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Commodities Briefing 11.Feb 2014

Posted on 11 February 2014 by VRS |  Email |Print

New performance data shows a possible resurgence could happen this year. Commodities could be set to bounce back from a lacklustre 2013 after new fund flow and performance data hinted at a resurgence.
Brent crude oil, gold, copper and corn were among many areas of commodities that suffered double-digit losses in 2013 but a series of data and fund management commentary appears to be showing renewed support given the bombed out levels………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

A group of commodity firms came out against a new U.S. rule to curb market speculation in a letter on Monday, after banks successfully shot down an earlier version of the position limits rule in court.
The new rule by the Commodity Futures Trading Commission attracted well over 100 comment letters by industry participants after the agency - which regulates swaps and futures - launched it in November. “The Commission would inevitably hurt the efficient operations of U.S. derivatives markets,” if no changes were made, the Commodity Markets Council said, adding that the rule also exceeded the Congressional mandate………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

The global sugar market could tip into a small deficit in 2014/15 after four years of surpluses as producers struggle to cover their costs, but the stocks built up during the years of ample supply will be a brake on any recovery in prices.
Traders and analysts attending the February 8-11 Dubai Platts Kingsman sugar conference said sugar consumption was outpacing flat-to-weaker production into 2015. “Pretty much all producers are operating at below costs of production,” said Kona Haque, head of agricultural commodities research at Macquarie Bank………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Hedge funds raised bullish commodity bets to a 15-week high after a drought in Brazil threatened crops from coffee to soybeans. The net-long position across 18 U.S.-traded commodities climbed 15 percent to 900,330 futures and options in the week ended Feb. 4, the biggest gain since August, U.S. Commodity Futures Trading Commission data show.
Investors turned bullish on arabica coffee for the first time since July 2012 and soybean wagers rose by the most in almost three months. Brazil is the biggest exporter of both crops………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

US oil continued its recent strong run, climbing above $100 a barrel on Monday and hitting its highest level so far in 2014. Nymex March West Texas Intermediate rose as much as 0.5 per cent to $100.55 barrel, taking gains over the past month to 8 per cent.
“From a fundamental perspective, markets remain well supported from elevated winter demand in the US as well as North Sea and Libyan supply worries,” said JBC Energy, an oil consultancy………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Oil production from the Organization of the Petroleum Exporting Countries edged higher in January by 150,000 barrels per day to 29.87 million barrels per day, according to a Platts survey of OPEC and oil industry officials and analysts released Monday.
“The Libyan situation has a long way to go to play out but this is clearly good news,” said John Kingston, Platts global director of news, in a statement. Libyan production rose to 530,000 barrels a day in January from 250,000 barrels a day the month before. Production at Sharara field, which has capacity of 340,000 barrels a day, restarted at the beginning of January, Platts said………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

The Organisation of Petroleum Exporting Countries (OPEC) is not threatened by the U.S. shale oil production and the group can absorb higher output from its members, Iran, Libya and Iraq when supply outages are resolved, according to its Secretary-General Abdalla El-Badri.
“I welcome the tight oil of the United States,” El-Badri said at a recent Chatham House Middle East and North Africa Energy conference in London, Bloomberg quoted El-Badri as saying. He added: “Demand will grow and this will not affect OPEC in any way.”……………………………………….Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

The explosion of U.S. oil output won’t push prices much lower, according to analysts at RBC Capital Markets. They forecast West Texas Intermediate oil prices will trade largely between $92 and $94 this year and next, CNBC reports. March WTI settled at $99.88 Friday.
U.S. oil production has soared by almost 50 percent from its 2008 low, to 8 million barrels per day. Thanks to the shale boom, output could increase by at least 700,000 barrels per day each year through 2016, according to RBC, CNBC reports………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Gold futures extended their gains to a fourth-straight session on Monday to settle at the highest in more than two-and-a-half months as Chinese buyers returned to the market following the recent Lunar New Year holiday.
Gold traders also bid prices higher ahead of Tuesday’s testimony from Federal Reserve Chairwoman Janet Yellen on monetary policy………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Amid the disappointment on display after gold’s lacklustre, late-session performance on Friday, the outlook isn’t entirely poor for the yellow metal. In its daily commodities note, UBS points out that, while gold seems stuck in a range at the moment, the metal remains negatively correlated with risk.
It explains that the gold vs S&P 500 20-day rolling correlation is currently at -0.54, after recently reaching -0.63, its lowest level in more than three years………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

China’s output and consumption of gold rose to record levels last year, entrenching the country’s position as the world’s largest producer and an opportunistic buyer of bargain-price commodities.
The unprecedented level of Chinese purchases came as prices of the precious metal tumbled 28% to end the year at $1,205.99 an ounce, its lowest level since September 2010, according to data from investment service BullionVault………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Traders and experts speaking at the Global Commodity Conference in Dubai on Sunday said that 2014 may see some upside swings in gold prices with markets potentially remaining volatile through the year.
Speaking at a panel discussion, industry players and analysts said despite the higher import duties introduced by India, a key market for physical gold and large scale liquidation of paper gold (ETFs) in the West, gold demand has strong support from People’s Bank of China which is adding bullion as reserve and consumption demand from India………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Call it a theory of evolution for commodities. First, prices are set on long term contracts; then indexation and the spot market take over. Then derivatives emerge.
Since the 1970s and 1980s all the major raw materials from oil to coal to copper have followed this evolutionary path with one notable exception – iron ore………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

In the last five weeks copper prices are lower by 6% finding mild support at the 61.8% Fibonacci level just above $3.18. Expectations of a continued slowdown in China has weighed on futures. Since China’s demand accounts for approximately 40% of the world’s copper market, a contraction there will have a major influence on prices.
The latest evidence of this slowdown came in the smaller figures in the purchasers manages index indicating that manufacturing and service sectors are losing momentum………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

After the financial tsunami of 2008, the US economy started to recover under quantitative easing policies. Besides, a 4 trillion yuan (HK$5.12 trillion) stimulus package from Beijing plus rapid money supply growth created inflation expectations.
Smart investment banks started to expand commodity businesses and hired traders. Unfortunately, the commodity market did not perform as expected. Mainland exports, and hence manufacturing activities, did not grow and Chinese raw material demand declined………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Much of the attention being paid to the rally in gold-related exchange traded funds this year has been directed to mining ETFs. That is understandable because not only ETFs such as the Market Vectors Gold Miners ETF and the Market Vectors Junior Gold Miners ETF popular with investors, but those funds offer the opportunity for rapid capital appreciation.
Of course, it cannot be forgotten that there has NEVER been a year in which the miners have risen while gold futures have declined………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

The boom in exchange-traded funds in recent years can give retirement investment portfolios a new lease on life. ETFs offer similar diversification to mutual funds, but they trade like stocks, and come in assorted flavours that can be used to build a balanced portfolio. Investors can find ETFs that track equity markets by countries, regions and industry sectors, or focus only on dividend-paying stocks.
ETFs are compelling because of their lower fees compared with most mutual funds, but investors can buy them only through a discount or full-service broker. Some ETFs will charge even less than their peers, so keep an eye on the management expense ratio [MER]………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

ETP assets in the U.S. fell to $1.64 trillion as of January 31, 2014, due to outflows and market declines. Equity ETFs saw total assets decline by $60.9 billion while bond ETFs saw assets increase by $2.9 billion.
January was marked by a sharp rise in the VIX, indicating that investors expect increased equity market volatility in the next 30 days. Historically, poor market timing by retail investors during periods of uncertainty has resulted in lower long‐term returns………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

The frontrunner to buy JPMorgan’s (JPM) commodities trading division is reported to be Geneva-based trader Mercuria. Never heard of them? Don’t feel bad; few outside of the trading world probably have – but their rise has been the stuff of Hollywood.
According to Reuters, Mercuria was founded by Marco Dunand and Daniel Jaeggi, who both worked as executives at Goldman Sachs and then at trading house Sempra, which was later bought by JPMorgan from the Royal Bank of Scotland for some $2 billion in 2010………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

Ukraine’s imposition of capital controls has stemmed a slide in its currency, but has done little to calm fears that the country will default on its debt in the absence of international aid, as the political crisis deepens.
The hryvnia, which fell to a five-year low below 9 to the dollar last week, has rallied around 5 per cent since the central bank stepped in last Friday, imposing a cap on foreign currency purchases by individuals and a ban on buying foreign currency to invest overseas or to repay foreign debts early………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

In the past month, non-U.S. developed markets equity ETFs attracted $11.2 billion. Pan-European equity, which I’ve discussed before on the Blog , brought in $4 billion. During the same period, broad-based developed markets equity added $3.7 billion, and Japanese equity exposures attracted $4 billion.
We believe this trend will continue, and recently upgraded our view of Europe and Japan from neutral to overweight, as noted in BlackRock’s latest Investment Directions………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

The UK is lagging behind other European nations by not using the £60bn it is expected to collect from European carbon taxes over the next fifteen years to insulate homes, a report has concluded.
The report by campaign group Energy Bill Revolution, which includes contractors Mark Group, Gentoo and trade body the Federation of Master Builders, said redirecting carbon tax cash into insulating homes would deliver substantial improvements to the housing stock………………………………………..Full Article: Source

Posted on 11 February 2014 by VRS |  Email |Print

“It has been said that something as small as the flutter of a butterfly’s wings can ultimately cause a typhoon halfway around the world.” – Author unknown. The year 1952 was when “A Sound of Thunder” by Ray Bradbury was first published. The most re-published science fiction short story of all time told the story of a hunter, Eckels.
We follow Eckels as he travels back in time to a prehistoric safari and slays a Tyrannosaurus Rex, ignoring warnings of the possible catastrophic effects that changing the past could hold. Upon his return, Eckels notices a variety of changes around him and he finds a crushed butterfly on the bottom of his boot, the apparent cause of these transformations………………………………………..Full Article: Source

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