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Commodities Briefing 14.Feb 2014

Posted on 14 February 2014 by VRS |  Email |Print

Emerging market unease from countries with high deficits in early 2014 could have knock-on impacts on natural resource markets, according to Goldman Sachs Group Inc research.
Gold, platinum, copper, iron and soybean markets could all be rattled by unease within “vulnerable” countries, which the investment bank defined as those with problems managing trade deficits………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

When the Quantitative Easing began with the advent of the financial crisis of 2008, little did someone think that it would have in store yet another round of financial issues. Yes, coupled with easing which saw a deluge of Dollars hitting the markets, the banks in US and Europe brought down the interest rates to the position that it was in effect made to be practically irrelevant. The term, ‘near-zero interest rates’ represented the situation with absolute authenticity.
But after six years of a roller coaster ride, US began to see the return of growth. Easing was tapered and it currently stands at a monthly purchasing of $65 billion in bonds and mortgage backed securities by Fed………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Societe Generale’s Cross Asset Research published their monthly Commodity Compass on Tuesday of this week. SG analyst Mark Keenan and Head of Commodity Research Michael Haigh suggest that the current turmoil in emerging markets is not likely to influence commodities price unduly.
They argue that commodity prices are in general tracking economic growth, and as long as China’s economy stays on track, commodity prices should be stable with an upward bias in 2014………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Stronger-than-expected demand has drained oil inventories to the lowest level since 2008, tightening the market and defying predictions of a glut, the West’s energy watchdog said on Thursday.
The International Energy Agency (IEA) said oil inventories in the developed world plummeted by 1.5 million barrels per day (bpd) in the last three months of 2013, the steepest quarterly decline since 1999………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Oil inventories in advanced economies tumbled in the fourth quarter by the most since 1999 because of “surprising robustness” of demand in the U.S. and other developed nations, the International Energy Agency said.
The IEA, a Paris-based adviser to oil-consuming nations, also boosted forecasts for global fuel demand this year and the amount of crude that will be required from the Organization of Petroleum Exporting Countries………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Opec will need to sustain production at its current level of almost 30m barrels a day if badly depleted oil inventories in the developed world are to be rebuilt, according to the International Energy Agency.
In its widely followed monthly report, the west’s energy watchdog said stronger than expected demand in the US and other industrialised nations had drained oil stocks to the lowest level in five years, tightening the market and supporting prices………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Opec has announced that global energy demand is growing faster than predicted, according to Reuters. Opec are now forecasting that global demand will increase by 1.09 million barrels per day (bpd) in 2014, up around 40,000 bpd from previous estimates.
Opec has become the second major forecaster to revise its estimates this week, after the US’s Energy Information Administration revised its estimates for 2014 by a similar amount………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Unplanned interruptions in the global oil supply chain last year were about 30 percent higher than in 2013, the U.S. Energy Department said. Much of the problem was blamed on Libya, though sputtering from Kazakhstan’s giant Kashagan field played a factor as well. This year could be North America’s to lead in terms of secure production, but the story for 2014 is as certain as market predictions themselves.
The U.S. Energy Information Administration said crude oil supply disruptions from OPEC averaged 1.8 million barrels per day, but actually hit the 2.6 million bpd by the end of the year because of on-again off-again supplies from Libya………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

The benefits of shale oil are bigger than many Americans realise. Policy has yet to catch up. Until the early 1970s, America was the world’s largest oil producer and the Texas Railroad Commission stabilised world prices by dictating how much the state’s producers could pump.
When Arab states slapped an oil embargo on Israel’s Western allies after the six-day war in 1967, Texas cushioned the blow by allowing a massive production boost………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

How dramatically things can change in a decade. We’ve talked about how volatile resources can be, and 2013’s top commodity performer is an excellent example. Per our latest Periodic Table of Commodities Returns, natural gas increased the most in 2013.
However, the commodity is still the worst performer over the past 10 years. You can see several times when gas fell toward the bottom: in 2006, 2009, 2010 and 2011. However, by 2012, gas climbed to the top half of the chart, clamoring for the top spot in 2013………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

In a stellar year-to-date showing, gold prices in 2014 are up 7.6% - compared to the Dow Jones Industrial Average’s 3.9% drop. Gold set a new closing high record for 2014 on Wednesday when it added $5.30 to hit $1,295.20 an ounce.
Pushing gold to a near three-month high this week was testimony from new Federal Reserve Chair Janet Yellen. Yellen made it clear she isn’t about to make any abrupt changes to the central bank’s pledge of a measured tapering of bond purchases. Additionally, Yellen said interest rates will remain near zero for a good while………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Gold futures rose above $1,300 per troy ounce Thursday, breaching the round-number level for the first time since early November. And some traders say the precious metal still has a good deal of upside potential left.
“When you look at gold, it’s been all about the technicals,” said Brian Stutland of the Stutland Volatility Group. “As soon as we broke above $1,275 basically, it’s been a straight push to $1,300. I think it continues—I’m looking around that $1,320, $1,340 level where gold could probably trade. The technical are just too strong behind it.”……………………………………….Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

With the games in Sochi underway, people around the world are tuned in to watch the competition heat up in their favorite cold-weather sports, including cross-country skiing, snowboarding and hockey. Back in Washington, we watched Ben Bernanke officially “pass the puck” to Janet Yellen, who became the new chairman of the Federal Reserve’s Board of Governors last week.
Imagine if the puck were the Fed’s assets—that would mean the disk is five times bigger today than when Bernanke became chairman in 2006. At the beginning of his reign, the Fed’s assets were $834.6 billion. Now, the balance sheet has grown to $4.1 trillion, a previously inconceivable size………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

If electrons are the lifeblood of a modern economy, copper makes up its blood vessels. In cables, wires, and contacts, copper is at the core of the electrical distribution system, from power stations to delicate electronics.
As consumption has risen exponentially—reaching 17 million metric tons in 2012—miners have met the world’s demand for 10,000 years. But that might soon change. A group of resource specialists has taken the first shot at projecting how much more copper miners will wring from the planet………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Aluminum was a wholesale market between large producers and large industrial customers such as Boeing or Procter & Gamble. Contracts were arranged bilaterally, the spot market was small, and the London Metals Exchange (LME) did not even list forwards on the metal until 1978.
But if we have learned anything since the late 1970s, it’s that there is no aspect of human existence that cannot be digitized or turned into some aspect of financial engineering or both………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

European stocks closed higher on Wednesday as investors around the globe cheered a combination of U.S. Federal Reserve Chair Janet Yellen’s reassurance of supportive monetary policy, strong Chinese export data and a U.S. debt deal in Congress. U.S. stocks were mixed on Wednesday, with Procter & Gamble’s reduced earnings outlook weighing on the Dow industrials and the S&P little changed after its largest four-day rise in more than a year.
Traders seemed to refocus on commodities after the strong Chinese import and export data. Gold continues to climb as Chinese buyers grab up as much gold as they can………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

After a lackluster 2013, commodities across the board are gaining traction and have recently caught investor interest. Some commodities like natural gas, gold, silver, cocoa and coffee have been on a tear posting incredible gains from a year-to-date look, while others like wheat, tin, aluminum and copper have seen extreme weakness.
In fact, sugar has been one of the worst performing products, not only in the soft category, but also in the broad commodity space as well. Futures for raw sugar fell to the lowest level in more than three and half years largely thanks to record harvest from three big producers like Brazil, India and Thailand………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Picking from the multitude of sector ETFs is a daunting task. In any given sector there may be as many as 45 different ETFs, and there are at least 183 ETFs across all sectors.
Why are there so many ETFs? The answer is: because ETF providers are making lots of money selling them. The number of ETFs has little to do with serving investors’ best interests. Below are three red flags investors can use to avoid the worst ETFs:……………………………………….Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

News that Kenya will host a regional commodities exchange could not have come at a better time. The face of Kenya in the recent days has been one of extreme want. Tens of thousands of Kenyans are at risk of starvation.
Already, there have been the sordid tales of affected families eating poisonous fruits and other dehumanising cocktails — including the canine meal that should never have been………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

The combined turnover of commodity exchanges declined by 55 per cent to Rs. 6.56 lakh crore in January due to a sharp fall in trading volumes in bullion and metals, data from the Forward Markets Commission (FMC) showed.
These exchanges had clocked a business of Rs. 14.55 lakh crore in the corresponding month last year, teh data showed. According to the FMC, maximum business of Rs. 5.18 lakh crore was generated by MCX, followed by NCDEX at Rs. 98,881 crore; NMCE - Rs. 18,294 crore; UCX - 6,318 crore; ICEX - Rs. 5,878 crore, and ACE at Rs. 3,676 crore during last month………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

With the commodities derivatives regulator, Forward Markets Commission (FMC), now under the finance ministry, rules governing the commodities markets are being converged with the securities derivatives’, wherever there are similarities.
One is to disallow commodity exchanges from having different transaction charges for different brokers. In securities, irrespective of volumes, the charges are similar for all brokers. However, the FMC has allowed exchanges to have different transaction charges for deliverable commodities………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Chancellor George Osborne said the pound was not an asset to be divided up, during a speech in Edinburgh. The Treasury’s top official has “strongly” advised against a currency union with an independent Scotland.
Sir Nicholas Macpherson said such an arrangement was “fraught with difficulty”. His recommendations to the chancellor were published as the three main Westminster parties ruled out a currency union………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

Concerns about high debt and an overvalued currency are sucking gold imports into China, according to a new report from Lombard Street Research. It adds that the authorities may possibly be moving in the direction of using gold in a plan to make the yuan an international currency.
Beijing has said that it does not view gold as a useful asset for diversifying the country’s $3.8 trillion worth of foreign exchange reserves, according to media reports………………………………………..Full Article: Source

Posted on 14 February 2014 by VRS |  Email |Print

The commission’s 2030 climate and energy package ‘underscores’ the value of carbon capture and storage (CCS), but measures must be taken to make it financially viable, says Graeme Sweeney.
The European commission and European parliament have invested great efforts in driving the debate around climate change goals for 2030. We now have a framework proposal that provides a strong foundation for achieving these goals and developing a competitive low-carbon economy………………………………………..Full Article: Source

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