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Commodities Briefing 14.Apr 2014

Posted on 14 April 2014 by VRS |  Email |Print

Even though the main commodity index, the UBS Bloomberg CMCI Composite, has risen modestly recently there have been relatively few gains outside of agriculture. Indeed, it was the only main sector to show positive returns as continuing poor weather conditions led to further rises in many grain prices. Elsewhere, the only moves of note were a sizeable fall in copper and renewed weakness in the gold price.
A global economic background of slower emerging market growth, combined with the reform and rebalancing of a Chinese economy generating a significantly lower trend growth rate, presents a more difficult medium term backdrop for many commodity producers. This represents a departure from the structural bull market witnessed during the last decade and will lower potential returns until capacity tightens again………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Big changes are under way among global energy and food commodity traders, with a flurry of first-quarter acquisitions and leadership moves that cover Asian, European and North American companies.
Last month, Swiss firm Mercuria Energy stepped closer to joining Vitol, GlencoreXstrata and Trafigura at the top of the independent energy and metals trading hierarchy, following its $US3.5 billion purchase of US investment bank JP Morgan’s physical commodity operation………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Country’s new oil minister has set a new output target of 5.7m barrels per day of crude within four years. Iran has unveiled plans to double its oil production by the end of the decade and, ignoring sanctions, pump billions of dollars of its currency reserves into developing its share of the world’s largest natural gas reservoir in the Persian Gulf.
The country’s new oil minister, Bijan Zanganeh, has set a new output target of 5.7m barrels per day (bpd) of crude by 2018, according to the official state-run news agency Shana. The latest figures produced by the Organisation of Petroleum Exporting Countries (Opec), show that Iran is currently pumping about 3m bpd of crude………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

The group, which pumps about 40 percent of the world’s oil, reduced output to the lowest for March since 2011 as a standoff between the Libyan government and rebels kept exports near the lowest level since Muammar Qaddafi was driven from office.
Output from the Organization of Petroleum Exporting Countries fell for the fifth time in seven months, according to a Bloomberg News survey. The International Energy Agency, which advises oil-consuming countries, said April 11 that OPEC will have to pump more crude after a “steep drop” last month………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Global crude oil supplies fell month-on-month in March by a steep 1.2 million b/d to 91.75 million b/d, with a decline in output from members of the Organization of the Petroleum Exporting Countries accounting for near 75% of the loss, according to the International Energy Agency’s most recent Oil Market Report.
Due to sharply lower supplies from Iraq, Saudi Arabia, and Libya, OPEC crude oil supplies in March fell 890,000 b/d to just 29.62 million b/d—the lowest level in 5 months………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

New data from the Energy Information Administration shows that crude reserves in the U.S. hit their highest levels since 1976. The EIA released a report on April 10, entitled “U.S. Crude Oil and Natural Gas Proved Reserves (2012),” which indicated that 2012 marked the fourth year in a row that proven oil reserves increased.
Not only that, but 2012 marked the largest increase in oil reserves for a single year – 4.5 billion barrels – since 1970. That is a remarkable feat since 1970 was the year that vast reserves, around 10 billion barrels, were booked in Alaska………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Venezuela, holder of the world’s largest oil reserves, requires the price of Brent crude to average $121 a barrel this year, about $14 more than current prices, for the country’s government to balance its budget, according to Deutsche Bank AG.
The break-even oil price for the South American nation has fallen from about $150 a barrel last year, the bank said, after the government allowed its currency to weaken last month to alleviate shortages of imports including medicine, food and toilet paper. Oil producers Russia, Nigeria and Bahrain also need prices higher than $100 a barrel to balance their budgets this year, Deutsche Bank said………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

The commodities complex was relatively well supported on Thursday despite the wave of risk aversion that swept across other asset classes. Thus, for example, three-month copper futures actually finished the day higher by 0.6% to $6,636/metric tonne mark on the LME despite remarks from China’s Premier that the country will not embark on any significant stimulus to ward off a short-term economic slowdown.
Crude futures also took news of falling oil output from the Organisation of Petroleum Exporting Countries (OPEC) in their stride………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

For this simple reason, it remains the world’s main source of power, providing a quarter of our primary energy and more than 40% of our electricity. And it will continue to do so for many years to come.
The challenge, then, is how to harness coal’s energy more cleanly. While global attempts to develop carbon capture and storage (CCS) have stalled, a number of countries are looking at different ways to exploit their abundant coal reserves. Not all are motivated by environmental concerns, but are driven instead by economics and a desire for energy independence………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Bearish speculators misjudged gold bets again as the release of Federal Reserve minutes extended this month’s rally in bullion. Money managers cut their net-long position to the lowest since February in the week ended April 8. The minutes of the Fed’s March meeting the next day played down forecasts for higher rates, and gold had its biggest weekly gain in a month.
Speculators misjudged prices in three of the past four weeks. First, investors anticipated accelerating inflation only to see the Fed signal higher borrowing costs in 2015. Then, bets that the gold rally would fizzle were undermined by weak economic reports………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Over the first quarter of the year, gold prices benefited primarily from unexpected weakness in the US economy. Abnormally cold winters dampened economic activity, causing 10-year yields to drop 33 basis points to 2.75 per cent, reducing the opportunity cost of holding gold. At the same time, the dollar lost around one per cent, further contributing to higher dollar-denominated gold prices.
Geopolitical events have also been positive for gold prices. The crisis in Ukraine caused investors to seek a safe-haven store of value in case the annexation of Crimea led to military conflict in the region………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

People love to debate, but sadly sometimes it crosses a line and turns argumentative. That’s what is happening right now with the debate over gold. There have been several high-profile articles, most recently in the Wall Street Journal, saying you should eliminate gold as a worthwhile part of your portfolio. Primarily because of this year’s lower price.
Against that idea, many bloggers and private investors, wondering why gold prices have fallen, say that it shouldn’t have dropped. There must be some conspiracy driving down prices when money-printing and our still-weak economy should be driving gold higher………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

The latest news regarding the gold price per ounce is looking much better than the end of 2013. In 2013, gold bugs saw the gold price dropping 24% against the U.S. dollar. It was the third-worst decline in the history of gold since the year 1975.
But since the start of the New Year, the gold market has experienced a steady rise in price that shows promising returns in the near future. Specifically, the gold price per ounce has risen about 17% over the last four months alone………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

On average, every quarter we are exposed to yet another price guidance by a mainstream analyst. Such analysts usually reside within a large investment bank. These calls become focal points for a sector and often seem to carry with them some form of self fulfilling prophecy.
Many come directly from the big financial firms and investment houses. They are respected because of their size and brand, which gives them credibility based solely on relative visibility. Goldman-Sachs was too big too fail; it was rescued and given banking status. “When the world’s most intelligent FDIC-backed hedge fund, pardon, bank says the current market structure is no longer necessary to Goldman, people notice, and promptly imitate”………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Silver investors will have been a little disappointed by the metal’s performance vis-a-vis the gold price following the latter’s gains after the release of the latest U.S. FOMC meeting minutes. The minutes suggested that the low interest rate regime may well continue longer than expected and resulted in a major boost to the stock market and a significant uptick in the gold price.
But it had rather less impact on silver which initially remained stuck below the $20 mark, although this morning’s trade has at last see it move up above this mark. Perhaps European investors are less pessimistic about silver’s investment credentials………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

The American GDX Gold Miners ETF is slowly becoming the de-facto standard for measuring gold-stock performance. Nearing its eighth birthday, GDX has even usurped the venerable HUI gold-stock index as this sector’s metric of choice in many circles.
While GDX has advantages and disadvantages compared to the traditional HUI, it is an excellent gold-stock benchmark. But it still falls far short of individual stock picking………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

A Chinese consortium is buying Glencore Xstrata’s copper mine in Peru in a $6bn (£3.6bn) all-cash deal, marking one of China’s largest mining acquisitions. The consortium is led by MMG Limited and includes China’s Citic Metal.
The acquisition is subject to regulatory approvals but all parties expect the deal to be done by the end of September. Analysts expect Glencore to use the proceeds from the sale to reduce its debt………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

The setting up of a vibrant Agricultural Commodity Exchange will be essential for Zimbabwe’s economic recovery as it has the capacity to stimulate the circulation of money, experts have said. A commodities exchange is an open and organised marketplace where ownership titles to standardised quantities or volumes of certain agricultural commodities are traded by its members.
Securities Exchange Commission of Zimbabwe (SECZ) chief executive Tafadzwa Chinamo said such a trading platform could stimulate more circulation of money in the economy, with benefits for investors and producers………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Commodity derivative trading hours, on platforms such as MCX and NCDEX, may soon go in for a break. “We are planning to allow an hour or half-an-hour break for commodity trading as the trading hours are long,” Ramesh Abhishek, Chairman, Forward Markets Commission (FMC), told Business Line. FMC regulates futures trading in commodities.
Currently, commodity trading on various exchanges can be done between 10 a.m. and 11.30 p.m. However, for stock spot and futures trading, the timing is 9.15 a.m. to 3.30 p.m. with 15 minutes extra time before the start of trade for the pre-trading session………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Bloomberg has negotiated a strategic partnership with UBS to allow its index business responsibility for governance, calculation, distribution and licensing of the bank’s commodity indexes. From 1 July, the indexes will be renamed from the Dow Jones-UBS Commodity Index Family to the Bloomberg Commodity Index Family.
“Benchmarks are at the heart of the financial system, and benchmark independence is key to the transparency and efficiency of global financial markets,” Bloomberg chief executive and president Dan Doctoroff said………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

Singapore’s central bank maintained its pace of currency appreciation, seeking to support growth while guarding against inflation as the economy expanded less than analysts estimated last quarter.
Gross domestic product rose an annualized 0.1 percent in the three months through March from the previous quarter, when it expanded 6.1 percent, the trade ministry said in a statement today. The median estimate in a Bloomberg News survey of 14 economists was 0.4 percent………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

The US dollar had a difficult week last week. It lost ground against all the major currencies. Falling interest rates, sparked by the FOMC minutes that reassured investors that an early US rate hike is highly unlikely and a drop in the equity markets that wiped out the first quarter gains, appear to have been the main culprits.
Recall that the dollar-bloc had led the move against the dollar last month, but since the new quarter began the euro and yen have participated. Last week, the yen and Swiss franc were the strongest of the majors, while the dollar-bloc seemed to tire………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

The world’s leading climate science body has released its second report in two weeks, this time outlining how the planet can avoid dangerous climate change. It’s found greenhouse gas emissions are at unprecedented levels, despite a growing number of policies to reduce climate change.
And as for the cost of mitigation? Economists estimate it would be up to 6 per cent of GDP by 2050. The high speed mitigation train would need to leave the station soon and all of global society would have to get on board………………………………………..Full Article: Source

Posted on 14 April 2014 by VRS |  Email |Print

IPCC report says carbon pricing is ‘cost-effective incentive for everyone to look for their best option to lower emissions’. The international community believes Australia is taking a “backwards step” by scrapping carbon pricing, which is seen as a key tool in cutting emissions, according to an Intergovernmental Panel on Climate Change lead author.
Prof David Stern, a lead author of the UN report which was released on Sunday, said although the IPCC was policy-neutral, the report makes clear the benefits of carbon pricing………………………………………..Full Article: Source

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