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Commodities Briefing 12.Mar 2014

Posted on 12 March 2014 by VRS |  Email |Print

Commodities investors and farmers are on alert after the third official warning in a week of an El Niño weather phenomenon emerging that could affect food and energy markets already reeling from extreme weather in many parts of the world.
El Niño refers to a warming of Pacific sea surface temperatures that occurs naturally every few years and can trigger drought in some parts of the world and floods in others, depending on its strength………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Asian markets were set for another tense session on Tuesday as worries about China’s economy continue to reverberate, taking a particularly hard toll on commodity prices.
February’s shock fall in exports from the Asian behemoth has cast a shadow over the global outlook, even as analysts blamed much of the drop on the Lunar New Year holidays. Oil and industrial commodities bore the brunt of the sell-off. Copper futures shed almost 2 percent on Monday, while spot prices for iron ore tumbled over 8 percent………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

U.S. stocks declined on Tuesday, with the S&P 500 retreating from its record, as news from China hit commodity prices, concern about Ukraine lingered and investors awaited signals on the direction of the economy.
“Equities are in a holding pattern around all-time highs, and are likely to be so for the next couple of weeks as investors wait for some clarity on the economy. We need another round of economic readings to get a better measure on the pace of economic growth,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Commodities markets have been major underdogs relative to record-breaking U.S. equities for much of the past six years. But the tides are now turning, S&P Dow’s Vice President Jodie Gunzberg says.
Amid supply shocks around the globe, tapering of quantitative easing in the U.S. and a rising-interest-rate outlook, commodities from corn to hogs to oil seem bound to shine in 2014, leaving equities in their shadows, Gunzberg said………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Allan von Mehren, Chief Analyst at Danske Bank notes that most action has taken place in commodity markets following on the surface very weak trade data out of China. “Iron ore showed the sharpest decline yesterday in more than four years and reached the lowest level since October 2012. LME metal price index also plunged, hitting a two and a half year low.”
“The drop in commodity prices has taken its toll on mining stocks such as Rio Tinto, Vale and BHP Billiton.”……………………………………….Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

The expansion in volumes of oil and gas produced by hydraulic fracturing is taking experts and politicians by surprise, with profound consequences for US geopolitics, and even Europe’s reliance on Russian gas.
Thanks to the success in pushing the frontiers of hydraulic fracturing, or “fracking”, to access reserves of oil trapped in shale formations, notably here in Texas and North Dakota, America is poised to displace Saudi Arabia as the world’s top producer. With that could come a hobbling of Opec and unforeseen shifts in US foreign policy………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

OPEC heavyweight Saudi Arabia produced 9.849 million barrels per day (mbd) of crude oil in February, up from 9.767 mbd in January, an industry source familiar with the matter said on Tuesday.
The world’s largest oil exporter supplied 9.899 mbd in February to the market, down from 9.916 million bpd in January. Supply to market may differ from production depending on the movement of barrels in and out of storage………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

After a strong run-up in gold prices this year, analysts at CIBC World Markets are recommending investors take money off the table. The precious metal has spiked 10% this year, following a crushing 28% decline last year that put an end to a 12-year bull market. CIBC last year called for gold prices to reach US$1,350 an ounce in 2014, a level they quickly achieved last month.
But CIBC said “the returns no longer justify the risk” now that gold has hit that price point………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Gold is coming back with a vengeance, experiencing a clear recovery and grabbing the attention of market cynics. Analysts from Noruma Securities even upgraded its outlook for gold, expecting bullion to climb over the next three years, according to Barron’s.
Nomura analysts attribute their increased gold forecast to real interest rates that “don’t seem to be heading anywhere at the moment.” In addition, there appears to be “long-term demand support from Asian nominal income growth, an evolving post-QE macroeconomic environment and lower disinvestment potential.”……………………………………….Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Is the golden run about to come to an end? Just two months into the new calendar year and the price of gold has staged a surprising recovery, rising over 11% to around US$1,342 per ounce. However suggestions of lower demand from China and positive economic data from the U.S. could see the price for the metal flatten out, and even fall throughout 2014 analysts say.
While there is always a big range of opinions on the future of gold, one widely held view is that a recovery in the U.S economy will speed up later in 2014, dissuading investors from gold. There have also been fears this week that poor Chinese economic growth and stronger than expected U.S. employment figures could speed up falls in the gold price………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Does one of the great mysteries of the universe shed light on allegations surrounding the Gold Fix? Or is it the other way around? When Werner Heisenberg looked at his brand new quantum formulae in 1927, he noticed something weird.
The world of very small spaces and particles is ruled by matrix mechanics, but as you may remember from your school mathematics, in matrix multiplication (A * B) * C is not the same as A * (B * C). What Heisenberg saw was that because of the difference in the two matrix products there would always be uncertainty as to key physical properties of a particle. His discovery forbids a particle from having both precisely defined motion and precisely defined position at the same time………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

China Gold Association says gold demand may fall 17%, to 250 metric tons, in the first quarter of 2014, versus 300 tons in the first quarter of 2013, HSBC says, citing a Bloomberg News story. In the Bloomberg story, Zhang Yongtao, CGA’s vice chairman, said 2014 annual demand is forecast to be unchanged at 1,176 tons versus 2013, and 2014 annual mine supply is expected to remain mostly unchanged at 428 tons versus 2013, HSBC says.
“A simple math calculation based on Mr. Zhang’s forecast would indicate that China’s gold demand should be stronger for the rest of 2014 after 1Q, when compared to the same period in 2013. This may indicate that China’s strong appetite for gold is likely to be sustained well into 2014, in our view,” HSBC adds………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

The biggest growth in trading activity of gold future contracts in the last five years has come from China, according to the latest information from the Futures Industry Association.
Monday evening the FIA released its annual report on global trends in the trading of futures and options; Gold futures on the Shanghai Futures Exchange saw the biggest increase volume in the last five years as 20.09 million contracts were traded in 2013, an increase of 416% from the 3.9 million contracts traded in 2008………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

So far this year gold has probably been the best performing asset class of all having risen around 12% to date. But, within the overall precious metals sector, silver has only moved up a seemingly disappointing 7%, platinum 8% and palladium perhaps an even more disappointing 5% - despite analysts almost being unanimous in their views that the platinum group metals (pgms) in particular will outperform given the ongoing industrial action in South Africa, the world’s largest producer.
The South African situation is potentially severely disrupting supplies, while the global economy is seen as being in a recovery phase, which should indeed be a positive for the pgms given that within the Western recovery – and also with ongoing Chinese sales increasing – the automobile sector seems to be doing particularly well and that is the principal user of pgms, especially palladium………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Advances in automotive battery technology are making graphite the next big thing for commodity investors. Graphite is the critical material for the new generation of batteries, even more than lithium or rare earths.
Focus Graphite President and Chief Operating Officer Don Baxter explains the eyebrow-raising supply/demand picture of the graphite industry, the attractive financials of the Lac Knife project and the significance of the graphite industry’s first offtake agreement, including what it means to investors looking to understand an unfamiliar but well-positioned market………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

All manner of sins can be covered up by a bull market: exorbitant salaries, poor returns, bad projects, to name but a few. But, as has been clearly shown over the last few years, we are definitely no longer in a bull market and, some of the sins of the past have come back to haunt mining companies.
Jeremy Wrathall, head of Investec’s Global Natural Resources team, explains that while there has, indeed, been some optimism creeping into the market of late, there is no reason to be wildly optimistic that things are going to return to the halcyon days before 2007………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

After an array of sour performances last year, a plethora of commodities are surging in 2014. From gold and other precious metals to coffee to corn, many commodities have given investors reasons to smile this year.
For the indecisive investor, the GreenHaven Continuous Commodity Index Fund offers equal weight exposure to 17 commodities. The $336 million ETF, which carries an annual expense ratio of 0.85%, breaks its allocations down as follows: Three energy commodities, four precious metals, four soft commodities and six agriculture commodities………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Platinum holdings in physically backed exchange-traded funds have hit a record high after fresh inflows into funds listed in London and Johannesburg, and are set to rise further as a strike in major producer South Africa grinds on.
The world’s largest platinum-backed ETF, NewPlat ETF reported an inflow of around 4,000 ounces on Monday, taking its holdings to a near seven-week high at 908,811 ounces………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Institutional investors and speculators are extending the rally in gold exchange traded funds, with bullion experiencing its best start in six years, as the standoff on the Crimea peninsula fuels safe-haven demand. The SPDR Gold Shares has gained 1.7% since Russian troops entered Ukraine at the start of the month. The ETF is now up 11.2% year-to-date.
Hedge funds and other speculators are increasing bets on gold futures for the fourth week and are now the most bullish since December 2012, with gold prices rising about 12% to a high of $1,350 per ounce this year, Bloomberg reports………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

The yen gained for a second day versus the dollar on demand for safety as stocks and commodities fell amid concern about instability in China’s financial system.
The Japanese currency advanced versus all of its 16 major peers as copper plunged to the lowest level since 2010. China had its first onshore bond default last week and over the weekend reported its biggest trade deficit in two years. Yields on Treasury 10-year notes fell for a second day. The South African rand tumbled as business confidence in the country unexpectedly declined………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Carbomap, an environmental survey company, has completed a three-dimensional carbon map of a forested region in Costa Rica. The map reveals that the actual carbon content is 22 percent higher than published values using traditional satellite methods of measuring forest carbon.
Estimated using approved methodologies by the United Nations Framework Convention on Climate Change (UNFCCC), the global forest carbon stocks are understood to contain 638 billion tonnes of carbon, which may be valued at more than $3.8 trillion (using an average price of $6 per tonne of carbon)………………………………………..Full Article: Source

Posted on 12 March 2014 by VRS |  Email |Print

Global growth is likely to remain sluggish as a slowdown in the developing world undercuts gains in Europe and the United States, a leading international economic body warned Tuesday.
The Organization for Economic Cooperation and Development said one-off factors like the harsh winter weather in North America and the U.S. government shutdown mean “growth for the major advanced economies in the first half of 2014 will be somewhat slower than in the second half of 2013.”……………………………………….Full Article: Source

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