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Commodities Briefing 14.Mar 2014

Posted on 14 March 2014 by VRS |  Email |Print

Rio Tinto chief Sam Walsh says the market should not be surprised by factors that have sent iron ore prices sliding and he is confident Chinese growth will underpin long-term commodities demand.
And the mining boss has sent a message to his Glencore counterpart Ivan Glasenberg: that the Swiss trader-miner will have to offer more to merge its Hunter Valley coal operations with those of Rio………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Tensions in Ukraine have produced extreme volatility across the spectrum of commodities. Wheat prices have seen the greatest surge, up 6% in the past seven days and 24% since hitting a low in January. Ukraine is the sixth-largest wheat exporter in the world. Corn, of which Ukraine is the world’s third-largest exporter, is up 10% over the past 30 days.
“Grain traders are still focusing their attention on developments in Crimea,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said in a note, per Bloomberg. “In the event of a yes vote, shipment problems could be the result.”……………………………………….Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries will cut crude exports this month to the lowest level since November as refinery demand slows in Europe and North America, according to tanker-tracker Oil Movements.
OPEC, responsible for 40 percent of global oil supplies, will decrease shipments by 1.1 million barrels a day, or 4.6 percent, to 23.6 million a day in the four weeks to March 29, Oil Movements said in an e-mailed note. The figures exclude two of OPEC’s 12 members, Angola and Ecuador………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

The Organization of Petroleum Exporting Countries (OPEC) bolstered forecasts for the amount of crude it will need to provide this year as the economic recovery stokes global fuel consumption. Iraq, its second-largest member, pumped the most oil since 1980.
OPEC, responsible for 40 percent of the world’s oil supply, said its 12 members will need to produce an average of 29.7 million barrels a day this year, 100,000 a day more than forecast last month. The amount required is about 400,000 barrels a day less than the group said it pumped in February, when output surpassed 30 million a day for the first time since August………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

NYC-based PIRA Energy Group believes that peak winter buying has been wrapped up. In the U.S., Appalachian shale bottlenecks are increasingly visible. In Europe, gas fundamentals becoming more bearish. Specifically, PIRA’s analysis of natural gas market fundamentals has revealed the following:
Peak winter buying has been wrapped up - In Europe and Asia, peak winter buying has been wrapped up, with the recent Ukraine crisis having little impact. South American and Mideast counter-seasonal buyers are entering the scene, but it appears that in Brazil at least buying will not be as strong as last year………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Gold prices are up about 14% on the year as investors return to commodities and the yellow metal gets a safe-haven bid on geopolitical worries, but one key market participant is largely absent.
Physical buying, particularly out of Asia, has been subdued at best for the past few weeks, as seen by the small premium or occasional discount Shanghai Gold Exchange prices trade versus spot. Additionally, gold-market traders pointed to positive gold forward rates, known as “gofo” rates, or lease rates, which also suggest the physical market isn’t tight………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

The price of gold hit a six-month high overnight of $US1,370 ounce buoyed by investor appetite and civil unrest in Ukraine. Gold has always been considered a safe haven during times of political and civil unrest and the geopolitical uncertainty in Crimea has seen the price steadily rise all week.
But the managing director of gold miner Ramelius Resources, Ian Gordon, believes there are also other factors at play in the price rise. “Events like the unrest in Ukraine do spur on the price of gold, but I don’t know if it’s as important as people say, but it’s in the mix of factors………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Charles Oliver joined Sprott Asset Management LP in January 2008. He focuses on gold and silver investments as a portfolio manager for the Sprott Gold & Precious Minerals Fund and the Silver Equities Class.
“In 1980, when the gold price peaked at $800, it took 1 ounce of gold to buy the Dow Jones Index. After 1980, financial assets took the lead over hard assets. In 1999, it took 44 ounces of gold to buy the Dow Jones, at a gold price of $250. If gold were to regain the position it held in 1980, we could easily see a 3:1 ratio – gold at $5,000 given the current level of the Dow Jones, or even $15,000 if gold returns to the 1:1 level………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

It is unquestionable that silver and gold prices share a strong relationship. Like gold, silver is dependent on psychology and the factors that drive psychology, such as inflation and the dollar. However, despite being considered a precious metal, silver also plays a role as an industrial metal.
Like the rest of commodities, silver peaked in 2011, as the dollar pushed commodity prices down. Since then, silver prices have weakened. Despite the upward move that silver made last month, it seems that silver is struggling to overcome previous levels………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Silver, it seems, is everywhere. The precious metal’s dual role as both an investment and industrial metal means that while it can be bought physically or in paper form by investors, it also has myriad technological and medical applications.
It’s in part because of those many uses that some silver market watchers think at some point — perhaps in the near future — demand for the metal will exceed supply, creating a shortage………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Silver is likely to trade in a range between $17.75 and $22.75 for the rest of 2014 as the global silver surplus widens to around 156moz this year, says HSBC. According to the group’s latest silver outlook publication, there are three main trends that are likely to drive the silver market in 2014: Supply remaining strong, investment demand making a modest recovery and the current pickup in demand from industry and jewellery.
Looking at the supply side first, the bank says that at near $20/oz, prices are within striking distance of the highest-cost marginal producers. But, despite this, it says, silver remains worth extracting………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Paul Adams thinks the current gold price is about right, plus/minus $100 per oz ($100/oz). Wobbles in the emerging markets have prompted gold’s recent move up into the $1,300/oz range.
The consensus data for the industrial metals generally looks positive for 2014 and into 2015. Obviously, we want to see what effect the Indonesian ban on raw exports will have. That’s very important to nickel prices………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

What was clear from the presentations and conversations in Toronto during this year’s Prospectors and Developers Association of Canada conference is that the long-term future of South Africa’s platinum sector lies not in the deep-vein, shanty-town-lined mines of old but rather in the newer, shallower mines that afford more opportunities to local communities and for mechanisation.
From a cost point of view, this, at least on paper, was obvious in a slide shown by Mike Jones, CEO of Platinum Group Metals, during his presentation………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

BNP Paribas is reiterating its position favoring lead, tin and zinc over copper in the base-metals complex. The bank points out copper fell to its forecast of $6,500 as metric ton even sooner than it expected. BNP Paribas says it still looks for the copper market to move into a “material but far from catastrophic” supply surplus in 2014-15.
The bank says it still has a positive view on demand, looking for growth of more than 10% over the next two years. However, the bank also looks for world mine production to rise by about 10% over 2014-15, with refined production outpacing mine output. The bank says a copper rally above $7,000 likely would present a selling opportunity………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Copper has fallen sharply in the last week, reaching its lowest level in nearly four years. The metal is traditionally seen as a barometer of global activity although this very long-term chart (which we ran near the market peak in 2011) doesn’t suggest a great deal of reliability. (To update the price from the graph, it is now around $6,400).
The price was falling for much of the 1990s when the economy was doing very well indeed. Nowadays the copper price may say more about events in China than elsewhere; although that still is useful………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Increased market volatility, sparked by emerging market turmoil and disappointing U.S. economic news , dominated headlines in recent weeks. But a record-breaking event within the investment industry stayed just under the radar. The total number of global ETFs exceeded 5,000 for the first time this year, a significant milestone that signals greater value available to investors.
Since their introduction in the early 1990s, the pace of new ETF launches was gradual. It took more than 15 years for global ETF listings to hit the 2,000 product mark………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

The geopolitical tension between Russia and Ukraine has grabbed the attention of the global investing market to start this year. The crisis has not been confined to war of words only; the possibility of war also cropped up in the Crimean peninsula. The Ukrainian clash is not only a net negative for the East-European territory, but it could have a ripple effect on the West as well.
The conflict really dated back to November 2013 when the presently ousted Ukraine president, Viktor Yanukovich abstained from signing an Association Agreement with the European Union for closer ties with Russia………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Eleni, a private company positioned as the premier commodity exchange promoter in Africa, has announced today the formation of a private-public investment consortium to finance the establishment of the Ghana Commodity Exchange (GCX).
Investment consortium partners include Ghana’s top tier financial institutions, Data Bank Agrifund Manager Ltd, Ecobank Ghana Ltd, UT Bank Ghana Ltd, as well as IFC, 8 Miles Fund and eleni, with minority stakeholding by the Government of Ghana………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

The Bank of England (BoE) has published an article on the role of money in the modern economy and one topic was the future of digital currencies and payment technologies. The currency v commodity debate has been going on for a while and the Bank of England is clearly on the commodity side of the argument.
“Digital currencies are not at present widely used as a medium of exchange. Instead, their popularity largely derives from their ability to serve as an asset class. As such they may have more conceptual similarities to commodities, such as gold, than money,” the bank concluded………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Singapore plans to regulate virtual currency intermediaries, to combat potential risks from money-laundering or terrorism-related financing.
The Monetary Authority of Singapore (MAS) said the intermediaries, such as virtual currency exchanges, would need to verify their customers’ identities. They will also have to report any suspicious transactions………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

The last month or two has provided a wonderful illustration of why a diversified commodity index is a better investment than an investment in any given commodity. Since mid-February, April Lean Hogs has rallied 23%. Since late January, May Wheat is up 23%. March Coffee is up 80%. Gold is up 9%.
But Crude Oil is 6% off its highs. Copper is 12% off its highs (8% since Thursday). April Nat Gas was up 42% from November through late February, but has lost 10% since then………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

Three of Australia’s senior economists have backed carbon pricing as the most effective way to reduce carbon emissions. One, former Reserve Bank governor Bernie Fraser, also said the Abbott government was working in the short-term interests of business and not the long-term interests of the public in its policies on climate change.
Mr Fraser, in an address to the National Press Club, expressed surprise at the ”brazenness and scale” of the campaign waged by the government and big business against the carbon and mining taxes………………………………………..Full Article: Source

Posted on 14 March 2014 by VRS |  Email |Print

How do you prevent a jump in your carbon pollution? Don’t invade anybody. Take Russia. At a meeting yesterday of 200 or so national climate negotiators in Bonn, Russia’s Oleg Shamanov said his country wanted to launch a market for trading carbon pollution credits.
The sooner the country can gain experience in a domestic cap-and-trade system, he said, the sooner it can link up to carbon markets in other countries or regions………………………………………..Full Article: Source

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