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Commodities Briefing 14.Jan 2014

Commodity market increased in December due to positive fundamentals
The new commodities cycle is less super than the last one, but don't dump them from your portfolio just yet
Optimistic outlook for NZ commodities
Fed set to push ahead on new commodity trade rules
Fed said to release plan to limit banks’ commodities activities
Goldman sees new commodity cycle as shale oil spurs US growth
Oil price caught up in fallout from Iran nuclear deal
Iran nuclear programme deal pushes oil price lower
Tight supply may push oil price above $100
EIA: Global oil demand to rise 1.2 mln b/d in 2014
Platts survey: OPEC pumps 29.72 mln barrels of crude oil per day in December
Gold to tank in 2014: Goldman Sachs
Barclays analysts: Don’t get fooled by gold again
How gold differs from all other commodities
Gold: Bullish breakout ahead
Why China wants low gold prices?
Speculators build bullish positions in gold, cover shorts in silverp Platinum - CFTC data
Uranium bull market to gather steam over next 18 months - Scotiabank
Industrial metals to gain strength, trading strategy for 2014 : Barclays
Barclays raises 2014 zinc, copper price outlook on higher demand
ETFs may be simple, but don't forget the 'flash crash' of 2010
Global ETF and ETP assets reached U.S. $2.4 trillion, new record high, at end Of 2013
Hedge funds' bearish turn on ags extends into 2014
Deutsche Börse deepens push into Asia commodities
India: Commodities trade dips over 36pct in Apr-Dec
Russia to halt targeted daily currency interventions
Currency depreciation in Latin America: Taper jam
Asia-Pacific leading the world on carbon emissions trading
U.S. carbon-dioxide emissions rising

Posted on 14 January 2014 by VRS |  Email |Print

Commodities were higher in December due to positive fundamentals supporting the energy and industrial metals sectors. Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management business, said, “The 2014 global economy looks to be the most orderly in several years, centering on modest yet stable growth. We expect global growth to accelerate gradually in 2014, with most of the pick-up occurring in developed market economies, narrowing the growth gap with the Emerging Markets. We believe this steady uptick in growth may be beneficial to commodities.”
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “Amid macroeconomic improvements in the US and abroad, correlations between commodities and traditional asset classes have been decreasing. We expect individual commodities to continue to be increasingly driven by fundamental factors rather than macroeconomic headlines. While broad macroeconomic trends continue to be important, they will likely impact asset classes in different ways. We continue to expect commodities to provide valuable diversification benefits going forward………………………………………..Full Press Release: Source

Posted on 14 January 2014 by VRS |  Email |Print

The commodities supercycle of the previous decade, which saw insatiable emerging market demand drive raw materials prices higher, is over. As a result, commodities prices growth has basically ground to a halt in the past few years.
In his latest note, Goldman’s Jeff Currie says that long-term, he remains bearish on the sector. But he says that a new commodities cycle has begun replacing the old one - and argues for hanging on to commodities a bit longer………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Analysts are predicting a positive outlook for New Zealand-produced agricultural commodities in 2014 as demand continues to outstrip supply of dairy, beef and wool.
Milk powder prices should hold up “pretty well” this year and any significant easing would not occur until the second and third quarters of 2014, Rabobank director of dairy research Hayley Moynihan said. “Our commodity price in US dollars still has whole milk powder sitting at US$4500 per tonne by the time it gets to the third quarter of the year.”……………………………………….Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

The Federal Reserve is set to take its first formal step toward limiting major Wall Street banks’ role in physical commodities markets this week and issue a notice to seek public comment on the topic, sources familiar with the matter said on Monday.
The Fed will publish a so-called “advance notice of proposed rulemaking” on Tuesday, laying out the issues it is considering, one day before a second Senate banking committee hearing on the matter, the sources said………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

The Federal Reserve is poised to take a preliminary step toward limiting banks’ activities with commodities amid Congressional scrutiny, according to three people briefed on the discussions.
The Federal Reserve is planning to release a notice seeking information on ways to curb banks’ ownership and trading of some commodities as it tries to cut risk for deposit-taking banks, said the people, who requested anonymity because the talks are private. Regulators and lawmakers have said raw-materials assets could lead to catastrophic losses, collapses and public bailouts………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

The commodities cycle that sent prices rising almost fourfold over 10 years is reversing and will eventually drive raw materials into a structural bear market, Goldman Sachs Group Inc. said.
Growth in shale oil output will keep U.S. energy prices low, reinforcing economic growth and leading to more tapering of government stimulus, the bank said. That will cut raw-material demand in emerging markets and lead to weakened currencies that will encourage more production. The new cycle is the opposite of the “super cycle” that ran from 2002 through 2011, Goldman said………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

The price of oil will come under “serious downward pressure” as the nuclear deal between Iran and six world powers kicks in next week, a leading analyst told CNBC.
In an interim deal struck between Iran and the UN Security Council plus Germany in November, Iran agreed to freeze parts of its nuclear program in return for sanctions relief. Despite criticism of the move, the deal comes into effect on January 20 giving the parties six more months to finalise the pact………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

The fresh six-month deal with Iran to curb its nuclear programme has pushed benchmark oil prices lower as investors eye a glut of the energy source to return to the market place over the longer term.
After US President Barack Obama urged Congress not to impose additional sanctions on Iran, the Brent crude forward contract for February delivery fell below the $107 per barrel (bbl) mark to $106.91/bbl. Meanwhile, US WTI oil fell by 51 cents to $92.21/bbl………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

The tight supply of crude oil in the global market may drive the price of the Brent crude to between $100 and $110 per barrel this year, a report has indicated. Oil output from the Organisation of the Petroleum Exporting Countries (OPEC) had fallen in December to the lowest since May 2011.
The global oil output survey, which was based on shipping data and information from sources at oil companies, OPEC and consultants had revealed that the drop in output left supply below OPEC’s nominal target of 30 million barrel per day (mbpd) for a third month………………………………………..Full Article: Source

Posted on 14 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 14 January 2014 by VRS |  Email |Print

Oil production from the Organization of the Petroleum Exporting Countries (OPEC) edged up by 20,000 barrels per day (b/d) to 29.72 million b/d in December from 29.7 million b/d in November as increases from Saudi Arabia, Iran and Nigeria more than offset a drop in Iraqi volumes, a just-released Platts survey of OPEC and oil industry officials and analysts showed.
“It’s Goldilocks time – not too hot, not too cold — for the oil market,” said John Kingston, global director of news for Platts, a leading global provider of energy, petrochemicals and metals information………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Bad news for “gold-bugs”—bullion’s current beginning-of-the-year rally will not only lose steam, but prices could drop sharply by the end of 2014, according to Goldman Sachs’ Jeffrey Currie.
Currie, Goldman’s head of commodities research, told CNBC on Monday he had an end-of-year price target of $1,050 per ounce for gold, a 16 percent drop based from current prices of $1,251. The main culprit? Economic recovery………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Gold prices drifted a little lower on Monday, with no big signs of a followup so far after last week’s jobs-related surge. But analysts at Barclays say investors shouldn’t get fooled into believing any upturns for gold will stick and be prepared to sell into any rallies this year.
Barclays analysts are among those who believe the Fed will continue the taper, and while short-covering support is going to stream into gold due to buying ahead of the Lunar New Year, that gold love will be fickle and fleeting………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Most financial analysts, including some who specialize in precious metals, analyze gold as a commodity however gold is not a commodity since unlike other commodities it is not consumed. Therefore, the traditional economic models and theories of supply and demand simply do not apply when analyzing gold.
Gold is a monetary metal and as Prof. Antal Fekete says, “in the case of monetary metals, in contrast with all other commodities, high and increasing prices may not bring out new supply. Rather, they might make supply shrink. Monetary metals are exempt from the law of supply and demand.”……………………………………….Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Gold reversed from the very potential support area of $1208-1180 and now trading between minor support and resistance area which will decide the future direction for shot term.
Now gold is trading around $1245 and as we can see on the chart, it is reaching to the minor parallel resistance area at $1254. we have witness a major bull bear fight in this $1217 - $1254 range earlier and it may be more interesting this time. However the upside move was well supported by an triangle breakout as shown in chart. At the same time RSI above 50 mark showing positivity. ……………………………………….Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

One question that has not been asked sufficiently is, “How can China buy well over 2,000 tonnes of gold without sending the gold price rocketing?”
In the U.S. people believe that the gold price will fall even further in 2014 despite indications that Chinese demand will continue at current high levels if not rise even more. This is because U.S. investors have been selling gold to move into the rising equity market………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

A rise in price prompted large speculators to add to their bullish futures and options positions in gold at the Comex division of the New York Mercantile Exchange, as seen in the latest weekly commitments of traders data from the Commodity Futures Trading Commission, released Friday.
Large speculators also increased their net-long positions in silver and platinum; however, the rise came because of short covering, which is the buying back of previously sold positions. The data is as of Jan. 7. Speculators added to their palladium net-longs, but their activity between the legacy and disaggregated reports were mixed in copper………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Scotiabank analysts are bullish uranium. They have been for some time. As we noted in early 2013, Patricia Mohr, Scotiabank’s vice-president economics and commodity market specialist, made the case that uranium prices, decimated by the 2011 Fukushima Dai-Ichi nuclear disaster, would rebound mid-decade.
It’s not a position that has changed. In her latest commodities report on December 19, 2013 she labelled uranium a “turnaround story” for the mid-2010s. Her thesis - as outlined at the AME BC Roundup conference last year - is heavily contingent on three factors:……………………………………….Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Industrial metals are set to gain strength in 2014 on improving demand and slower supply growth but a stronger US dollar, reduced monetary stimulus and the fragility of the global economic recovery could also create headwinds, according to Barclays Research.
Barclays pointed out that 2014 may mark the end of one of the strongest ever periods for base metals supply growth, while leading manufacturing indicators are signallaing stronger consumption. ” For the first time in several years, the balance of risks is shifting to the upside. “Subsequently, we favour buying the dips, especially given the higher prices we expect over the next couple of years,” Barclays said………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Barclays on Monday raised its zinc and copper price forecasts for 2014 citing improved demand outlook for the industrial metals. The bank sees zinc at $2,138 per tonne in 2014 and forecasts copper at $7,125 per tonne this year, it said in a note.
“We expect the global refined zinc surplus to shrink markedly this year and for the market to move into its first deficit in almost a decade in 2015,” it said. Barclays said it expects copper to move into surplus in 2014, weighing on prices, though it said the surplus would likely be small and short-lived. ……………………………………….Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Exchange-traded funds offers an excellent range of products, but investors need to beware the risks. The “do nothing” investment portfolio is every investor’s dream. Simply buy low-cost funds that replicate an equity index, corporate bonds and UK gilts, then sit back and ignore the daily gyrations of the stock market, safe in the knowledge that over time the investments will win out.
The rapid growth and extensive range of new exchange-traded funds, or ETFs, has brought this nirvana a step closer for many. The global ETF industry has grown into a $2.4 trillion (£1.45trn) behemoth, with the top four providers dominating nearly three-quarters of the market………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

U.S. $24.5 billion net inflows in December and positive market performance pushed assets in the global ETF/ETP industry to a new record high of U.S. $2.4 trillion at year-end 2013, according to preliminary findings from ETFGI’s global ETF and ETP industry insights report. The global ETF/ETP industry had 5,090 ETFs/ETPs, with 10,172 listings, from 218 providers on 60 exchanges at the end of 2013.
“After spending most of 2013 wondering when and how the Fed would taper its QE scheme, investors felt a degree of positive cheer and certainty after the Fed announced in December that the US economy was strong enough for it to begin to taper by U.S. $10 billion in January 2014” according to Deborah Fuhr, Managing Partner at ETFGI………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Hedge funds started the new year where they left off 2013 in extending their bearish positioning on agricultural commodities, fuelled by a raise in their net short holding on Chicago wheat to a record high – a profitable call.
Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from cotton to cattle, by more than 40,000 contracts in the first week of 2014, according to data from the Commodity Futures Trading Commission regulator………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Deutsche Börse is deepening its push into commodities trading in Asia by taking a majority stake in Cleartrade Exchange, the Singapore-based commodity derivatives bourse.
The German exchange operator has bought a 52 per cent stake in Cleartrade via its European Energy Exchange (EEX) subsidiary. EEX paid cash for the controlling stake but further details of the transaction, which closed at the end of December, were not disclosed. Regulators in Singapore and Europe have approved the purchase………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Commodities exchanges saw a heavy decline in trading during the first nine months (April-December) of the current fiscal. This comes in the backdrop of all-round deceleration in agri and non-agri commodities trade.
According to the latest data from commodities market regulator Forward Markets Commission (FMC), trade was down both in value and volume terms. In terms of volume, the total trade declined to 71.22 crore tonnes in April-November 2013-14, from 112.38 crore tonnes in the corresponding period last year. At the same time, the trade value shrunk to Rs 82.46 lakh crore (Rs 129.62 lakh crore)………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Russia’s central bank is to cease daily targeted interventions in foreign exchange markets, allowing for a more flexible exchange rate as the central bank moves towards a free float of the currency by the end of the year.
The rouble fell 0.9 per cent at 33.3050 to the dollar and slipped 0.4 per cent against the central bank’s dollar-euro basket after the announcement, which investors took as a signal that the authorities would welcome a further weakening in the exchange rate………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

Brazil’s number-crunchers delivered an unpleasant surprise on January 10th, when they revealed that the year-end inflation rate came in at 5.91%. That was higher than market expectations, and higher than Dilma Rousseff, her eyes fixed on a presidential election in October, would have wanted, too.
Asked what lay behind the rises, Alexandre Tombini, the central-bank president, pointed, among other things, to the real’s depreciation as a cause of stubbornly high inflation………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

It is not well know that Kazakhstan — a nation whose landmass exceeds that of Western Europe and which boasts the largest economy in Central Asia — introduced a carbon trading scheme last year. It is the first Asian nation to take on an economy-wide cap and the trading system has been designed to help it achieve its goal of reducing greenhouse gas emissions to 7 percent below 1990 levels by 2020.
Indonesia is also considering carbon trading and, in 2014, Thailand will introduce a voluntary emissions trading system, likely to be a precursor to a mandatory scheme. These developments follow hot on the heels of the landmark passage, in May 2012, of a South Korean law that introduces a carbon trading scheme in 2015………………………………………..Full Article: Source

Posted on 14 January 2014 by VRS |  Email |Print

The United States has been one of the few bright spots for climate-change policy in recent years. Thanks to the recession, improved efficiency measures and the shale-gas boom, the nation’s carbon-dioxide emissions from energy fell 12 percent between 2005 and 2012.
But the party’s officially ending, at least for those worried about global warming. In an early estimate, the U.S. Energy Information Administration said U.S. carbon-dioxide emissions from energy sources increased 2 percent in 2013:……………………………………….Full Article: Source

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