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Commodities Briefing 17.Mar 2014

Posted on 17 March 2014 by VRS |  Email |Print

149 commodity exchange-traded funds out there but just a handful are broadly diversified. Coffee is up 80% this year. Lean hogs are up 28%. Corn is up 13%. Gold is up 12%. Most of these same commodities were down last year, and any of them could fall at the drop of a hat.
So how do rational investors participate in the upside for unpredictable commodities without losing their all-cotton shirts? One approach is to invest in a diversified basket of commodities. That lowers the chance of a big loss and adds diversification to an investment portfolio, since commodities tend not to track the stock market. While there are 149 commodity ETFs, only a handful are broadly diversified………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Unprecedented natural-gas reserves in Europe, record global grain output and the threat of mutual economic calamity from oil sanctions are cushioning commodity prices even as the Ukraine-Russia conflict spurs a gold rally.
While U.K. gas prices, a European benchmark, rose 5.1 percent since the crisis began at the end of February, they are still the lowest for this time of year since 2010. Brent crude fell 0.6 percent. After wheat advanced 15 percent and corn 4.7 percent, both remain about a quarter below the peaks in 2010, the last time Russia and Ukraine curbed shipments. Gold reached a six-month high on March 14 as demand for a haven grew………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Looking ahead to the rest of the year, commodities face a structural demand decline driven by emerging market slowdown, energy efficiency targets and environmental objectives. This supply will adapt but there will be a multi-year response lag.
On the demand side, emerging market growth and structure of growth have fuelled the supercycle and relate directly to emerging market urbanisation, changing dietary habits (more protein supporting grain prices as feedstock for cattle) and lifestyle choices, which seek to imitate those of the developed markets………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

OPEC crude production rose above its target for the first time in five months as Iraq pumped the most in 35 years, according to the International Energy Agency.
The 12 members of the Organization of Petroleum Exporting Countries produced 30.49 million barrels a day in February, up from 29.99 million in January, the Paris-based IEA said today in its monthly oil market report. That’s about 300,000 barrels a day higher than the average level required in the second half of the year, according to the agency………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

The U.S. appears to be building pressure on Russia over its actions in Ukraine by releasing crude oil from its emergency stockpile onto the market, with news of a “test sale” causing oil prices to dip to their lowest levels in a month.
The U.S. announced yesterday that it would hold the first test sale of crude from its strategic reserve since 1990, releasing 5 million barrels onto the market — just enough to send a message to Russia, whose economy depends on high oil prices. U.S. crude oil fell by more than 2 percent on Wednesday, its biggest drop in two months, on the news………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

The chief operating officer at Continental Resources said that oil producers would be forced to cut back on production if the United States doesn’t allow for crude oil exports.
Is a problem of plenty brewing? Rick Bott — president and COO of Continental — said that crude oil prices will remain artificially depressed because domestically produced crude isn’t finding its way into the global markets. And this eventually lowers the incentive to keep up with production volumes. As evidence, he points out to the fact that the crude oil markets are heavily “backwardated.”……………………………………….Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Iraq’s oil production surged to its highest level in over 30 years last month, surprising skeptics of the country’s efforts to restore its oil industry after decades of war and neglect, The Wall Street Journal said in news briefed by “Shafaq News”.
In its monthly oil report published Friday, the International Energy Agency said Iraq’s oil output jumped by half a million barrels a day in February to average 3.6 million barrels a day. The country hasn’t pumped that much oil since 1979, when Saddam Hussein rose to power………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

After shunning gold and wheat for most of last year, hedge fund managers are piling back in as the escalating crisis in Ukraine spurs a rebound in the prices of both commodities.
Speculators have the biggest bet on a gold rally since December 2012 and turned bullish on wheat for the first time since November, government data show. Bullion last week reached a six-month high and wheat entered a bull market as Crimea prepared for a referendum. A majority in the disputed vote March 16 chose to leave Ukraine and join Russia, exit polls showed………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

With gold hovering around the $1370 level this morning – a level which has confounded the very bearish bank analyst sector – gold has, as we have noted before, been by far the best asset class to be invested in so far this year, beating even the other precious metals which might seem to have even more going for them.
But the analysts will say that they could not have predicted the flare-up in the Ukraine and the subsequent aggressive moves by Russia which look as though they will see the annexation of Crimea. It seems Ukraine is virtually powerless to do anything about this beyond gleaning Western support which could result in sanctions being imposed on Russia, given its likely intransigence in the matter, with the threat of further escalation overhanging the situation………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Gold prices are looking set to crack the $US1400 mark yet again, with surges over the last three weeks leading to a finish of $US1385 per ounce last week. With the Australian dollar sitting at 90 US cents, the Australian gold price has hit $1536.
The new prices come as a relief to gold miners, especially Newcrest Mining Limited, pegged by the pundits to win big in the long term from the rising prices thanks to substantial reserve holdings of the precious commodity………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

All the warning signals are now pointing to a continuing slide in prices as the full extent of China’s economic problems emerges and bearish sentiment grips the large commodity trading houses.
Investors in vital industrial metals such as copper and iron ore will have their nerves tested again this week after China’s unfolding debt crisis caused volatility on commodity markets………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Zambian mines are still operating profitably despite the fall in copper prices but could be threatened if the price dropped below $5,000 per tonne, Mines Minister Christopher Yaluma said on Saturday.
Copper markets have been edgy over slowing Chinese demand and fears that credit upheaval in the world’s second-biggest economy could unwind financing deals using the metal as collateral. Benchmark three-month copper on the London Metal Exchange has been falling steadily since January and sank to a 44-month low of $6,376.25 on Wednesday………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Most investors know exchange-traded funds as passive, index-based investments that give them a chance to buy into a market, from the S&P 500 to health-care stocks, without worrying the fund manager is going to make a wrong-way pick on the next Enron. So you might have scratched your head over the term “active” ETFs.
First, these funds are what they sound like: ETFs whose holdings are picked by individuals, rather than simply tracking an index. They have been attracting investor assets and media attention. Even Vanguard, best known for pioneering low-cost indexing, took a step last week toward offering these actively managed products………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

In any long-term investment portfolio, exchange traded funds that track stocks or other riskier assets will provide investors with a capital growth component, augmenting a portfolio’s overall returns.
For an aggressive ETF portfolio for couples with a 25-year or longer time frame until retirement, Christine Benz, director of personal finance for Morningstar, suggests investors should hold about 60% of a the overall portfolio in riskier, and potentially more lucrative, securities………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Traders and physical market users who trade on domestic commodity futures exchanges may soon witness a deepening of the decade-old market.
To encourage more physical market users to hedge on domestic commodity bourses, regulator Forward Markets Commission (FMC) will soon write to the finance ministry, under which it functions, suggesting that it urge banks to ask their clients to trade on exchanges like MCX and NCDEX. ……………………………………….Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

One of the surest bets on China is starting to look a bit shaky. Every business day for the last nine years, at 9 a.m., government workers in the blandly named Building No. 30 in Shanghai’s Pudong financial district have published what their country’s currency will be worth that day, when compared with the United States dollar.
More often than not, the staff of the China Foreign Exchange Trade System has assigned a value to the currency, the renminbi, slightly stronger than it had finished the previous day. Thanks to the guiding hand of the Chinese state, the renminbi today is about 25 percent stronger than it was in July 2005, when China scrapped the currency’s fixed peg to the dollar in favor of a steady, crawling appreciation………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

Two years ago, European businesses were worrying about whether the euro would survive. Today, a bigger problem for many of them is its strength. With the single currency at its highest level since mid-2011 on a trade-weighted measure, politicians are warning that adverse exchange rates could stall the eurozone’s fragile recovery.
While the euro’s rise against the dollar has been fairly moderate, turmoil in emerging currencies has stung many multinationals – which had bet heavily on growth in emerging economies in recent years to compensate for the lack of activity in their home markets, but now find themselves exposed to swings of as much as 20 per cent between the worst-hit local currencies and the resurgent euro………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

The European Commission on Friday gave approval for companies in 17 EU member states to exchange United Nations-backed offsets for EU Allowances under the bloc’s carbon market.
The move will allow participants in the EU’s Emissions Trading System (ETS) to use cheaper Certified Emissions Reductions (CERs) or Emissions Reduction Units (ERUs) to meet emissions targets ahead of an April 30 compliance deadline. Governments had been required to outline exactly how many offsets each power plant, factory and airline covered by the ETS is allowed to use between 2013 and 2020………………………………………..Full Article: Source

Posted on 17 March 2014 by VRS |  Email |Print

About four years after Asia’s first mandatory greenhouse gas emissions-reduction scheme was launched by the Tokyo Metropolitan Government, businesses in the capital have succeeded in drastically cutting carbon dioxide emissions without depending on emissions credit trading.
Due mainly to the March 2011 Fukushima nuclear crisis, which reduced utilities’ electricity supplies and triggered legal curbs on power consumption by large-lot customers that year, Tokyo offices and factories covered by the cap-and-trade system have been able to easily meet their carbon dioxide reduction targets, a metropolitan government official said………………………………………..Full Article: Source

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