperature and far from the kind of sub zero weather being experienced in Canada and the USA, and the rain, storms and floods in Europe so I guess we should count ourselves lucky!
But back to gold. The strong pro-gold commentators have at least been consistent in their views on gold and where it is headed. Indeed, they may well be partly correct in their views, but the timescales over which their scenarios will likely be played out, and the price levels likely to be reached, are indeed more wishful thinking than reality……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Commodity exchange traded products (ETPs) suffered their worst year on record in 2013 as investors dumped their gold holdings and joined the equity rally, data from BlackRock showed.
A whopping $42.9 billion was withdrawn from commodity ETPs in 2013, with gold ETPs accounting for $40 billion of those outflows, asset manager BlackRock said. The SPDR Gold ETP lost $25 billion, the single biggest ETP outflow in 2013…………………………….Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Even though time, dates, and years are rather arbitrary when it comes to investing, it gives investors a benchmark to compare their returns to well… anything. Just like those investors, each year we like to look back to see if buying and holding a couple commodity markets over the course of a year are doing better than investing in the ETFs that supposedly track them: Crude Oil (USO), Natural Gas (UNG), Corn (CORN), Copper (JJC), Coffee (JO), and Wheat (WEAT).
Typically, the ETFs underperform a simple strategy of buying the December futures contract and rolling it annually……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

From the moment Prometheus stole fire from the gods and presented it to us, humanity has been concerned with how to fuel our need for energy. One contested, yet efficient and effective, energy source is nuclear power.
Approximately 13% of the world’s energy needs currently are met by nuclear power plants, with leading users including Finland, Japan, South Korea, Switzerland and Ukraine. France gets three-quarters of its electricity from nuclear reactors. Uranium is the fuel used in conventional nuclear reactors, and the Global X Uranium ETF (URA) is the exchange-traded fund (ETF) that tracks stocks in the uranium industry……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

The annual rebalancing of two major S&P Dow Jones commodities indexes are going to result in massive buying of Brent crude oil and gold, and unloading of WTI crude and natural gas in the days ahead. The adjusting exposure should directly impact a roster of ETFs that either track one of these benchmarks directly, or that invest in those specific markets, all of which will be impacted by the move.
In a process that began Wednesday and should go on for five days, according to S&P Dow Jones, the rebalancing of the Standard & Poor’s Goldman Sachs Commodity Index and the Dow Jones-UBS Commodity Index will trigger roughly $2.7 billion in new buying in the Brent market, and some $1 billion in fresh gold demand……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

The turnover of the commodity bourses fell by 36.38 per cent to Rs 82.46 lakh crore till December of the ongoing fiscal, as against Rs 129.6 lakh crore in the year-ago period, according to regulator FMC.
The business turnover has showed a decline in most of the 17 commodity bourses in the country after the imposition of commodity transaction cost since July 2013 and due to the around Rs 5,500 crore payment crisis at spot exchange NSEL, analysts said……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Inflation is a dreaded word for most policy makers and analysts apart from being a constant worry for India’s aam aadmi. However, there is still no clarity as who is the villain in this game: big traders, middlemen, players in commodity derivatives including index investors.
I was just going through a working paper of Reserve Bank of India titled ‘Global Liquidity, Financialisation and Commodity Price Inflation’ by Kumar Rishabh and Somnath Sharma……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Stockpiles of corn in the U.S., the world’s top grower, are rising at the fastest pace in 19 years as a record crop overwhelms increased demand for the grain used to make livestock feed and ethanol.
Inventories on Dec. 1, the first tally since the harvest was complete, probably totaled 10.764 billion bushels (273.4 million metric tons), 34 percent more than a year earlier, according to the average of 24 analyst estimates in a Bloomberg survey……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Weakness in Asian currencies this year amid an unwinding of U.S. monetary stimulus is likely to be broad and not just confined to countries with large-current account deficits, currency strategists say.
U.S. economic indicators over the past week suggest the world’s biggest economy is in better shape than financial markets had anticipated. That keeps the spotlight on the unwinding of the Federal Reserve’s massive stimulus program that starts this month……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

Macquarie Group Ltd., which has ousted Canada’s Desjardins Group as the world’s most accurate currency forecaster, is telling clients that its top picks for 2014 call for declines in Australia’s dollar and the yen.
Australia’s largest investment bank sees the Aussie sliding about 8 percent by Dec. 31 and the yen falling more than 5 percent as central banks in the two nations add to monetary stimulus that have sent their currencies to the lowest levels in at least three years……………………………..Full Article: Source

Posted on 10 January 2014 by VRS |  Email |Print

A year after the launch of its cap-and-trade program, California formally linked its emissions trading scheme with Quebec’s—enabling carbon allowances and offset credits to be exchanged between participants in the two jurisdictions. The linkage, which marks the first agreement in North America that allows for the trading of greenhouse gas emissions across borders, is designed to escalate the price on the amount of carbon businesses can emit.
There is a “potential for this market to serve as an example for other North American subnational jurisdictions to follow if it can prove to be successful,” said Robin Fraser, a Toronto-based analyst with the International Emissions Trading Association……………………………..Full Article: Source

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