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Commodities Briefing 17.Apr 2014

Posted on 17 April 2014 by VRS |  Email |Print

United Nations economists who previously called for government intervention to tame volatile swings in commodity prices say banks and hedge funds have since reduced their influence to the lowest level since 2008.
In a 2012 report for the UN Conference on Trade and Development (UNCTAD), David Bicchetti and Nicolas Maystre said the rise of financial players in commodities markets over the previous decade had moved prices of oil and grains away from the fundamentals of supply and demand………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

Commodities: As commodity prices become decoupled from equities, certain resources should again prove their worth as part of a diversified portfolio this year. After a lacklustre few years, commodities have had a short but strong run over the first few months of 2014.
Unfortunately, the recent bounce in the prices of selected resources probably does not represent the start of another bull market for commodities, but rather reflects more idiosyncratic influences on the supply-and-demand outlook for individual commodity groups. Broadly, commodities are unlikely to make up for past losses in 2014, although they should have a better year as the global economic outlook strengthens………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

Commodity-related equities have now troughed, according to JPM’s Neil Gregson, who says that the market has moved past the point of maximum pessimism. Having significantly underperformed and hit investors with huge capital losses over recent years, commodity and basic material stocks have bounced back and performed well relative to the wider global equity market so far in 2014.
Gregson, manager of the £1bn JPM Natural Resources fund, says this recovery in prices demonstrates that the market has now bottomed and that investors can expect a period of decent performance from the sector………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

Budget breakeven oil prices in most Gulf Arab producers are creeping upwards, as governments continue to push through investment stimulus programs despite flatter production. The budget breakeven price is a useful tool to understand what price of oil is needed to ensure that a budget is in balance for a given level of government spending.
Breakeven prices for Gulf states shot up from an average of USD 43.2 per barrel in 2007 to USD 78.8 by 2011 in the wake of the Arab Spring, as governments unleashed billions of dollars of investment to appease their populations………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

After decades of sporadic growth and political turmoil, Angola is on the verge of catapulting to the top ranks of the world’s energy economy following major deep-water production investments by several top global oil companies.
France’s Total announced that it planned to proceed with a $16 billion ultra-deep-water project 160 miles off Angola’s northern coast to begin production in 2017. About 185 pipelines located 6,200 feet beneath the ocean will connect 59 wells in six oil fields. Advances in drilling technology have enabled primarily large oil companies to produce oil and gas from reserves 4,000 to 5,000 feet underwater, an impossible task a mere generation ago………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

China’s gold-loving grannies bought enough gold last year to see them through this year, and perhaps longer. Despite prices lower than this time a year ago, when the gold rush in the world’s second-largest economy began, demand is likely to remain level this year, the first time it has not increased since 2002.
“We expect 2014 to be a year of consolidation,” a report from the World Gold Council, the trade group, said Tuesday. “The sudden price drop in 2013 meant some Chinese consumers brought forward jewelry and bar purchases, which may limit growth in demand in 2014.”……………………………………….Full Article: Source

Posted on 17 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 17 April 2014 by VRS |  Email |Print

Critics of price charting charge that charts only show for certain where a market has been. I completely agree. These charges are valid. Yet, understanding where market has been can provide historical context — and this historical context can be useful in anticipating the future. With the above disclaimer in mind, let’s take a look at Silver’s chart history.
Firstly, the monthly price chart shows that Silver remains in a long-term bull trend from the 1932 low. Yet, long-term trends experience sudden and violent counter-trend reactions. Such was the case in the 1980 through 1993 decline during which Silver priced declined by 93%. Silver bulls should know they can go broke being right on the metal’s long-term direction………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

This could be the year that certain industrially oriented metals rise in the second quarter, thereby bucking their seasonal trend, said BMO Capital Markets.
“Nickel and the PGMs (platinum group metals) are experiencing specific supply disruptions that, if sustained, could maintain upside price support through a traditionally weak season and potentially over the longer term,” the firm said. Copper has underperformed for the year to date but could improve as prices normalize to reflect a tight market this year, the bank said………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

A year ago today saw one of the largest declines in COMEX Gold and Silver futures in the last several decades. For those who argued that an electronic futures market– where an entire years worth of silver production can be bought or sold in one day– would always and everywhere be able to shrug off strong physical demand and set prices however futures traders saw fit, last April was vindication.
Coupled with a soaring stock market, the near destruction of the gold and silver bulls sent a powerful message to small savers: invest with Wall Street, or else………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

US investment bank Goldman Sachs said Wednesday it has upgraded its three-month and six-month nickel price forecasts on the back of the Indonesian ban on nickel ore exports.
The bank notes that following a fragmented Indonesian election result, the lack of a clear majority means it appears less likely the new president and coalition government will moderate their policies relating to the ongoing ore export ban………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

The EDHEC-Risk Institute’s latest survey of European investors in exchange-traded funds (ETFs) has revealed that the popularity of hedge fund products in the space has simultaneously jumped and slumped. 2013 was a good year for hedge fund ETFs in terms of their take-up by investors: their usage rose by 14.8% to a record high – above 40% – since the institute began its survey.
But conversely user satisfaction with hedge fund ETFs dropped from more than 50% in 2012 to just above 30%, the worst score since 2009. It is below even the satisfaction rating from 2011, when the db Hedge Fund index lost 6.7%. Last year it rose by 7%. In both years, though, it lagged the MSCI World index………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

London-based Armajaro Asset Management lost nearly a quarter of assets at its largest commodities fund in the first quarter, the latest sign that edgy investors have continued to withdraw cash from the sector after weak returns, documents show.
Assets under management at Armajaro Commodities Fund (ACF), the biggest of the group’s six hedge funds and one of three dedicated to commodities, fell to $686 million by end-March from $904 million at end-December, documents obtained by Reuters on the fund showed on Wednesday………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

Hong Kong Exchanges & Clearing Ltd. Chief Executive Officer Charles Li is said to be picking coal for his company’s first energy product a year after paying a record price for the world’s top metals bourse.
The world’s third-largest exchange operator will introduce thermal coal futures in Hong Kong this year, according to two people with knowledge of the matter. The futures will be denominated in the Chinese currency, said the people, who asked not to be identified because the information isn’t public. Scott Sapp, a Hong Kong-based spokesman for the company, declined to comment……………………………………….Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

A number of Western commodity companies are setting up new trading desks in Malaysia as the southeast Asian country introduces incentives in a bid to attract business away from the main regional trading hub Singapore.
Commodity houses Mercuria and Cargill have already set small desks in Kuala Lumpur, two sources said, and others are also studying the possibility………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

The Forward Markets Commission (FMC) is considering permitting bourses to offer centre-specific, short-term forward trades in highly traded farm products as the regulator aims to increase delivery in the Rs 101- lakh crore commodity futures market, which is dominated by speculation and hedging.
Termed a “game changer” by Ramesh Abhishek, chairman, FMC, these contracts will allow traders to buy commodities like chana, rapeseed mustard, castorseed, etc, on commodity exchanges,where currently they can’t do so. This, Abhishek feels, could increase delivery by physical market traders on the six national bourses, which posted volumes ofRs 101-lakh crore in the fiscal year through March………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

The US has told China its currency must be allowed to rise if it and the global economy are to see stable growth. The US Treasury’s twice-yearly report to policymakers says the yuan is “significantly undervalued”.
Unlike the euro and the dollar, the value of the yuan is not set by the market but is kept within certain limits of other world currencies. The US has long argued that the bands are set too low, making Chinese goods cheaper on the world market………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

China rejected on Wednesday a warning from the Obama administration that its currency was too weak, urging the United States to recognise that China aims to “perfect and regulate” the exchange rate system.
The Obama administration on Tuesday warned China that its currency was too weak and expressed doubt over the Asian giant’s resolve to let market forces guide the value of the yuan………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

Brussels is to grant €300m to a pioneering carbon capture and storage project in the UK. The move comes as the EU seeks to regain its lead in a technology seen as crucial in the fight against climate change.
Officials said the White Rose CCS development in North Yorkshire had qualified for a grant under a scheme run by the European Commission to support renewable energy, grid integration and CCS projects………………………………………..Full Article: Source

Posted on 17 April 2014 by VRS |  Email |Print

The European Commission will hold three meetings this summer on how to ensure the bloc’s industries can compete in global markets while meeting goals to cut greenhouse gas emissions, it said on Wednesday. The meetings aim to gather views on rules determining if companies can continue to receive free carbon permits under the EU Emissions Trading System (ETS) beyond 2020, when current measures expire.
They will also include how EU governments can fund the development of new technologies to help drive deep cuts in the heat-trapping emissions blamed for warming the planet………………………………………..Full Article: Source

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