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Commodities Briefing 10.Apr 2014

Posted on 10 April 2014 by VRS |  Email |Print

China’s economic deceleration has spooked commodity markets. But the International Monetary Fund, in its latest global economic report, said China’s demand for commodities is far from peaking.
The IMF noted China’s rebalancing away from an investment-led economic model does not mean its consumption of commodities will tail off. Looking at growth trajectories in China, South Korea and Japan, the fund found that China’s per capita gross domestic product would need to double before that started to happen. (GDP per capita stood at $6,600 in 2013, the IMF estimates.)……………………………………….Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Economic growth in Latin America and the Caribbean will slow this year as commodity prices remain flat or drop on a deceleration in China, the World Bank said in a report today.
The region’s economy will climb 2.3 percent in 2014 after expanding a “disappointing” 2.4 percent last year, the Washington-based lender wrote in the report, “International Flows to Latin America: Rocking the Boat?” That would be less than half the pace of growth in the years before the global financial crisis in 2008………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

A U.S. regulatory agency on Wednesday issued tips for bankers and examiners on potential risks involved with loans for oil and natural gas production, as the domestic energy boom continues.
The U.S. Office of the Comptroller of the Currency (OCC) published on its website a bulletin laying out supervisors’ expectations for energy production lending and spelling out new examination procedures for banks issuing the loans………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Energy companies are mounting a last-ditch effort to prevent the Federal Reserve from cracking down on physical commodity trading by major Wall Street banks, saying more restriction may further damage liquidity and raise hedging costs.
In a handful of early submissions on potential new rules, industry groups and big corporations like UPS and refiner Alon USA Energy Inc urged the Fed not to push banks out of physical markets. They warned that the unregulated commodity trading houses who are now expanding in the space may pose credit and counterparty risks that financial firms do not………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Higher regulatory pressure and diminishing profit potential. Are these just excuses, or are they the real reasons we’ve seen a major shift by the investment banks out of commodities and physical trading?
Over the past two years, if we look at two headliners for commodities and metals - gold and corn- we can see why. Not pretty. Actually, ugly. So as you can see, probably more of a problem with diminishing profitability rather than regulatory oversight………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

The International Monetary Fund (IMF) has said that most GCC economies continue to have “substantial buffers” to cope with short-lived oil price shocks despite an expected drop in their current account surpluses.
In its World Economic Outlook, published ahead of its spring conference in Washington, the IMF said economic growth in most of the GCC economies is to hover near the rates registered in 2013, with Saudi Arabia, the largest Arab economy, expanding by 4.1 per cent in 2014, compared to 3.8 per cent in 2013………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

A rapid growth in US oil production combined with potentially weaker global demand present a downside risk to Gulf oil output and prices, the International Monetary Fund warned Tuesday.
But despite an expected drop in their current account surpluses, most Gulf Cooperation Council economies continue to have “substantial buffers” to cope with short-lived price shocks, the IMF said in its World Economic Outlook………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

The direction of oil prices is once again a hot topic. In a recent Barron’s article, Ed Morse, Citigroup’s head of global commodity research, forecasts a collapse in global oil prices to $75 /b over the next three to five years.
By contrast, Chevron has announced that it is budgeting with $110/b oil for 2017, with the company’s CEO John Watson stating, “There is a new reality in our business… $100/bbl is becoming the new $20/bbl in our business… costs have caught up to revenues for many classes of projects.” And for good measure, he adds, “If $100 is the new $20, consumers will pay more for oil.”……………………………………….Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

OPEC, which supplies 40 percent of the world’s oil, will accommodate additional output from members Iraq, Iran and Libya, Secretary-General Abdalla El-Badri said, without explaining how it will do so under the group’s ceiling.
The Organization of Petroleum Exporting Countries will wait until 2015 to discuss output targets with Iraq, which currently operates outside the production-quota system for each of the group’s other 11 member countries, El-Badri told reporters today in Doha, Qatar………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Most of the growth in petroleum and other liquid fuel supplies comes from countries outside of OPEC, the U.S. Energy Information Administration said. EIA said it projects petroleum and other liquids supply to increase by 1.4 million barrels per day in 2014 and 1.3 million bpd in 2015, with most of the growth coming from North America.
In its short-term market report for April, EIA said it expects production from members of the Organization of Petroleum Exporting Countries to fall by 200,000 bpd in 2014 and in 2015, in part because of rising production elsewhere………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Gold was trading near its highest in two weeks on Wednesday, bolstered by signs of increasing demand in China and as rising tensions over Ukraine burnished its safe-haven appeal.
But investors continued to pull money out of gold-backed exchange-traded funds, raising the risk that price gains could be short lived. Spot gold had risen 0.2 percent to $1,311.10 an ounce by 0646 GMT, after gaining 0.9 percent in the previous session. The metal hit a two-week high of $1,314.43 on Tuesday………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

June gold finished the day up $10.60 at $1,308.90 an ounce. Spot gold ended the session on a favorable note as well, up $12 at $1,309.50. The yellow metal is up 1.1% in April, and up 8% year to date.
Stoking yellow metal gains Tuesday was a weaker dollar and troubling headlines out of politically unstable Ukraine. Gold, a safe-haven investment, moves when market uncertainty and geopolitical tensions increase………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

According to many analysts surveyed at the beginning of 2014, this year was not supposed to be a good one for silver. In fact, in January we reported that many silver forecasts saw the silver price averaging around $21 per ounce. We are now in a mindset where any activity above $20 per ounce is greeted with positivity and chatter about a price recovery.
Is this what we have to look forward to? Pop-ups above $20? We take a look at what’s been going on this year and a couple of the issues affecting the price of silver………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

We are about to see the end of our current international monetary system. Based on much of the evidence that I have written about previously, this appears to be a certainty. The systematic build-up of this current monetary order went together with the gradual phasing out of silver from the monetary order.
This system, by its very nature, has been diverting value away from silver. To understand this, just imagine that silver was actually used as currency (like the paper Dollar is currently used); we would then have much less silver available for sale in the current silver market. Based on the demand and supply economic model, this would then mean that the silver price would rise significantly………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Move over, gold. Palladium is ready to shine. The precious metal, used mostly to make catalytic converters that clean up emissions from combustion engines in cars, has seen a 7-percent jump in futures prices year-to-date. And analysts see further upside for the commodity, thanks to squeezed supply and growing automobile demand.
Trading around $782 per ounce, palladium is mainly produced in South Africa and Russia. Ongoing strikes by miners in South Africa and unresolved tension surrounding sanctions on Russia could drive up the prices by triggering supply constraints………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

The strategy discussed below may play a very significant role for a portfolio hedger who wishes to use relatively little capital for the purpose being achieved (assuming the inverse relationship between silver and equities), while offering speculators what may be the single greatest expression of very long term leverage that I have ever seen in my 32 years in the industry, including the other major silver troughs, as well as the Japanese, Shanghai and New York summits.
Two other simultaneously written reports illustrate the confluence of events in the other major asset classes that are supportive and consistent with the here-contemplated Wave-3 eruptions in the precious metals………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Copper prices are likely to remain under pressure in 2014 as the market posts a moderate supply/demand surplus, said Thomson Reuters GFMS Tuesday.
The consultancy released its GFMS Copper Survey 2014, the fifth edition of the report on the copper market, during CESCO Week copper convention in Santiago, Chile. Analysts said they look for the annual average price to be below $7,000 per metric ton in 2014 for the first time since 2009, with a rest of $6,000 likely over the second half of the year………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

The World Steel Association (worldsteel) has released its Short Range Outlook (SRO) for 2014 and 2015. worldsteel forecasts that global apparent steel use will increase by 3.1% to 1,527 Mt in 2014 following growth of 3.6% in 2013. In 2015, it is forecast that world steel demand will grow further by 3.3% and will reach 1,576 Mt.
Chairman of worldsteel Economics Committee, Mr Hans Jürgen Kerkhoff said “In 2013 world steel demand grew higher than our previous forecasts due to a stronger than expected performance in the developed world in the second half of the year………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

The world is mining more iron ore than steelmakers need. Australia, the largest supplier, sent 504 ships from Port Hedland during the first quarter carrying enough iron-ore exports to build more than 700 Golden Gate Bridges. Shipments jumped 35 percent to the biggest buyer, China, where inventories have ballooned to the highest ever.
After companies including BHP Billiton Ltd. and Rio Tinto Group expanded capacity to meet surging steel demand, output is climbing just as China’s economy slows to the weakest since 1990………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

U.S. retail and institutional investors pulled cash from broad commodity exchange-traded funds for a fifth straight quarter even as coffee, natural gas and hogs prices had their best run in years, data from Thomson Reuters Lipper showed on Wednesday.
Lipper, which tracks nearly 270 U.S. exchange-traded commodity funds and products worth about $240 billion, noted a net outflow of nearly $2.7 billion in the first quarter of this year………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Volatile global financial markets and a shift in investor sentiment were contributing factors to the rise of commodities exchange traded products in the first quarter.
After being severely punished last year, exchange traded funds backed by physical holdings of gold rebounded in the first quarter with the SPDR Gold Shares posting a gain of 4.8%………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

More money flowed into silver exchange-traded products than any other commodity during the first quarter, enabling commodity ETPs as a whole to post their first net inflow since the fourth quarter of 2012, ETF Securities said Wednesday.
Gold had a small net outflow for the quarter due to the activity in January, but nevertheless investment demand took off again in the months of February and March, ETF Securities said………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

UBS has transferred control of one the world’s top indices for commodity prices to Bloomberg as banks retreat from setting financial benchmarks in the wake of the Libor scandal.
Governance, calculation, distribution and licensing of the Dow Jones-UBS Commodity Index will now fall to the financial data and media company, which plans to rename it the Bloomberg Commodity Index on July 1, said Srikant Dash, head of Bloomberg Indexes………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

What’s the best bet for commodity bulls mulling how to exploit the El Nino which looks an increasingly likelihood this year?
It may actually be a metal rather than any of the crops which suffer the most high-profile effects from the weather pattern, which is linked to the likes of drought in eastern Australia, denting wheat production, dryness in South East Asia, hurting palm oil output, and flooding in Ecuador’s cocoa belt………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Like a still obscure version of online dollars, bitcoins – or something like them – are here to stay and redefining money. No, you can’t open a Bitcoin bank account at JP Morgan Chase just yet. And you certainly can’t pay your IRS tax bill in bitcoins: the taxman views the fledgling cyber-currency as an asset, not a means of exchange.
We can’t hold it in our hands, use it to fill up our cars with gas, or do much but grab the occasional sushi dinner in places like San Francisco, or shop online at the handful of merchants that accept bitcoins………………………………………..Full Article: Source

Posted on 10 April 2014 by VRS |  Email |Print

Prime Minister Tony Abbott’s visit to Japan, China and South Korea this week offers the opportunity for the government to witness the changing circumstances in regional climate leadership and the accelerating Asian action on carbon and clean energy.
These have seen Asia become the epicentre of clean energy investment and seen Asian nations the biggest movers in a range of indicators, such as last year’s TCI/GE G20 Low-Carbon Competitiveness Index………………………………………..Full Article: Source

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