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Commodities Briefing 03.Apr 2014

Posted on 03 April 2014 by VRS |  Email |Print

International Monetary Fund Managing Director Christine Lagarde warned today that the political crisis around Ukraine poses a danger to the broader world economy. In a speech in Washington, Lagarde said global growth five years after the Great Recession “remains too slow and weak” and faces multiple threats.
For one, low inflation, especially in Europe and Japan, are dangers for demand and output and consequently jobs, Lagarde said at the Johns Hopkins University School of Advanced International Studies. A second key threat is high corporate leverage in emerging economies, which if not adequately addressed will be worsened by the turmoil from eventual monetary tightening in advanced economies, especially the United States…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

New Zealand commodity prices dropped for the first time in four months in March as cheese and milk powder declined. The ANZ Commodity Price Index fell 0.1 per cent to 337 from February. The index is 14 per cent above its level of March 2013. International prices for 10 of New Zealand’s main commodities increased in the month and three fell.
The price of whole milk powder led the decline, down 6 per cent, while prices for skim milk powder and cheese dropped 2 per cent. Dairy product prices fell 8.9 per cent in Fonterra Cooperative Group’s latest GlobalDairyTrade auction, the biggest drop in 20 months, as volumes increased…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

If the bookies are to be believed, Chelsea Clinton could turn out to be luckiest US president in history. The holy grail of American leaders over the past four decades, from Richard Nixon to Barack Obama, has been energy independence, and thanks to shale oil and gas, the dream could soon become reality.
The International Energy Agency (IEA) and oil giant BP certainly think so - they believe the US will be energy independent by 2035. As Mr Obama said in his State of the Union address last year: “After years of talking about it, we are finally poised to control our own energy future.”………………………………..Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

A U.S. government office has the power to approve exports of an abundant type of petroleum and help energy companies begin to partially bypass a 40-year ban on crude exports, according to a report released on Tuesday by Lisa Murkowski, the top Republican on the Senate Energy and Natural Resources Committee.
The ban on crude exports the government put in place after the Arab oil embargo of the 1970s includes a prohibition on exports of unprocessed condensate, a light petroleum that appears in oil reservoirs as a gas, but condenses to a liquid when it leaves the well…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

Oil prices declined Wednesday as a drop in U.S. supply failed to erase traders’ fears about sluggish demand. U.S. crude-oil supplies fell last week for the first time in 11 weeks, the U.S. Energy Information Administration said, upending analyst expectations. But traders wrote off the drop as a one-week aberration–a closure of the Houston Ship Channel between March 22 and March 25 limited imports of crude oil and required refiners to draw more supplies from storage.
Inventories likely will rise again next week, said Andy Lipow, president of Lipow Oil Associates in Houston. Demand for crude oil typically falls in March as refineries shut down units for seasonal maintenance…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

There is only one certainty in Ukraine: The energy sector must and will be transformed, and how long this takes will depend on who ends up in the driver’s seat and how serious they are about becoming a part of Europe and reducing dependence on Russia. But by then, investors will have missed the boat.
The driving factor for any energy investor in Ukraine is the pricing environment. There is nowhere else in Europe—or some would even argue in the world—where you are going to get significant access to resources and potential resources for the price. Gas is selling at $13.66/Mcf, while it costs $4-$5 to produce and operate. That means producers are netting anywhere between $8 and $9/Mcf…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

For the first time in three days the gold price rose this morning, on the back of hope that the low price will spur gold buying in China. Also, for the first time in the last week gold for immediate delivery in Shanghai traded at a premium to London. This suggests that the downside in gold is protected somewhat by expected demand in China.
Another reason for gold’s weakness this week is the impending March non-farm payroll data, due for release on Friday. Forecasts so far expect the U.S. Labor department to announce 200,000 new jobs were added last month…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

So far, 2014 has been a paradoxical year for gold. Many investors aren’t even aware that it has rallied almost 8%. On the rare occasion that the financial media mentions the yellow metal, it is only in the context of comparing the recent rise to last year’s decline.
In spite of this overwhelming negative sentiment, gold is experiencing a stealth rally as one of the best performing assets of the year. Let’s look at some important metrics of the most under-valued sector in this market…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

In accordance with the latest official trade data, the gold bullion imports by the country’s Northern state of Gujarat touched lowest levels in five years during the financial year FY ’14. The imports failed to cross even 100 metric tonnes this year.
As per trade figures released Monday, the total gold imports during the period from April ’13 to March ’14 amounted to 92 metric tonnes. The gold imports during the fiscal year plunged to nearly half when compared with the total gold imports of 193 metric tonnes during FY ’13…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

Gold rose, ending the longest slump in 19 weeks, on speculation that demand for bars and jewelry will increase in China after futures touched a seven-week low. ANZ Banking Group said Wednesday its gauge of demand increased late last month in China, the world’s biggest buyer. Iraq’s central bank plans to process 11 metric tons for public sale, and will import bars to sell to goldsmiths.
The outlook for reduced U.S. monetary stimulus and higher borrowing costs helped push futures Tuesday to the lowest since Feb. 11. “People are betting on increased physical buying and bargain hunting at these levels,” said Phil Streible, a senior commodity broker at R.J. O’Brien & Associates in Chicago. “This may be temporary, as prices could head lower because of expectations of higher interest rates.”………………………………..Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

Managed futures funds have outperformed long-only commodity plays over the last two decades. What’s behind their success? In January, while the S&P 500 Composite (SPX) slid 3.6 percent, the Dow Jones UBS Commodity Index (DJUBS) gained 0.3 percent. DJUBS is a long-only benchmark made up of 20 non-financial futures.
It wasn’t much of a gain and one month doesn’t spell “turnaround,” but this isn’t just a one-month deal. Commodities, on the outs since 2011, have actually broken above a multi-year downtrend line…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

On March 31, Janet Yellen gave a speech to which every U.S. investor with foreign holdings should have been listening—on whether or not the Fed plans to raise interest rates anytime soon.
During her talk, which she gave at a community investment conference, the new Federal Reserve chairperson mentioned that the decision would be based on a number of factors, including inflation and labor market conditions, but she believes that the economy and jobs are still too weak to start increasing rates…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

The New Zealand dollar was the worst-performing major currency overnight on speculation lower dairy commodity prices will weigh on economic growth. The kiwi fell as low 85.45 US cents after rising as high as 87 cents earlier this week. The local currency was at 85.58 cents at 8am in Wellington from 86.02 cents at 5pm yesterday. The trade-weighted index fell to 80 from 80.37.
Investors reduced their New Zealand dollar holdings after dairy product prices had the biggest drop in almost 20 months at yesterday’s Fonterra Cooperative Group GlobalDairyTrade auction, with whole milk powder falling to its lowest level in more than a year…………………………………Full Article: Source

Posted on 03 April 2014 by VRS |  Email |Print

Central China’s Hubei Province Wednesday launched a carbon trading scheme, the country’s sixth. The scheme covers 138 companies in 12 high pollution industries, including power generation and steel, which have been given a combined carbon emission quota of 324 million tonnes this year, the Hubei carbon trade exchange said in a statement.
Under the trading program, those which emit below their quotas can sell their excess to other enterprises or even to investors for profits. Hebei is the first place where the government has sold reserve quotas. About 2 million tonnes of carbon have been sold at a price of 20 yuan (3.20 U.S. dollars) per tonne…………………………………Full Article: Source

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