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Commodities Briefing 16.Apr 2014

Posted on 16 April 2014 by VRS |  Email |Print

Facing low volatility, a lack of trading opportunities and compliance headaches, major global investment banks are pulling back from commodities. But at the same time, a number of smaller and regional players are actively seeking to increase their involvement.
A sinking feeling has pervaded Wall Street recently. During the past few years, commodity revenues have been falling at major global investment banks. Industry titans such as Deutsche Bank, JP Morgan and Morgan Stanley have decided to quit large parts of the commodities market, or leave it altogether………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

It is time to take commodities seriously as an investment, and in particular a portfolio diversifier, according the strategists at Citi. They point out metals, hydrocarbons and basic foodstuffs have outperformed equities and bonds over the past quarter.
Citi’s team expects that trend to continue into the second three months of the current year. And its analysts go as far as to suggest the historic relationship between stocks, government debt and commodities has returned to a normal pattern. The negative correlation between equities and commodities, made the latter and ideal ‘diversifier’ in a balanced portfolio………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

A long-term investment in South African commodities — especially gold — is expected to produce a sizable payoff, according to a CCTV Africa report. Standard Bank Commodities Analyst, Walter De Wet, expects that prices will continue to rise as stocks mature and production heightens. More importantly, with the increased investment of China, commodities in Africa — and on a global scale — will edge toward stability.
“We think that China is underinvested in this metal. We do think the physical demand from west to eats will continue. Once the U.S. market is normalized and stabilized, we do think that gold will continue to grind higher,” De Wet said. ”We think long-term price for gold is closer to $1,500 than $1,100.” ……………………………………….Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Prices of commodities including gold, copper and Brent crude oil are enjoying an uptick as global equity indices are spooked by a sell-off in tech stocks and political unrest in Eastern Europe, according to data from Charles Stanley.
Between 7 and 11 April the price of gold, silver, copper and Brent crude rose 0.8 per cent, 0.3 per cent, 0.05 per cent and 0.31 per cent respectively. In stark comparison, all major global equity indices bar China’s Hang Seng suffered losses averaging 3 per cent, with Japan’s Nikkei 225 taking the biggest hit, shedding 7.3 per cent………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

There is a lot of talk about El Nino and often, as is the case in commodities, some hype over which crops and futures contracts will be affected in coming weeks and months. It is important to look, not just at the timing of when El Nino forms and how strong it might be, but ocean temperatures in other parts of the globe.
El Nino “does not” always imply higher commodity prices and disasters around the world. In fact, a cooler U.S. summer and weak hurricane season would cap rallies in corn, soybeans and natural gas this summer. In addition, global ocean temperatures (see below) may bring about good early season weather for West Africa’s cocoa crop………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Forecasts that the USA will achieve zero net oil imports by 2020 appear to be on-track. While the U.S. Energy Information Administration (EIA) and a number of media pundits (notably on the left side of the political spectrum) take a more cautious — or even downright negative — view, the US-EIA’s own data gives good reason for hope.
Between 2006 and 2013, the United States cut its net imports in half. If this trend continues, zero net imports will occur in late 2019 or early 2020………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Global supplies jumped by 600 kb/d in February to 92.89 mb/d, led by a significant rise in OPEC crude output of 500 kb/d. Compared with a year ago, February production stood 2.03 mb/d higher, with non-OPEC supply up by 2 mb/d and OPEC crude output nearly unchanged (-5 kb/d).
Non-OPEC oil production rose by 100 kb/d to 55.9 mb/d in February, led by marginally higher output in Canada and the US. Output barely rose outside of North America, with a meaningful rise occurring only in Latin American countries, most notably Colombia………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Irans global crude oil exports have far-exceeded the one-million barrel-per-day cap set by the West. The Israeli paper referred to a recent IEA report as saying that Irans global oil exports in February made the highest record since June 2012.
The IEA’s monthly report revised February’s global crude imports from Iran upwards by 240,000 barrels per day to 1.65 million barrels per day, the highest since June 2012………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

French energy company Total said it was sinking $16 billion into oil projects off the coast of Angola. The French major is following the bread crumbs offshore Angola and now the country aims to re-establish itself as a major oil player by courting investors to onshore fields.
Total said it made a final investment decision to develop the deepwater Kaombo project off the coast of Angola. High costs had delayed the decision, though Total now says it could produce as much as 230,000 barrels of oil per day once operations begin in 2017………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

OPEC predicts Azerbaijan’s oil production to amount to 0.87 million barrels per day (bpd) on average in 2014, Azernews reported on April 14. OPEC’s April oil market report said the production in the country will reach 0.89 million bpd in the fourth quarter as the highest production level of the year.
OPEC estimates the country’s oil production in the first quarter of 2014 was steady at 0.83 million bpd. In the second quarter, Azerbaijan’s oil production is predicted at 0.86 million bpd, in the third quarter at 0.88 million bpd, in the fourth quarter at 0.89 million bpd………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

A new study by scientists from Purdue and Cornell suggests that the methane emissions from shale gas could be much higher than previously thought. The study, published in the Proceedings of the National Academy of Sciences, looked at fugitive methane emissions in Pennsylvania by flying an airplane over drilling sites and collecting samples. What they found was a bit unnerving.
“It is particularly noteworthy that large emissions were measured for wells in the drilling phase — in some cases 100 to 1,000 times greater than the inventory estimates,” said Purdue chemistry professor Paul Shepson………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Gold will remain a strong safe-haven bet in spite of its recent seesawing price as the Ukraine crisis and expectations of a further pullback in U.S. equities will push the precious metal’s price higher, CNBC’s weekly sentiment survey showed.
Some of those surveyed believe gold has enough momentum to test the year’s highs near $1,400 an ounce last seen in mid-March, as investors strike a more risk-averse stance, shunning equities and rotating instead into safe-haven assets………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

In a major report published on Monday by the World Gold Council “China’s gold market: progress and prospects” suggests that private sector demand for gold in China is set to increase from the current level of 1,132 tonnes(t)1 per year to at least 1,350t by 20172.
Following the record level of Chinese demand in 2013, which saw the country become the world’s largest gold market, the report suggests that while 2014 is likely to see consolidation, the succeeding years are likely to see sustained growth. The report examines the factors that have driven China’s rise to become the number one producer and consumer of gold since the market began liberalising in the late 1990s………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Gold miners suffered declines as the price of the precious metal sank below its 200-day moving average and began Tuesday on track for its biggest one-day fall since October.
Shares in half a dozen gold producers that trade in New York and Toronto fell in early trade while the S&P/TSX Global Gold Index shed almost 2 per cent on the day to close at 182.86………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

On April 15 last year, gold prices had corrected sharply, following investment bank Goldman Sachs saying it had a bearish outlook on the commodity. At that time, prices had fallen from $1,600/oz to $1,300/oz in only a few days.
On Tuesday, exactly a year later, gold prices again fell sharply in the foreign market—from $1,330/oz to $1,290/oz—in just a few hours. Again, it was Goldman Sachs that came up with a bearish outlook—it said the metal would hit $1,050/oz by the year-end………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Chinese companies may have accumulated up to 1,000 tonnes of gold for use as collateral in financing deals rather than to meet consumer demand in recent years, a new study says.
The report by the World Gold Council said imported bullion was being used “to raise low-cost funds for business investment and speculation”, and was part of the wider growth in shadow banking in China………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Apocalyptic predictions are usually the stuff of TV shows like “The Walking Dead,” but last week Marc Faber, a noted contrarian investor and publisher of the Gloom, Boom & Doom Report, made one of his own.
Faber, often not-so-affectionately called “Doctor Doom,” said Thursday on CNBC’s Futures Now program that the stock market is headed for a crash worse than the one seen in 1987. “I think it’s very likely that we’re seeing, in the next 12 months, an ‘87-type of crash,” he commented. “And I suspect it will be even worse.”……………………………………….Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Palladium prices have increased 16 percent since the beginning of February. Palladium is the best performer among precious metals since 2011 and it is close to reaching the record levels it recorded in spring 2011.
MetalMiner Lead Analyst Raul De Frutos predicted another strong year for palladium as the South African Miners’ Strike continues and supplies of the metal are bought by automakers and other end users. Russia’s position as the largest producer of the metal worldwide and possible international sanctions against it by other governments also throw its ability to supply the metal into question………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Nickel prices in London fell for the first time in two weeks, snapping the longest rally since 2010, as industrial metals slumped amid concern that the economy will falter in China, the world’s biggest consumer.
A report due tomorrow probably will show China’s gross domestic product expanded 1.5 percent in the first quarter, down from 1.8 percent in the fourth quarter, according to a Bloomberg News survey. Copper fell as much as 2.5 percent to below $3 a pound in New York, and aluminum dropped the most in more than a month in London………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

The nickel price finished an active Monday LME session firm and around a 14-month high but the rest of the complex were sideways to lower in Tuesday’s Asian session. The markets will be closely watching data out of China this week, as Beijing is set to release half of its monthly data this week.
In US data, March retail sales rose 1.1 percent against a forecast 0.8-percent increase, while February business inventories were up 0.4 percent. Little impact was seen from the releases on the metals, although it did help US stocks markets to bounce from the previous week’s slump………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Minmetals China announced in April 14, that it has put pen to an agreement to buy Glencore Xstrata’s Las Bambas copper mine project in Peru for 5.85 billion U.S. dollars. The project marks the largest external metal mining purchase by a Chinese enterprise.
Located in the Apurimac region in southern Peru, the Las Bambas project is the largest copper mine under construction in the world. On completion, it is expected to produce about 450 thousand tons of fine copper each year. Post-acquisition, China Minmetals will become the largest Chinese enterprise in the the production of copper, and squeeze into the global top 10 of copper producers………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Stocks have been taking a beating and the dreaded “correction” has been tossed around a lot. There is one group of assets however that are squarely in the middle of their own bull market – metals. Sure, gold and silver grab all the headlines, but industrial metals can make for some great investment plays too.
Jonathan Hoenig of CapitalistPig.com weighed in on Breakout. “Even in the first quarter of 2014 a lot of the commodities in general have been in legitimate bull markets,” he says before listing the likes of tin, nickel, zinc, copper, and lead as potential boons………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Equity-based energy exchange traded funds continue to shed the laggard status with which they were saddled last year and it is a diversified mix of funds that are seeing upside. Over the past month, the First Trust ISE-Revere Natural Gas Index Fund is the best-performing non-leveraged sector ETF with a gain of 11.1%, a performance that bests that of the United States Natural Gas Fund.
More traditional energy ETFs are getting on the act as well. Since the beginning of March, the Energy Select Sector SPDR, the Fidelity MSCI Energy Index ETF, the Vanguard Energy ETF and the iShares U.S. Energy ETF are each up at least 5.3%………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

The Obama administration is raising concern about the value of China’s currency but is declining, as in recent years, to accuse Beijing of manipulating it. The administration also expressed concern Tuesday about South Korea’s actions in currency markets and about countries that use the euro and have wide trade surpluses.
The Treasury Department said China’s currency, the renminbi, has appreciated but not as fast or as much as needed. Treasury reached that conclusion in its twice-yearly report on whether nations are manipulating currencies to gain trade advantages………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

In a day where Aussie was dragged lower by falling gold prices, Deutsche Bank released an interesting paper where they claim to have found “stronger evidence that currencies can help predict commodity prices rather than vice versa.”
According to the bank, the correlations albeit unable to offer immediate results for currency forecasters, indeed can help improve commodity forecasts. Here is what the bank believes traders should keep an eye on: “We find that NZD can help predict sheep prices, AUD and CAD can predict coking coal, while CAD also has predictive power over the BoC metals index. Overall, the NZD has the tightest relationship with commodities in both directions of causality.”……………………………………….Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

Brazil, looking to offset the carbon emissions generated by construction, travel and other activities related to hosting the 2014 Soccer World Cup, said on Tuesday it wants holders of United Nations-backed carbon credits to swap them for publicity during the games.
The World Cup begins June 12 and Brazil’s Environment Ministry said it has launched a program to convince owners of credits to exchange them for publicity in official documents of the event………………………………………..Full Article: Source

Posted on 16 April 2014 by VRS |  Email |Print

U.S. greenhouse gas emissions fell nearly 10 percent from 2005 to 2012, more than halfway toward the United States’ 2020 target pledged at United Nations climate talks, according to the latest national emissions inventory.
The report showed that emissions dropped 3.4 percent from 2012 to 2011, mostly due to a decrease in energy consumption and fuel switching from coal to natural gas. The Environmental Protection Agency on Tuesday published the United States’ 19th annual emissions tally to the U.N. Framework Convention on Climate Change………………………………………..Full Article: Source

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