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Commodities Briefing 04.Apr 2014

Posted on 04 April 2014 by VRS |  Email |Print

Commodity trading executives tend to speak bluntly. This week has been no exception. The oil sector is “stuck in a rut”, metal producers must get their “shops in order” and the agriculture industry is “on a knife edge”.
Those are some of the messages at the FT Commodities Global Summit in Lausanne. That may not sound especially positive, at least for trading houses, which can thrive on volatility. But, after a tough 2013, when prices of major commodities fell amid concerns about global financial health, the mood among delegates about the world economy was cautiously optimistic………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

The U.S. Commodity Futures Trading Commission is investigating high-frequency traders to see if they were breaching the derivatives regulator’s rules, its chief said Thursday.
“Staff (is) responding to concerns brought to us about certain practices, whether it be spoofing just to give one example, whether that’s running afoul of our rule,” Acting Chairman Mark Wetjen told reporters during a meeting. “And then whether or not it meets the definition of manipulative activity under our statute,” he said………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

The UN’s top climate change official has issued an unusually blunt message to the oil and gas industry that it must radically overhaul its business model to meet the realities of global warming.
Three quarters of fossil fuel reserves need to stay in the ground if the world is to stop global temperatures rising beyond the internationally agreed limit of 2 degree Celsius, said Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Russia continues to use their natural gas to bully Ukraine, and this has to worry the rest of Europe, especially Western Europe, which has shied away from developing their own production to instead rely on Russian natural gas delivered over pipelines. Pipelines which travel through the Ukraine and could be cut off due to tensions.
We are not trying to be alarmists here, but these are important facts to understand in this high-stakes game of chicken. With Russia raising natural gas prices for Ukraine, we could see the situation escalate, as it has in the past, with supplies to Europe basically cut off………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

The UN’s climate chief has appealed to the oil and gas industry to become the solution rather than the problem to addressing the causes of global warming. In a speech today at the London headquarters of IPIECA, the industry’s association for environmental and social issues, Christiana Figueres said she wanted fossil fuel companies to drive investments in renewables and technologies to capture and store carbon dioxide.
“We need, and are undoubtedly moving towards a new, sustainable energy mix. What is exciting is that the oil and gas industry can actually be part of the solution,” she said………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Russia and Iran are moving closer to a $20 billion oil-for-goods deal launched earlier this year, according to a Reuters report citing unnamed sources close to the deal. Russia has finished preparation of all documents related to the deal on its side, and the deal’s completion now allegedly hinges on an oil price agreement, the source reportedly said.
The deal could eventually be worth $15-$20 billion, but would be completed in increments, with an initial $6-$8 billion transaction, while both sides are still bargaining over the exact nature of a barter deal that would trade Iranian oil for Russian industrial goods and food………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

South Africa’s Richards Bay Coal Terminal is reviewing export targets for 2015 after a power cut in February forced it to reduce this year’s goal, the head of the world’s largest standalone export facility for the fuel said.
RBCT trimmed its forecast for shipments this year to 73 million metric tons from 75 million tons after it had to halt operations for almost 10 days in February because of faults on municipal power cables that cut supply, Chief Executive Officer Nosipho Siwisa-Damasane said. While it cleared the backlog by March 31, the facility, together with exporters and Transnet SOC Ltd., the state-owned ports and rail utility, faces losses of about 2.1 billion rand ($197 million)………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Gold premiums in India are expected to fall from current levels of about $30 an ounce after the Reserve Bank of India (RBI) indicated it is considering removing some of the curbs to trade that have crippled imports.
India, the second biggest consumer of gold after China, last year imposed a record 10 percent import duty on the metal and said a fifth of all shipments should be re-exported as finished product to help narrow its current account deficit (CAD)………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Gold headed for a third weekly decline in the longest run of such losses since September before U.S. economic data that may show the labor market improved, backing the case for reduced monetary stimulus.
Bullion for immediate delivery fell as much as 0.2 percent to $1,284.27 an ounce, and traded at $1,284.61 by 9:28 a.m. in Singapore, declining for a second day, according to Bloomberg generic pricing. The metal is down 0.8 percent this week after sliding to $1,277.79 on April 1, the lowest since Feb. 11………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Carl Noack, vice president investments for Altus Global Gold, gave his views on seeking value in the resource sector. He admitted that recent market performance has proved to be a painful time for gold bulls with the sector market down 28% last year and around 50% or more from its peak and with good companies in many cases hit just as badly as poor ones.
Noack pointed to last year’s sharp downturn in the gold price being primarily due to two factors – big sales out of the gold ETFs and ever continuing uncertainty over whether the U.S. Fed would indeed start its tapering programme………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Spot silver prices rose declined around 7 percent last month, tracking weak cues from gold prices and base metals complex. In the Indian markets, silver prices declined by around 8 percent. The fall in Indian markets is due to rupee appreciation by around 3 percent.
Upbeat economic data from US, and UK and to some extent Eurozone signalled signs of growth in these economies in turn reducing the metals safe haven appeal. Additionally, upbeat market sentiments in coupled with fears of interest rate rise in the US earlier than expected acted as a negative factor………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Many observers have pointed to the recent weakness of the copper price as an indication of a forthcoming decline in commodity prices generally. Copper is said to have a Ph.D. in economics, hence, the “Dr. Copper” title, because it is regarded as a sensitive indicator of business activity. But is that still true?
Looking at the first chart, one cannot escape the conclusion that the price of the red metal has completed what we technicians call a head-and-shoulders top. The vertical blue arrow on the left calculates the maximum depth of the pattern, which is then used to establish a price objective when applied at the point of breakdown………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

The global copper market could show a production surplus relative to demand in 2014 ending four consecutive years of deficits, the International Copper Study Group said Thursday after a meeting in Lisbon, Portugal. According to ICSG projections, world production of refined copper is expected to exceed demand for refined copper by about 400,000 metric tons, as demand will lag behind the growth in production.
The world refined copper balance in 2013 showed a production shortfall relative to demand of around 280,000 tons mainly due to constrained growth in refined production and growth in China’s apparent demand, said the group………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Demand is expected to continue to outstrip supply in the global markets for zinc and lead in 2014, the International Lead and Zinc Study Group said Thursday. The group, which met in Lisbon, Portugal this week, said the world market for refined lead metal will remain in modest deficit with the extent of the shortage estimated at 49,000 metric tons.
It added that global demand for refined zinc metal will likely exceed supply in 2014 by 117,000 tons. The ILZSG expects that global demand for refined lead metal will increase by 4.4% in 2014 to 11.73 million tons. “This will be driven mainly by growth in China where usage is forecast to increase by 7.4%,” it said. In 2013, China accounted for 45.2% of total global lead usage………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Big warehouse owners, under regulatory scrutiny for tying up huge amounts of aluminium in profitable storage, are unlikely to risk seeking a fresh influx of metal even though a UK court ruling last week set back attempts to rein them in.
But access to aluminium will remain tight as existing backlogs increase in the global network of warehouses overseen by the London Metal Exchange (LME) following the court decision, analysts and industry sources said………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Base metals on the London Metal Exchange barely reacted Thursday to the latest economic stimulus from China. Some disappointing economic figures from the large consumer nation have weighed on metals prices in recent weeks as investor concerns deepened about subdued demand. China is responsible for around 40% of global copper consumption.
“The main development overnight has been the announcement in China of $24 billion worth of stimulus to the railway system in less-developed regions, but this does not seem to have boosted metals,” noted FastMarkets head of research Will Adams………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

ETFs can be valuable tools, but breaking them down to determine their potential can be a bit daunting for the average investor. But don’t despair - today we’ll be doing just that with the popular iShares U.S. Oil Equipment and Services ETF by examining some of the main components of the fund.
A quick note: Part one of this three-part series on energy ETFs can be found here, where the iShares U.S. Energy ETF was discussed along with its main components ExxonMobil and Chevron………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Almost no other category of investing has experienced as much turmoil in the last 12 months as income investors have been subjected to. Interest rates have been on a roller coaster ride that has churned the landscape for core themes in fixed-income, REITs, preferred stocks, and even dividend paying equities.
Years of low volatility in many of these categories had lulled income seekers into a false sense of security that led to jolting changes in a short period of time………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

If you want to know the price of a bushel of corn, you can find it on the website of the Chicago Mercantile Exchange (CME). The market value of organic corn or grains grown without genetically modified seeds is harder to find. These crops are traded privately, with growers negotiating rates with buyers over the phone or via e-mail.
Kellee James wants to change that. As co-founder and chief executive officer of Mercaris, a market data service and online trading platform for organic and non-genetically modified organism commodities, James plans to build an exchange so such crops can trade the same way as conventional commodities………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

The European Union has abandoned its plan to tax carbon dioxide emissions from flights into and out of European airspace. The proposal would have included flights originating in the United States.
After debating late into the night, the EU Commission agreed to axe its proposal to tax emissions from flights while they are outside of European airspace. The original proposal would have taxed international flights for carbon dioxide emitted from the whole flight, not just the portion in EU airspace. ……………………………..Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

The cost of polluting is poised to rebound after the European Union began reducing a record glut of permits to rescue the world’s biggest greenhouse-gas market. Carbon prices will climb 32 percent by the end of June, according to the median of 11 trader and analyst estimates compiled by Bloomberg. Options data show traders are the most bullish in three years.
Futures that tumbled as much as 92 percent from their peak in 2008 spurred EU lawmakers in March to curb supply in the $47 billion market by postponing sales of some permits. While carbon rallied as traders anticipated the changes, volatility has also increased. Prices fell 30 percent last week as data on emissions from U.K. power plants missed analysts’ estimates………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

Every part of the world is feeling the impact of climate change, according to Kalee Kreider, a special adviser for climate science at the United Nations Foundation. “No country is immune,” said Kreider, who is also spokeswoman for former U.S. Vice President Al Gore, at a forum on Wednesday in Beijing.
The forum was part of a three-day promotional activity publicizing the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report………………………………Full Article: Source

Posted on 04 April 2014 by VRS |  Email |Print

The global economy could be heading for years of “sub-par growth”, according to the head of the International Monetary Fund (IMF). Christine Lagarde warned that without “brave action” the world could fall into a “low growth trap”.
She said the global economy would grow by more than 3% this year and next, but that market volatility and tensions in Ukraine posed risks. Ms Lagarde also urged more action to tackle low inflation in the eurozone……………………………..Full Article: Source

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