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Commodities Briefing 21.Jan 2014

Posted on 21 January 2014 by VRS |  Email |Print

The global economic recovery might be gaining steam, but Capital Economics is forecasting commodity prices are likely to remain flat in 2014. Commodity prices have struggled to post gains for the past three years, notes Julian Jessop, chief global economist at Capital Economic.
That has led some analysts to predict prices will rebound this year, but he is skeptical. “There is no fundamental reason why the underperformance of commodities relative to equities cannot be sustained for another year, given the prospects for supply,” he said………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Commodities saw their first positive weekly performance out of the last three weeks, not least helped by a recovery in all sectors apart from precious metals where some profit taking was seen after having outperformed the others during the early parts of January. The energy sector saw the biggest increase with gains in natural gas and WTI crude oil more than off-setting losses in gasoline.
Industrial metals came second, not least helped by strong gains in nickel and lead which helped offset a small loss in copper. The agriculture sector was mixed with soybeans and live cattle ensuring a general positive week despite another week of losses in coffee and sugar………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Saudi Oil Minister Ali al-Naimi said he viewed the increase in U.S. oil production as a new source of supply that will help stabilize oil markets. Oil from shale is providing a buffer against an unsteady Middle East market, but it’s not too early to consider what happens to markets after the revolution.
Naimi said during a meeting in Riyadh with U.S. Energy Secretary Ernest Moniz the increase in U.S. oil production was adding a level of stability to an international oil market unsettled by problems in the Middle East and North Africa………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Iran expects fellow Organisation of the Petroleum Exporting Countries (OPEC) members to cut back output and make room for rising oil supplies from Tehran when Western sanctions are lifted, Foreign Minister Mohammad Javad Zarif said.
Sanctions have cut Iran’s oil exports over the past 18 months, but Iran will soon be able to release more supply into world markets once a dispute over its nuclear work is resolved. The rigorous measures have cost it market share in the OPEC - mostly to Saudi Arabia, and neighbour Iraq………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Global energy giant BP recently released the fourth edition of its BP Energy Outlook 2035 which provides its view of the most likely developments in the global energy markets. That outlook is rather grim for OPEC.
Not only does it project U.S. oil imports will plunge by 75%, but it sees overall energy demand growth slowing down. For years America has been filling OPEC’s bank account as we’ve imported its oil………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Analysts are mixed as to whether shares of gold producers will outperform gold bullion prices in 2014.
Adam Patti, CEO of IndexIQ, a developer of exchange-traded funds, said that he is very bullish on the commodities sector; however, instead of looking at bullion, the Patti said the company is looking at producers………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

“How long can they keep on doing this without the gold price rising rapidly?” The short answer: As long as demand in the traditional markets is either lower or the same as supply. This has two aspects, first the potential for rising demand and second, the potential for falling supplies.
The main traditional market is London, where supposedly 90% of physical gold is traded. China buys there, ‘on the dips’ by importers taking bulk supplies and shipping them to Hong Kong (and Shanghai?) as stock for the distributors to the retail traded………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

One doesn’t know yet if it’s just stale bulls clutching at straws or if something else is afoot, but there certainly seems to be a renewed confidence in the precious metals markets arising during the opening weeks of the current year – an element that was mostly lacking throughout 2013.
Friday saw reports of big gold and silver flows into the major precious metals exchange traded funds; by all accounts Chinese gold demand remains extremely strong – indeed gold movements through the Shanghai Gold Exchange are running at near record levels - and gold and silver related stock indices are showing signs of revival. Whether this is a real sea change, or just another false dawn, remains to be seen………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

It’s always amazing to me how market sentiment can move from one extreme to the other, taking the herd with it. Chartology is the study of charting and investor psychology which, when you put two together, can give one an edge on where you are at any given point within a bear or bull market.
Back in the first week December of 2012 the sentiment was very bullish for the precious metals sector, especially the precious metals stocks. Gold and silver both had rebounded off of the bottom rails of their six point blue rectangles which had been building out since they both topped out in 2011………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Mining companies are extending massive cuts in exploration budgets for a second year, setting up the next price boom as China continues its relentless pursuit of metals and energy.
Exploration spending plunged by 30 percent or $10 billion last year, squeezing budgets to search for minerals and sustain supplies, according to MinEx Consulting Pty, whose clients include BHP Billiton Ltd., the world’s biggest miner………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

In the global hunt for return, you would be forgiven for thinking that investors around the world would be united in their appetite for low-cost, transparent solutions that generate income, particularly if they could pay lower management fees.
But a cursory glance at the global exchange traded funds market suggests that this is not the case. In the US, SPDR’s S&P 500 ETF has become the largest in the world, sometimes trading more than the value of the entire European equity market. There are 1,259 ETFs domiciled in the country and more than $1.6tn assets under management………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Exchange traded funds (ETFs) are the most talked about product trend in the wealth management industry. I’m not sure what comes second, but it’s not even close. An overwhelming majority of commentators and bloggers recommend indexing with ETFs, some to the exclusion of all other products and strategies.
For the most part, the halo hovering over ETFs is well deserved. In an industry that’s characterized by high fees and reluctant transparency, these pooled funds have low fees and are easily understandable………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Hedge funds ended their longest spree of bearish positioning on agricultural commodities on record as they took profits on short positions in grains, and hiked bullish bets on live cattle to a three-year high.
Managed money, a proxy for speculators, raised by more than 53,000 contracts its net long in futures and options in the main 13 US-traded agricultural commodities as of Tuesday, according to data from the Commodity Futures Trading Commission regulator………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Commodity market regulator FMC has given permanent approval to four bourses — MCX, NCDEX, NMCE and ACE — for launching trade in particular set of futures contracts, instead of giving permission on an yearly-basis.
This relaxation has been given to four national bourses subject to certain conditions and also depending upon volume and level of traders’ participation in a particular contract………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Financial markets offer a host of trading options for investors with different risk profiles. While one can opt for various market strategies, such as trading, arbitrage and long-term investing, an interesting, low-risk option is arbitrage.
It’s an opportunity which can help an investor benefit from the difference in the prices of an asset on various platforms. Arbitrage helps reduce the price disparity of an asset in different markets even as it helps boost the liquidity………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Bitcoin doesn’t meet the definition of a currency or even an electronic payment form in Finland, where the central bank has instead decided to categorize the software as a commodity.
“Considering the definition of an official currency as set out in law, it’s not that. It’s also not a payment instrument, because the law stipulates that a payment instrument must have an issuer responsible for its operation,” Paeivi Heikkinen, head of oversight at the Bank of Finland in Helsinki, said……………………………………….Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

As HMRC reviews the tax treatment of bitcoin, Rebecca Burn-Callander explores why the virtual currency is the most dangerous in the world. Bitcoin is a virtual currency, or “cryptocurrency”, that first appeared on the radar in 2009 after an anonymous creator “buried” 21 million coins online.
Coins can only be accessed, or “mined” by solving complex computing problems. As each block of coins gets mined, the problems become harder and harder, requiring increased computing grunt. This limits the supply of the coins………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

How long can Kiev hold the hryvna? As fastFT reports, the currency has edged down for nine straight days to 8.37 to the US dollar, its weakest since September 2009.
It looks like a managed devaluation, of sorts. The exchange rate is controlled by the central bank so its slide shouldn’t be seen as a direct reaction to the turmoil on Kiev’s streets. But monetary policy can be almost as haphazard as the government’s reaction to opposition protesters………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

The European Union will publish new long-term goals on Wednesday for curbing climate change, marking the start of a long process to fix them in EU law.
Apart from providing guidance for EU member states and their industries, the targets are significant in the context of global climate change talks, which Europe has sought to lead………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

European Union carbon prices are likely to more than double in value to reach 12-13 euros per tonne by the end of 2015, analysts at London-based consultancy Energy Aspects said in a research note on Monday.
The analysts see a gradual increase in prices this year from current levels of around 5.20 euros ($7.05) to between 8.5 and 10 euros as a European Commission plan looks to ease oversupply of carbon permits on the EU’s Emissions Trading Scheme (EU ETS)………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

Most of the surplus of European Union emissions permits built up since 2009 may already be held by the bloc’s electricity industry, cutting demand from power plants in carbon auctions, according to Nomisma Energia srl.
Industrial companies may have sold as many as 1.6 billion surplus EU permits out of the estimated 2 billion-metric-ton excess they accumulated by the end of 2012, according to Matteo Mazzoni, an analyst at Nomisma in Bologna, Italy. The consultant advises energy companies, governments and banks………………………………………..Full Article: Source

Posted on 21 January 2014 by VRS |  Email |Print

China’s new carbon markets are likely to be overallocated due to their heavy reliance on companies’ own emissions data, making the permits inefficient as drivers of investment in cleaner technologies, a Beijing-based green group said.
The world’s biggest emitter of planet-warming greenhouse gases has in recent months become the second biggest market after the European Union for trading of emission permits………………………………………..Full Article: Source

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