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Commodities Briefing 04.Mar 2014

Posted on 04 March 2014 by VRS |  Email |Print

Gains in everything from gold to oil drove commodities to the highest since September as Ukraine’s turmoil boosted the appeal of haven assets and fueled concern that energy and agricultural supplies will be disrupted.
The Standard & Poor’s GSCI Spot Index (SPGSCI) of 24 raw materials climbed as much as 2.1 percent to 663.48 yesterday, the highest since Sept. 9, and settled at 660.22 in New York. Crude oil jumped as much as 2.6 percent, wheat surged 7 percent, while gold increased 2.5 percent. Corn and gasoline also rose………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Export commodity prices fell in February to their lowest level in almost four years. The Reserve Bank of Australia’s index of commodity prices was 1.3 per cent lower in foreign currency terms in the month.
Coking coal and iron ore were the most important contributors to the monthly fall and were partly offset by a rising gold price, the RBA said on Monday. The RBA said the prices of many base metals fell, while many rural commodities enjoyed price rises………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Russia supplies 30pc of Europe’s gas demand, raising fears of shortages or price spikes if the Ukraine conflict escalates to war. Oil and gas prices rose on Monday amid warnings that escalation of conflict between Russia and the Ukraine could have “severe” consequences for gas supplies across Europe.
Russia supplies 30pc of Europe’s gas demand, with about half of it flowing through the Ukraine, raising fears that further war could lead to shortages and significant price spikes………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Barclays raised its 2014 crude oil price forecasts on expected higher oil demand and investor interest levels, coupled with low inventory figures and high geopolitical risks. The bank raised its average WTI price forecast for 2014 to $99 per barrel from the earlier estimated $97, and its average 2014 Brent price rose to $106 per barrel from $105.
“Global supply trends have also been supportive recently,” the bank said, adding that the high level of OPEC outages have been “cushioning downward price pressure and supporting the economic viability of extra incremental US oil”………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Hedge funds increased their bullish bets on West Texas Intermediate oil to a record as rising flows of domestic crude to Gulf Coast refineries cut demand for more costly foreign grades.
Money managers bolstered net-long positions, or wagers on rising prices, on the U.S. benchmark by 2.2 percent in the week ended Feb. 25, Commodity Futures Trading Commission data show. The positions climbed to the highest level in CFTC data going back to 2006………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Oil production from OPEC dropped to its lowest level in 2 1/2 years, according to a Bloomberg survey. Production dropped by 11,000 barrels per day from January to February, down to an average of 29.877 million barrels per day. OPEC’s production hasn’t been that low since June 2011.
Much of the lost production was due to a decrease in production in Saudi Arabia, as well as the ongoing political conflict in Libya and Nigeria that has forced capacity offline. Libya’s oil production dropped by 120,000 bpd in February, marking the ninth out of eleven months in which oil production dropped. Its daily output now stands at 350,000 barrels — the country has the ability to produce around 1.5 million bpd, as it did before its civil war………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

The London gold fix, the benchmark used by miners, jewelers and central banks to value the metal, may have been manipulated for a decade by the banks setting it, researchers say.
Unusual trading patterns around 3 pm in London, when the so-called afternoon fix is set on a private conference call between five of the biggest gold dealers, are a sign of collusive behaviour and should be investigated, New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Albert Metz, a managing director at Moody’s Investors Service, wrote in a draft research paper………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

The gold price soared 2.5% on Monday on the back of safe haven buying as Russian President Vladimir Putin’s adventurism in Ukraine caused a diplomatic scramble in the West. On the Comex division of the New York Mercantile Exchange, gold futures for April delivery – the most active contract – last traded at $1,351.80 an ounce, up $30.20 from Friday’s close.
In brisk trading the metal hit a high of $1,355 earlier in the day, the best level since September and up 13% since the start of the year. While investors were scrambling for hard assets and crude oil, stock markets sold off around the world, with triple digit losses for US blue chips and European investors running for cover. The ruble tumbled and Moscow stocks plummeted………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

HSBC is keeping its 2014 average gold price forecast unchanged at $1,292 per ounce, the bank said, and sees the metal ranging between $1,120 and $1,390 this year.
Physical demand for jewellery, coins and bars from China and other emerging markets is now driving the price, it said in a note on Monday. And while ETF outflows have moderated, investment demand for gold remains tepid, it added. “The gold market is still finding its equilibrium after last year’s price plunge, which ended a bull run,” chief precious metals analyst James Steel said………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Output of gold in Australia, the world’s No. 2 producer, rose to its highest in a decade in 2013 as richer ores were mined to combat weak bullion prices, a survey released on Sunday showed.
The practice, known as high-grading, caused output to jump by 7 percent, or 18 tonnes, to 273 tonnes (8.8 million ounces) last year, worth about $9 billion and the highest since mid-2003, according to a tally by Melbourne-based consultant Surbition Associates. “The 2013 total gold output of 273 tonnes is the highest annual figure since 2003,” said Dr. Sandra Close, a Surbiton director………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Gold producers that lost almost half their market value are tempting back investors from Julius Baer Group Ltd. to Invesco Ltd. who are getting set for a rebound as Chinese demand for the metal soars.
“We expect a major turn in gold equities in the next two years,” said Herisau, Switzerland-based Erich Meier, who manages about $500 million in the Julius Baer Multipartner Gold Equity Fund and other funds. “Lower production costs and much less capital expenditure spending bode very well for the industry in the near future.”……………………………………….Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

While gold is the king monetary metal, silver will turn out to be the king precious metal performer. Currently, gold is stealing the show as the East (China) continues to consume more than total world gold production. However, silver will surprise the markets in the future as overwhelming demand will outstrip supply in a big way.
The key factor that will drive up the price (value) of silver much higher than gold in percentage terms, will be its affordability. As the price of gold heads back above $1,500 and silver to $30, an individual can buy a heck of a lot more silver than gold………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

The latest World Exploration Trends report from SNL Metals & Mining reveals that all company types cut their exploration activity sharply in 2013 in response to lower metals prices, uncertain demand, and poor market conditions. The result was a 29% decrease in estimated worldwide nonferrous metals exploration budgets compared with 2012.
SNL Metals & Mining’s 24th edition of Corporate Exploration Strategies (CES) shows that the mining industry’s total budget for nonferrous metals exploration was US $15.2 billion in 2013, significantly lower than the record US $21.5 billion total in 2012………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

While equities wilt as tensions in Ukraine escalate, gold’s safe-haven status is proving alluring with investors rushing to the yellow metal as a shelter-from-the-storm play. Gold futures climbed last month, helping some of the major exchange traded funds backed by holdings of physical gold to see their first month of inflows in over a year.
Last week saw the highest in flows across commodity ETPs in over a year. “Leading the trend were precious metal ETPs, which saw aggregate inflows of $206 million,” according to a research note by Nicholas Brooks, head of research and investment strategy, and Nitesh Shah associate director – research at ETF Securities………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Commodities continue to strengthen across the board. Over 60% of the commodity tracking ETFs below are now in a uptrend. Precious metals have gold, silver, and platinum all in Stage 1 bases while palladium is in a Stage 2 uptrend.
Soft commodities have been one of the weaker parts of the commodities complex, but check out what happened to some of the soft commodity tracking ETFs in February. The corn ETF had a massive increase in volume for the month and has formed a monthly swing low………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Despite a weak start, February saw a steady rally through the end of the month, sending the U.S. stock markets to another record high. The Dow Jones posted its best monthly percentage gain of 4% since January 2013 while the S&P 500 added 4.3%, representing the best month since October 2013.
This suggests a sharp reversal in investors’ mood, which was dampened by the turmoil in emerging markets in January and some recent sluggish economic indicators. One of the he biggest reason behind the rally is strong corporate earnings……………………………………….Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

In the FT’s Commodities Daily report last week, commodities editor Neil Hume made the observation that the commodities trading landscape is changing. He is referring specifically to the mass exit, wholly or in part, by many of the banks that have dominated the market over the last decade.
Declining client interest in a sector that no longer holds the bull narrative of the commodities supercycle is partly to blame, it seems, but growing attention from regulatory authorities is also cited as a threat to the freewheeling ability of the major players to make the money they once did. Goldman Sachs is sticking it out, and so too is Citi, both major players across multiple activities in the sector, but JPMorgan Chase, Morgan Stanley, Bank of America Merrill Lynch and Barclays are all pulling back exposure or exiting completely………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

The rouble began weakening after the Russian parliament approved Vladimir Putin’s request to deploy the military in Ukraine. As the rouble plunged and Russian stock markets crashed Monday amid fears of war, traders on the streets of Moscow were running out of foreign currency.
“There were enormous queues Monday after Putin announced there might be war with Ukraine,” said Benjamin, who was working at an exchange point and declined to give his surname. “We have no euros and only a few dollars.” The value of the Russian rouble, which has dropped steadily this year, fell sharply Monday to historic lows………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

The Bitcoin phenomenon has now reached the mainstream media where it met with a reception that ranged from sceptical to outright hostility. The recent volatility in the price of bitcoins and the issues surrounding Bitcoin-exchange Mt. Gox have led to additional negative publicity.
In my view, Bitcoin as a monetary concept is potentially a work of genius, and even if Bitcoin were to fail in its present incarnation – a scenario that I cannot exclude but that I consider exceedingly unlikely – the concept itself is too powerful to be ignored or even suppressed in the long run………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Next week, the EU’s fix to its flagging cap-and-trade program finally goes into effect. For years, the European Union’s Emissions Trading System (cap-and-trade) has been under attack because the supply versus demand for pollution permits was so out of whack.
The program is the EU’s signature and pioneering way to meet its climate change targets: 20% lower emissions from 1990 levels by 2020. Because emissions were down during the recession and permits were initially given out for free, there has been way more supply than demand. As a result, the cost to emit one ton of carbon dropped as low as EUR 2.41 last year, providing little incentive to lower emissions………………………………………..Full Article: Source

Posted on 04 March 2014 by VRS |  Email |Print

Opponents of the UK’s climate policies often argue that green measures are forcing the country to cut emissions faster than its competitors. In fact, new analysis says the UK isn’t acting alone.
At least 62 countries around the world are moving ahead with laws to reduce greenhouse gas emissions - and every major economic power has taken some kind of action. Two new papers lay out international progress on emissions legislation………………………………………..Full Article: Source

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