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Commodities Briefing 16.Jan 2014

Posted on 16 January 2014 by VRS |  Email |Print

Commodity fund managers face an uphill struggle persuading investors to return to the unloved sector after an abject year in which just two actively managed funds in the 122-strong Lipper Global Commodity group made money.
Although a pick-up in economic growth is expected to boost demand this year, some commodities will remain hobbled by oversupply, making 2014 a crunch year for managers who need to convince investors the asset class can deliver………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Numerous factors suggest commodity prices are poised for a cyclical recovery this year. First, commodities have underperformed in the past two years, restoring value to most. Also, artificial and temporary distortions keeping prices overextended have recently been eliminated.
The haven premium embedded in precious metals’ prices since the crisis of 2008 was dissolved in the past year, as demonstrated by the price of gold collapsing from almost $1,900 to about $1,200………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

2014 could prove to be a fairly positive year for commodities according to Barclays, with global growth expected to move higher and the pace of commodity supply growth likely to ease. Tapering is unlikely to depress commodity prices, especially if expectations of stronger US growth come to fruition. The exceptions to this are gold and silver prices, which are likely to head lower as tail risks fade. On a relative sectoral basis, Barclays view base metals more positively vis-á-vis precious metals.
Supply risks are likely to dominate metals markets with Indonesia’s ore export ban to be implemented from 12 January. Nickel is likely to be the most vulnerable, and if the ban remains in place for long it will create a supply shock. High nickel stocks will be a finite buffer, but we think that nickel looks undervalued………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

A few years ago, I used to joke that commodities were the new tech. That was back when energy, metals and agricultural products all seemed like they could only head higher. It was a Jim Rogers market, to be sure.
In the past couple of years, many of those hard assets have fallen in value for a variety of reasons, including a slowdown in China. And the conventional stock market was the place to be. But will commodities get their turn to shine again?……………………………………….Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

OPEC spare capacity set to reach levels last seen in the depths of the financial crisis in 2009, analysts say. One piece of the jigsaw puzzle is missing to complete the deflation landscape across the West: a slide in oil prices. This is becoming more likely each month.
Turmoil across the Middle East and parts of Africa has choked supply over the past two years, keeping Brent crude near $110 a barrel despite a broader commodity slump. Cotton and corn prices have halved, as has the UBS index of industrial metals. Such anomalies rarely last………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Despite ongoing and unpredictable turmoil in the Middle East, analysts say oil is heading lower in 2014. Over the last several weeks, crude has been whipsawed by conflicting expectations out of the Middle East: Iran is seen as potentially increasing exports as it reaches a deal that curbs its nuclear ambitions, but at the same time, instability in Iraq and Libya have knocked more than 1 million barrels per day (bpd) of oil offline.
Regardless of whether violence in the Middle East takes a toll on supply, analysts say structural factors argue against crude moving higher from current levels. With or without the addition of Iranian supply, production elsewhere is expected to remain fairly consistent………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Reports are emerging that Iran and Russia are in talks about a potential $1.5 billion oil-for-goods swap that could boost Iranian oil exports, prompting harsh responses from Washington, which says such a deal could trigger new US sanctions.
So far, talks are progressing to the point that Russia could purchase up to 500,000 barrels a day of Iranian oil in exchange for Russian equipment and goods, according to Reuters………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

China’s implied oil demand will grow quicker this year at around 4 percent as new refineries start up, the country’s top oil firm forecast, after slowing economic growth likely led to its weakest rise in five years in 2013.
China, the world’s second-largest oil user and a key factor in global prices , has driven oil demand growth for most of the past decade and its slowing consumption has helped rein in prices despite a plunge in exports from OPEC member Iran due to sanctions and prolonged outages in Libya………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Global demand for energy will grow at a slower pace over the next two decades, a report from the oil giant BP predicts. BP’s Energy Outlook says energy demand will rise by 41% between now and 2035 - less than the 55% growth seen over the past 23 years.
It said increased fuel efficiency in developed economies was behind the predicted slowdown. But demand from emerging economies is expected to continue to rise strongly………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

New figures show investment fell to $254bn in 2013, with a drop in Europe of 41%. Global investment in clean energy fell for the second year in a row to $254bn last year, with green investment in Europe crashing by 41%, new figures showed on Wednesday.
The drop casts a pall over a high-profile investor summit at the United Nations on Wednesday. The summit, organised by the Ceres investor network, was supposed to build momentum for the shift to a clean energy economy – a transformation requiring global investment of some $1 trillion a year by 2030………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Chinese buyers have been quietly supporting bullion prices through their most recent rally, snapping up gold ahead of the Lunar New Year holiday, when the precious metal is given by family and friends as gifts.
The world’s biggest gold buyers are showing a willingness to pay more than investors elsewhere to get their hands on the commodity, which is coming off its worst year in decades, with prices having slumped nearly a third, snapping a decadelong bull run………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Goldcorp forecast 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 costs of 15-20 per cent during that period………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Sugar and coffee may be out of vogue (very bad for you), gold is too flash (though some of us still like it), and, thanks to the glimmers of a global industrial recovery, we’re back to basics when it comes to industrial metals.
Recent data from the U.S. Commodity Futures Trading Commission showed net long commodity positions falling by 11 percent in the week to January 7. But while investors think we’ll see softer prices for sugar, coffee, and corn, they have become more bullish on gold, with net long positions in the shiny metal rising 18 percent………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Platinum recently entered into its annual period of seasonal strength. What are the prospects this year? According to EquityClock.com, platinum has a period of seasonal strength from Dec. 23 to Feb. 21. The trade has been profitable in 30 of the past 40 periods. Average return per period was 8.7 per cent. The commodity has outperformed the S&P 500 by an average of 6.5 per cent since 1973.
Seasonality in platinum is primarily influenced by demand in the auto and jewelry industries. The auto industry consumes about 37 per cent of the annual production and jewelry takes another 31 per cent. Platinum is also used in electronic products, anti-cancer drugs, turbine engines, and fuel cells. ……………………………………….Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

US$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 US$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 US$10 billion in January 2014” according to Deborah Fuhr, Managing Partner at ETFGI………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Exchange traded fund providers have kicked off the New Year by rolling out a batch of new funds onto the stock market. Van Eck Global introduced Market Vectors Short High-Yield Municipal Index ETF (SHYD) Tuesday. It holds 43 noninvestment grade, tax-free municipal bonds maturing in one to 10 years.
During a time of rising interest rates, it delivers a yield greater than investment-grade bonds but with half the interest-rate risk, said Jim Colby, senior municipal strategist at Van Eck Global………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Senate Democrats ratcheted up their criticism of big banks’ activities in the physical commodities markets Wednesday, pressuring the Federal Reserve to act quickly in an ongoing review of the banks’ ability to trade in materials such as oil and aluminum.
Several senators pressed a senior Fed official for more decisive action in the wake of the central bank’s decision Tuesday to seek input on—rather than impose—possible limitations for banks that trade, store, and sell commodities………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

EU lawmakers reached a breakthrough on new rules to crack down on commodity speculation on Tuesday night (14 January) in Strasbourg. Under the so-called Market in Financial Instruments directive (MiFiD) that will regulate financial markets across the bloc, taking financial positions in commodity derivatives will be limited, in a bid to prevent market distortions and abuse.
The new bill is also the first EU law to establish rules for mathematical algorithms used in high frequency trading………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

The drudgery of paperwork is the highlight of few commodity traders’ days. But failure to complete the task can carry a hefty price tag. Two Brazil-based agricultural companies tied to Japan’s Mitsui & Co., Ltd., have agreed to pay $500,000 for failing to submit weekly reports showing their cotton purchases and sales, the U.S. Commodity Futures Trading Commission said in a release on Wednesday.
Multigrain SA and Agricola Xingu SA were not immediately available for comment………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Macquarie Group has been urged to maintain its hardline approach to acquisitions amid speculation the investment bank is eyeing a bid of up to $US2 billion ($2.24bn) for parts of JPMorgan’s physical commodities business.
As banks globally adjust to stricter regulation, CNBC reported JPMorgan was close to selling the commodities unit and interest was from Macquarie, private equity giant Blackstone and US investment company Castleton Commodities International………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

New rules would help decrease price volatility and inflation of staple foods and other commodities, says British MEP. The European Union has voted through rules to limit the ability of banks and hedge funds to bet on food prices.
Arlene McCarthy, a Labour MEP for the north-west, said the new rules, known as Mifid, would “curb speculation and help decrease price volatility and inflation” which had a “devastating impact on poor and food dependent countries”………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

Yes, hard for most people who have ONLY lived through the markets with a strong commodity foundation to believe that the Canadian Dollar was once trading at 1.60/USD. Hockey players sure remember, and they once were paid a premium to play north of the border despite this being the land of hockey royalty (in my view).
Today the Canadian Dollar is off another 50bps and has weakened against the US Dollar almost “3 big figures” since the start of the year………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

The Korea Exchange (KRX), the country’s stock market operator, said Wednesday that it aims to run the country’s first carbon trading market starting in 2015 with some 500 firms expected to join.
The KRX, designated as the sole operator of the carbon trading market, will adopt systems for emissions trading that are similar to the current stock market trading schemes. The regular trading hours will run from 10 a.m. to 12 p.m., the bourse operator said. The country has been joining efforts to reduce greenhouse gases largely responsible for global warming………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

The value of the global carbon market will reach EUR 46bn in 2014, according to Bloomberg New Energy Finance forecasts. This will be up 15% from last year but leave it well below the historical high of EUR 98bn in 2011.
The primary driver of this year’s increase will be the plan to postpone, or ‘backload’, auctions of European Union carbon allowances that would otherwise have taken place in 2014-16, into the later years of the decade. Backloading was approved by the European Parliament and Council late last year………………………………………..Full Article: Source

Posted on 16 January 2014 by VRS |  Email |Print

European carbon prices were on course to end a three-day bull-run on Wednesday as traders sold permits shortly after prices broke above 5 euros for only the second time this year.
By 1605 GMT, the December 2014 EU Allowance was down 6 cents at 4.85 euros ($6.64). The benchmark carbon contract fell back from a morning peak of 5.04 euros, its highest since Dec. 30, which marked an 11-per cent gain from peak-to-trough since Friday………………………………………..Full Article: Source

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