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Commodities Briefing 15.Jan 2014

Posted on 15 January 2014 by VRS |  Email |Print

The IMF’s latest forecast of commodity price outlook shows the global economy is unlikely to see a quick revival in 2014. Futures markets show most commodity prices remaining flat or declining over the next 12 months, with the exception of gasoline, natural gas and some food products, IMF said in the report.
Going by the latest commodity price trends, it is likely that global GDP growth rates may fall short of IMF’s October forecast of 3.6% for 2014. But there is some good news for India. First, IMF forecast oil prices, both WTI and Brent, are expected to decline due to an expected rise in non-OPEC supplies, and possible recovery from outages in OPEC nations………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

JPMorgan Chase & Co slightly raised its commodity trading risk for the first time since last spring in the fourth quarter, even as it exits the physical commodities trading business, its quarterly results showed on Tuesday.
Value-at-Risk (VaR) in commodities at JPMorgan, the largest U.S. bank, rose to $15 million in the fourth quarter, from $13 million, unchanged during the previous two quarters, and up $1 million from the fourth quarter of 2012. VaR is the most that can be lost on 95 percent of trading days within a given period………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Andy Brunner, investment strategist with Morningstar OBSR, believes that the commodity sector will remain virtually friendless going into 2014. Oversupply has become an increasingly serious issue for a number of commodities, especially industrial metals and, for the two main metals, aluminium and copper, this is expected to undermine pricing through 2014.
The average year-end copper price forecast from the main investment houses we monitor is $6,750/tonne, some 5% below current spot price………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Investors should be shifting out of cyclical sectors and into natural resources and energy stocks that have lagged behind the market in the past couple of years, according to Charles Tan, investment companies analyst at Cantor Fitzgerald.
Tan says the rally in cyclicals that has dominated the past two years is nearing its conclusion and past economic cycles suggest commodities are about to rally hard next. Closed-ended funds sitting on large discounts are an excellent high-beta, high-yielding way to play this new trend, he explains………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

The “super cycle” that sent commodity prices climbing nearly four-fold over a 10-year period is reversing and raw materials are now in a structural bear market, according to Goldman Sachs.
In a report uploaded on Sunday last, the bank writes that expansion of US shale oil production will suppress energy prices, bolstering economic growth and leading to more QE tapering. As a result, emerging market currencies will depreciate further, encouraging growth in raw materials production in those countries………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

The Federal Reserve is asking for public input on whether to put restrictions on banks’ trading and warehousing of physical commodities amid lawmaker scrutiny of potential conflicts of interest and market manipulation.
The Fed’s request released today seeks comment on 24 questions, including some on the risks posed by bank ownership and trading of commodities such as oil, gas and aluminum by deposit-taking banks and the possible benefits of imposing additional capital standards………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Deutsche Bank AG (DBK) reduced its price forecasts for Brent and West Texas Intermediate crude this year as “rampant” increases in crude supply from U.S. shale resources will help create a glut of oil.
The German bank cut its 2014 forecast for Brent to $97.50 a barrel, from $106.25, and its estimate for WTI to $88.75 a barrel, from $98.75, according to an e-mailed report today. A recovery in Iranian oil exports, should sanctions be resolved, is a “non-negligible” risk for this year, the bank said………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

The history of energy in the 20th century was mainly about oil; the struggle to find oil, to secure its supply and bring it to market. So important has been oil and its many by-products in fuelling, lubricating and transforming economies and societies over the past 100 years that many have failed to notice trends that are already changing the shape of energy demand in the 21st century.
The developed world is using much less oil. Consumption in the OECD is in long-term decline: in 2012 the industrialised countries used the same amount of oil as they did in 1995; today’s European Union countries are back at consumption levels last seen in 1967………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Minister of Oil Bijan Namdar Zanganeh has said he did not expect any major change in oil price stressing if the oil price witnesses a dramatic fall then Iran will propose the OPEC to reduce production.
Referring to Iran as one of the co-founders of the Organization of Petroleum Exporting Countries, Zanganeh said the country can propose reduction of oil production as a way to deal with any possible instability in oil market………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

The shale genie is out of the bottle, Warren writes. US production in shale oil and gas offers lessons learned for countries desiring to exploit their own energy resources.
In oil markets, the year 2014 already looks to repeat 2013 with some important differences. Unpredictability in the commodities’ extraction and delivery, political risk, and policy risk may play a bigger role in 2014. The potential lifting of the crude oil export ban, which the industry and some lawmakers desire, may also stir up the market………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Most seasoned investors have some allocation to precious metals in their portfolios, most often gold. They believe that such an allocation protects them, as it is a hedge, or an insurance policy, against the proliferation of paper (fiat) money by the world’s largest central banks. Fiat money is not backed by real physical assets.
In concept, I agree with this sentiment. Most investors who invest in precious metals ETFs, such as the SPDR Gold Trust ETF, through the supposedly regulated stock exchanges (paper gold) believe that they actually have a hedge against future inflation. In what follows, I will try to explain why they may not, and why their investments in paper gold may just be speculation………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

A stronger U.S. dollar will weigh on gold values in 2014, BMO Capital Markets said in a research note on Tuesday, lowering its average gold forecast price to $1,250 an ounce from $1,275. BMO left its 2014 forecasts for silver and platinum unchanged. For 2015, it raised its forecasts for silver and palladium, but left gold and platinum unchanged.
The firm said it hiked its 2015 silver forecast “to reflect stronger (industrial) demand expectations from the U.S., as well as further cuts to mine supply forecasts from primary operations.” BMO upwardly revised its 2014 palladium forecast, saying mid- to long-term prices reflect a significant deficit market and it wants to retain a two times platinum to palladium ratio………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Goldcorp forecast that the company’s gold production will grow by 13-18 per cent this year to between three million and 3.5 million ounces. In a press release issued, the Mexican mining company with concessions across South America predicted gold production would increase by 50 per cent over the next two years along with a reduction in an all-in sustaining cost of 15-20 per cent during that period.
For 2014, the company estimates that all-in sustaining costs will decrease to between $950 and $1,000 per ounce, compared to $1,065 per ounce in 2013. “Decreasing costs are expected to be driven by increasing grades and by-product production, lower costs of production Goldcorp’s continued overall focus on cost efficiencies through the Operating for Excellence programme,” said Goldcorp………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Gold fell by 28% in 2013. That’s a huge reversal of a decade-plus trend. Between 2001 and 2012, gold managed positive gains every single year, a track record unmatched by any major asset. The precious metal went from a low of $255 in April 2001 to a high of $1,900 in September 2011, for a peak return of 745%.
Since then, gold has given back 35% from its $1,900 high, leading many to call the end of the gold bull market. But is it really finished? By looking at history and numerous indicators, I’ve found a different story. One that will jumpstart your 2014 profits………………………………………….Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

There remains a debate over whether gold and silver prices are ‘manipulated’, although perhaps the debate should actually be are the prices manipulated by central banks, governments and the major investment banks in an attempt to control (suppress) prices.
In truth, of course gold and silver markets are manipulated – as is virtually every other market on the planet. It’s really a question of how one defines manipulation. Short selling, or concerted buying, by big money, particularly through the use of High Frequency Trading, of any stock or commodity could be considered attempted manipulation and no-one doubts this goes on the whole time in virtually any market or stock one cares to name………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

The name of the legislation is a mouthful and its acronym captures the feeling of many European commodity players towards it. The EU’s Markets in Financial Instruments Directive II, or Mifid (say it fast), could finally be agreed in Strasbourg today, after nearly four years of negotiations.
Among other things, the rules will impose fixed position limits in European commodity markets, from agriculture to metals and energy. The aim is to prevent uncontrolled speculation by traders and hedge funds who through outsized derivative transactions may seek to corner the market for their own gain………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Six months after announcing plans to sell its physical commodities business, JPMorgan Chase is close to a final deal, according to a source familiar with the matter. The shortlist of bidders includes the private-equity firm Blackstone Group and the Australian bank Macquarie Group.
Final offers from Blackstone, Macquarie, and a Stamford, Conn. based investment company called Castleton Commodities International are due next week, the source said, and JPMorgan executives are hoping to make a final decision by the end of January………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

Canada’s manufacturing sector is happy about the weakening of the country’s currency, which presents “remarkable opportunities,” the government’s junior finance minister said on Tuesday, suggesting Ottawa is not upset by the slide.
“I think … the manufacturing sector (is) quite pleased that we have a dollar that the value is down from what it was a number of months ago,” Kevin Sorenson, secretary of state for finance, told reporters after giving a speech in Toronto………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

The Turkish currency sank to a record low against the euro, hitting the psychologically key level of three lira to the euro as the country remained embroiled in a deep political crisis.
The euro touched 3.0013 lira in early afternoon trading before closing at 2.9883 while the Turkish currency was at 2.1832 to the dollar. The Istanbul stock market also lost ground, sliding 0.02 percent to 68,072.50 points………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

The Korea Exchange (KRX) will host trading under South Korea’s emissions trading scheme, set to become the world’s second biggest when it launches on Jan. 1, 2015, the Ministry of Environment said Monday.
KRX, the nation’s only securities exchange, won the bid to service the nation’s carbon market ahead of the Korea Power Exchange, a senior government official told Reuters. The scheme will cap greenhouse gas emissions from over 400 of South Korea’s biggest polluters, mainly power generators and manufacturers………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

China and Japan should put aside their diplomatic differences and find common ground in protecting the environment, the Asian Development Bank said Monday.
Takehiko Nakao, the ADB’s president, said China could learn from Japan’s historical record in cleaning up its once heavily polluted environment. “The area of environment is a good area of cooperation between these two countries,” he said in Hong Kong, where he was visiting for the Asian Financial Forum………………………………………..Full Article: Source

Posted on 15 January 2014 by VRS |  Email |Print

European Union carbon permits rose the most in four weeks as policy makers in the bloc seek to finalize details of a plan to temporarily withhold supply in the world’s biggest greenhouse-gas market.
The December contract added 4.5 percent, the most since Dec. 17, to 4.91 euros ($6.72) a metric ton by the close on ICE Futures Europe in London after touching 4.97 euros. Trading volume jumped 60 percent from yesterday to 27.5 million tons, the most for a front-year contract since Dec. 10 and almost triple the three-month daily average………………………………………..Full Article: Source

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