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Commodities Briefing 08.Apr 2014

Posted on 08 April 2014 by VRS |  Email |Print

There has been no shortage of fireworks in the commodities sector in the first quarter of 2014 after a relatively dormant second half of 2014. What has changed in the last three months? Here, in no particular order, are the factors pushing the commodity complex.
At the Fed, leadership has changed with Ben Bernanke’s eight-year tenure having come to an end. Bernanke will likely be viewed as a cyclical dove. His dovish policies developed after an academic career of studying the “Great Depression” and what went wrong, destined him to learn from past monetary policy mistakes………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Kuwaiti Oil Minister Ali al-Omair said Monday that current oil prices are “fair” despite strong geopolitical factors impacting the region. OPEC member Kuwait is the world’s fourth-largest oil exporter, pumping around 3.0 million barrels per day, of which at least 2.6 million bpd are exported in the form of crude oil and petroleum products.
“There are geopolitical factors impacting oil prices… which are not only controlled by output levels and production capacity but also by political changes,” Omair said………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

With the flattish nature of its action over the past several months, oil seems to have reached a tipping point on price. It’s almost as if the charts are saying that oil either must break up or break down, if long-term trendlines are going to be respected.
Barrons took the opportunity to plump for a downside break last weekend, a prediction I have vigorously argued against in both print media and on-air. But one follower of mine made a very astute observation, pointing out to me that futures markets for crude oil ten years out are ‘predicting’ oil prices almost $20 lower………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Differentials in the Asia-Pacific crude market could come under pressure from an expected increase in Libyan exports, traders said on Monday. Libyan rebels agreed with the government on Sunday to gradually end their eight-month petroleum blockade, which would free four eastern oil ports to export.
The Zueitina and Hariga ports, which account for around 200,000 barrels per day (bpd) of export capacity, will open immediately, while the larger ports, Ras Lanuf and Es Sider with capacity of around 500,000 bpd, will be freed in two to four weeks after more talks, the government said………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Iran will continue its efforts to boost crude production and exports regardless of Washington’s opposition to increased international sales of Iranian oil, oil minister Bijan Zanganeh said Monday.
“Iran will use every possibility to increase the amount of oil exports and will not wait for America’s permission,” Zanganeh was quoted as saying by oil ministry news service Shana. “The sanctions do not ban Iran from increasing oil production and we have a big plan for increasing Iran’s oil production.”……………………………………….Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The role of climate and energy policy in the ‘long game’ that will play out between Russia and the west has been overlooked. Vladimir Putin’s land grab in Crimea has shocked the west into rethinking security strategy on the continent.
Michael McFaul, former US ambassador to Moscow, has rightly argued in the New York Times that Putin has made a strategic pivot, and has abandoned reform and partnership with the west for a campaign to consolidate autocratic power at home and erect an alternative to western liberal democracy for the nations in its “near abroad”………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Commodity analysts are expecting gold to remain weak in the next three months as seasonal factors, an improving U.S. economy and lack of bullish momentum drag prices down.
Ole Hansen, head of commodity strategy at Saxo Bank, pointed out that the second quarter is usually a quiet time for gold, but this year traders could be more sensitive to increased weakness in the next three months, especially after a strong first quarter………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Gold may have hit a six-week low last week, but Peter Schiff, CEO of Euro Pacific Capital, thinks it will rebound with a vengeance as inflation reappears. “Central banks around the world, particularly the U.S., are going to continue to create more and more inflation,” Schiff told “America’s Forum” on Newsmax TV.
“In fact, now the central bankers don’t even pretend they’re fighting inflation. They are fighting to create inflation. They’re telling us that inflation is a good thing, that the absence of inflation is a problem that the Fed has to solve.”……………………………………….Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The price of gold fell back below the 1,300 an ounce level after traders booked profits on Friday’s brief post US jobs-numbers rally. On the Comex division of the New York Mercantile Exchange, gold futures for June delivery in late afternoon trade exchanged hands for $1,296.90 an ounce, down close to $7 compared to Friday’s close.
Volume was noticeably thin with 70,000 contracts traded, compared to average daily volumes on the exchange of around 200,000. Reuters quotes Jonathan Jossen, a COMEX gold options floor trader, as saying “investors are not taking any interest in the precious metals right now, and gold and silver are definitely in tight trading ranges.”……………………………………….Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Offering a space of breath to the Indian jewelers, the latest report revealed that the gold import in India surged nearly 50 tones in March, amid the RBI’s import restrictions. Since the RBI’s infliction of Gold import norms last year, gold import in the country was found to fade by volume, thereby creating drastic supply crunch for jewelries across the country.
The gold imported through illegal means have also increased due to the tightening of rules and enforcement of 10 % import duty because of which gold smugglers started experimenting on bizarre methods to sneak gold to India………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Dubai’s position as leading global bullion centre confirmed with almost 40% share of global gold trade volumes; a trade volume increase of 73% in comparison with 2012. Ahmed Bin Sulayem, Executive Chairman, DMCC, said: Dubai has quickly emerged as the leading global hub for the precious metals trade.
As a result of DMCC’s continuous efforts to realise the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President, Prime Minister of the UAE and Ruler of Dubai, the Emirate has risen as the destination for global precious metals trading. In 2013 almost 40 per cent of the world’s physical gold trade came through Dubai and the value of total gold traded through Dubai grew to US $75 billion, compared to US $6 billion in 2003………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The price of silver changed direction and rallied during last week. Is silver bound to recover anytime soon? Let’s examine the recent news that may affect silver and the silver ETFs.
The modest recovery of silver has reflected in the rise in demand for silver ETFs such as iShares Silver Trust (SLV). During the previous week, the Silver Trust’s price inched up by 0.5%. Conversely, other Silver investments such as Silver Wheaton (SLW) continued to fall and shed 1.6% from its value………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The price of zinc could get up to $4,500/mt by the end of the decade as supply is outstripped by increasing demand, CRU analyst Helen O’Cleary said Monday. The analyst — speaking at the Metal Events 6th International Zinc conference in Dubai — said that supply is likely to be outpaced by demand leaving a hole in the market propelling zinc to the lofty highs last seen in 2006/2007 of around $4,000-4,500/mt.
Three-months zinc priced on the London Metal Exchange closed the April 4 kerb session at $2,004/mt, it opened January 2, 2014, at $2,060/mt………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The World Steel Association (worldsteel) has published a major technical report on raw materials improvement in the steel industry. The report, which is the result of a project undertaken by worldsteel member companies and with the co-operation of raw materials and equipment suppliers, addresses the key challenges faced by the steel industry in the management of raw material quality.
The study provides a broad assessment of raw materials reserves across the world and an analysis on the use of different quality raw materials with related technologies………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

During both of President Obama’s election campaigns, energy seemed to be one of the hottest topics of debate. Both sides of the political fence argued for continued growth and expansion of the U.S. energy industry; the ideal means of achieving this goal, however, were quite different according to each candidate.
Coal, in particular, faced significant scrutiny from Obama’s administration. Subsequently, investments in the coal industry have faltered in recent years, and so has the only ETF offering targeted exposure to the commodity – the Market Vectors Coal ETF ……………………………………….Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Coffee has made an impressive comeback after a steep fall last year. A supply glut, uneven demand and investors’ appetite for stock markets over commodities resulted in a 20% decline in the price of the commodity last year. This was, in fact, the third year of decline in a row, with the commodity plunging about 88% in the time period.
Most investors thought that the trend would spill over into 2014 thanks to higher inventories which were thought to hit the 5-year high at June 2014 and the sluggish currency of Brazil – the world’s biggest producer and exporter of the commodity………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Japan’s prime minister, Shinzo Abe, deserves much of the credit for making currency-hedged exchange traded fund equity indices one of last year’s hottest selling investment products.
Mr Abe’s radical economic policies, which weakened the yen while reviving the Nikkei index of Japanese stocks, created the perfect environment for a currency-hedged Nikkei ETF to outperform. Investors in these products benefited from a weakening currency that provided major economic stimulus, without having to worry about forex movements eroding their returns………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The market price of a basket of commodities should increase roughly in line with inflation, but why would there be returns beyond this? While the spot prices of commodities tend to track inflation, futures contracts of commodities have historically delivered positive returns.
John Maynard Keynes laid the foundation of modern thinking on commodity futures markets . He proposed that investors in commodity futures are providing risk capacity to the producers of commodities by allowing them to lock in a fixed price for commodities to be delivered at a future date. In other words, investors in future contracts are essentially insuring commodity producers against a decline in prices in the future………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The Dubai Gold and Commodities Exchange (DGCX) is planning to launch agricultural commodities contracts in the first quarter of 2015, the bourse’s chief executive officer said on Monday.
“That’s something we really want to do, as we want to be able to diversify the products that we list on the exchange,” Gary Anderson told Reuters on the sidelines of a precious metals conference in Dubai………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The London Metal Exchange may not launch its new aluminium premium contract until early next year, the exchange’s top executive said on Monday, months after a competing product from U.S. rival CME Group Inc is expected to go live.
The distant date for the new LME contract will stir the debate over its ability to resolve the years-long issue of backlogs and inflated physical prices that U.S. end users say are costing the industry $6 billion each year………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Robert Howell has left Schroders after 16 years with the investment company to pursue opportunities outside the financial industry. Howell had also been lead manager on the Schroder Commodity fund, which has $2.6 billion in assets.
He is replaced in the role of head of commodities by Geoff Blanning, who is currently head of emerging markets debt, commodities and currencies group………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Many of Africa’s roads are scarred with potholes, so the fresh tarmac on the drive between Ndola and Kitwe, two cities in Zambia’s copper belt, is something of a treat. The country’s roadbuilding is financed by a $750m Eurobond (as dollar bonds issued outside America are known) issued in September 2012. The timing was perfect.
The Federal Reserve had an open-ended commitment to buy Treasuries to keep yields low. Investors in America and Europe were hungry to buy dollar-denominated debt offering juicy yields. Zambia drew $12 billion of orders for a ten-year bond paying only 5.4%. Spain could not borrow as cheaply at the time………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

The United States warned Beijing on Monday that the recent depreciation of the Chinese currency could raise “serious concerns” if it signalled a policy shift away from allowing market-determined exchange rates.
Washington has been pressing China for years to allow its currency to trade at stronger values. A weak yuan makes Chinese exports cheaper for U.S. consumers at the expense of U.S. producers. A weaker yuan also makes Chinese consumers less able to buy foreign goods………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Before the global financial crisis, the strange phenomenon of “uphill” capital flows—money moving out of middle-income economies and into richer ones—garnered considerable attention. While private capital was flowing in the opposite direction, net flows were driven by emerging markets’ accumulation of foreign exchange reserves, mostly stashed in the government bonds of advanced economies.
A confluence of recent events, some of them little noticed, has set the stage for this trend to resume, with emerging markets stockpiling reserves in ever-greater quantities. Currency tensions, with Asian economies again at the forefront, are set to rise. A prime cause of the problem will be the lessons leaders learned from Washington’s response to the financial crisis of 2008………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

Hedge funds’ raised the stakes in their bets on agricultural commodity prices for a ninth successive week, one the longest sprees on record, as a US corn planting hopes added to concerns over weather setbacks to a number of crops.
Managed money, a proxy for speculators, raised its net long in future and options in the top 13 US-traded agricultural commodities by more than 49,000 contracts in the week to last Tuesday, according to data from the Commodity Futures Trading Commission regulator………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

In science, more information is supposed to lead to better conclusions and greater consensus. The Intergovernmental Panel on Climate Change (IPCC), which published its latest report on March 31st, certainly has more information. The new study synthesises 73,000 published works (a quarter of them in Chinese). This represents a 100-fold increase in about 30 years.
But consensus remains elusive. Richard Tol of Sussex University, in Britain, disparagingly appraised the report’s conclusions as “the four horsemen of the apocalypse”. The final version appears to have been fought over paragraph and comma between those (such as Dr Tol) who want to describe dispassionately what they think is happening and those who want to scare the world into taking action………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

India has long been regarded a ‘climate change hotspot’, and the subcontinent is at the forefront of the worst impacts in terms of human livelihood and food security. Given that 70 per cent of our arable land is estimated to be prone to drought, 12 per cent to floods and 8 per cent to cyclones, we need to pay attention.
According to the fifth assessment report of working group II, released by the inter-governmental panel on climate change (IPCC), by 2100, with the current pace of climate change and development trends, and in the absence of adaptation, millions of people in South Asia will be affected by droughts, glacier melts, cyclones and coastal flooding………………………………………..Full Article: Source

Posted on 08 April 2014 by VRS |  Email |Print

New government plans to strengthen China’s “pollution permit” market have been applauded as the meaningfulness of existing trials of the system has been called into question.
Since 2007, China has set up more than 20 local pilot trading platforms for the permits. Not to be confused with carbon trading, which targets greenhouse gases led by carbon dioxide, this scheme allow industrial firms to buy and sell rights to emit pollutants like sulphur dioxide and nitrogen oxide, major causes of smog and acid rain………………………………………..Full Article: Source

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