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Commodities Briefing 25.Apr 2014

Posted on 25 April 2014 by VRS |  Email |Print

After several tough years, investors are once again starting to warm to commodities. That is the view of one of the sector’s most successful hedge fund managers. According to Pierre Andurand, “smart investors” are growing concerned about their exposure to equities and are looking to place contrarian bets in other asset classes such as commodities.
“We feel sentiment is turning. Pension funds are coming to us and saying they want to invest in commodities while others aren’t looking,” says Mr Andurand, whose eponymous hedge fund returned almost 25 per cent last year………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Thin margins, tough regulations and worries about reputation make trading commodities look like a source of worries not profits for nervous bank bosses. Barclays, one of the biggest in the business, is the latest to head for the exit. This week it announced it would give up most of its metal, crop and energy trading.
Barclays is following JPMorgan Chase, which last month sold its physical commodities division to Mercuria, a private trading firm based in Switzerland, and South Africa’s Standard Bank, which sold its commodities unit in London to Industrial and Commercial Bank of China in January………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Commodities investors are bracing themselves for the ever-growing possibility for the occurrence of a weather phenomenon known as El Niño by mid-year which threatens to play havoc with commodities markets ranging from cocoa to zinc.
The El Niño phenomenon, which tends to occur every 3-6 years, is associated with above-average water temperatures in the central and eastern Pacific and can, in its worst form, bring drought to West Africa (the world’s largest cocoa producing region), less rainfall to India during its vital Monsoon season and drier conditions for the cultivation of crops in Australia………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Before there were alternative investments (”alts”) or hedge funds, having some exposure to commodities, served as a good way to diversify a portfolio against stock market volatility. Historical correlations to the stock market are rather low, or at least sporadic, and owning commodities can also be seen as a hedge against inflation (higher costs of raw goods).
However, since the price of crude oil cratered from $150 per barrel all the way down to $40 back in 2008, the commodities asset class as a whole has been more or less shunned. Despite the price of oil having somewhat recovered — it currently trades around $100 — now might be a good time to un-shun………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

World commodity markets are turning more positive toward China as the country continues to import massive amounts of resources like iron ore, copper and soybeans even as economic growth slows.
Fears of a hard landing for China’s economy, which grew at its slowest pace in 18 months in the first quarter, have driven prices for many commodities sharply lower this year. That has compounded broad price declines since 2011, spurred by China’s decelerating economy and a wave of new supply of many raw materials………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

The price for the U.S. crude oil benchmark has moved closer to $102 per barrel in trading in part because of renewed concerns over Libya, once one of North Africa’s top exporters. On concerns Libya has not yet broken rebels’ grip on oil export terminals, West Texas Intermediate was trading at $101.40 per barrel, while the price for Brent moved at $109.10.
Though U.S. crude oil levels may provide some relief to market worries, the protracted stalemate over Libyan crude, coupled with continued unrest in Ukraine, could push oil prices higher through this summer………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Gas prices typically rise in the spring as refineries slow down operations in order to switch from producing winter fuel blends to less polluting summer grades. Gasoline demand is also ramping up as we head into the summer driving season.
This is also the time of year when many refineries schedule their annual maintenance. On Tuesday, Suncor announced a four-week shutdown of its Montreal refinery, taking as much as 137,000 barrels per day offline. During this period the company will be forced to pay higher prices by import supplies from Ontario and the Northeastern United States………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Over the past couple of days, the price of gold has been heading slightly downward. In fact, bears might argue that because the price of gold has been trading below $1,300 per ounce for a couple of days that we can expect additional downward price action in the gold price.
However, I think it might be time to look at the market from a different perspective — that is, we should be looking at gold mining shares………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

The demand for gold remained strong in Asian countries during 2013. The rise in gold demand among Asian countries, especially China and India, played a significant role in determining international gold prices. However, the heavy selling of gold hoards in gold backed Exchange Traded Funds (ETFs) is likely to offset the rising gold demand in the region.
According to World Gold Council (WGC), demand for gold jewelry, coins and bars continued to rise sharply in 2013. The Chinese gold demand surged by 32% over the previous year. India’s gold consumption grew 13% during the year………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

It’s a special day for the silver market. Why? Three years ago today, states BullionVault’s Miguel Perez-Santalla, the white metal traded at $49.80 per ounce on the New York spot market, meaning that somewhere it was changing hands at $50 per ounce.
Silver, however, hasn’t commemorated the occasion with a price rise. In fact, this week was fairly uneventful for the precious metal, which from Monday to Wednesday traded in a short range of $19.23 to $19.49………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Strong demand for zinc coupled with the imminent closure of several large mines is tipping the market towards deficit and enticing producers to restart mothballed operations.
Teck Resources, the Canadian company, said this week it would resume operations at its shelved Pend Oreille underground mine in the US, which has been idle since 2009. Although the zinc price has been flat this year, trading at $2,070 a tonne on Thursday, Teck is banking on a rally in the coming years………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

The Shanghai Futures Exchange (ShFE) plans to launch a futures contract on a base metals index as part of steps to internationalise its business, Chairman Maijun Yang said on Thursday.
ShFE is China’s biggest exchange for base metals, already trading copper, zinc, aluminium and lead. It said last year it also has plans to trade nickel and tin. Yang did not provide a timeframe for the new contracts………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Canadian investors are pulling money out of exchange-traded funds for a second year as concern grows that a rally in energy and mining that helped drive equities to the best performance among the world’s largest markets has run its course.
So far in 2014, investors have withdrawn $682.5 million from exchange-traded funds tracking Canadian shares, following an outflow of $820.8 million last year, according to data compiled by Bloomberg. The benchmark Standard & Poor’s/TSX Composite Index (SPTSX) is in its 10th month of gains, the longest winning streak since 1983, and has soared 20 percent in the past year. The gauge rose 0.2 percent to 14,557.27 at 10:55 a.m. in Toronto………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Fidelity Investments and BlackRock Inc, already partners in the exchange-traded funds market, are teaming up once again to launch a new ETF-heavy managed account aimed at providing income for investors preparing for retirement.
The new BlackRock Diversified Income Portfolio, which will be roughly 70 percent invested in ETFs, will be available beginning May 1 exclusively to the roughly 14 million retail customers who have Fidelity brokerage accounts, the company said on Thursday………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

British investors are using low-cost, exchange-traded funds to gain exposure to UK companies and markets, as the products become more mainstream.
Figures from Barclays Stockbrokers released this month show that 70% of the ETFs bought by its clients in their ISAs in the first quarter of 2014 had a UK focus, with the bulk of customers focussing on the FTSE 100………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Canadian investors are pulling money out of exchange-traded funds for a second year as concern grows that a rally in energy and mining that helped drive equities to the best performance among the world’s largest markets has run its course.
So far in 2014, investors have withdrawn $682.5 million from exchange-traded funds tracking Canadian shares, following an outflow of $820.8 million last year, according to data compiled by Bloomberg………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

The outlook for commodities is the best it’s been for a decade, according to Hermes Fund Managers, joining a long line of experts expecting more for the asset class in the coming years.
Old Mutual’s Richard Buxton and FE Alpha Manager Barry Norris are among the fund managers who have been increasing their exposure to commodities-related stocks in recent months. Many believe the pessimism towards Chinese demand has been overdone, and expect a sector-shift out of more expensive areas such as consumer staples and healthcare as a result………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

The London Metal Exchange will start accepting collateral denominated in Chinese yuan after setting up a clearing house in September as Asia increases its hold over the bourse.
The clearing house will become the “heartbeat” of the LME, the world’s biggest market place for industrial metals, said Chief Executive Officer Garry Jones. Asia’s share of electronic trading at the 137-year-old institution now accounts for 10 percent to 25 percent of the total on any given day, Jones said……………………………………….Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Banks’ pullback from commodities trading is weakening the link between raw materials and equities and helping to re-establish supply and demand as the main factor in setting prices, United Nations researchers say.
As Barclays Plc, JPMorgan Chase & Co. and Morgan Stanley leave parts of the business, prices of commodities are moving more independently of stocks. The correlation between U.S. equities and corn, cattle and wheat fell to less than 0.05 in January, compared with almost 0.3 in 2008, an analysis by David Bicchetti and Nicolas Maystre, economic affairs officers at the UN Conference on Trade and Development in Geneva, shows………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

People in the European Union, who according to a United Nations body eat way more protein than necessary, could prompt big cuts in nitrogen pollution if they halved their meat and dairy consumption, a U.N.-backed report said.
Nitrogen is used in fertiliser to replace nutrients which are removed by soils during plant growth but excess nitrogen can harm the environment by polluting water, air and soil………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

The strong New Zealand dollar may be the thing that ends up putting the brakes on the Reserve Bank of New Zealand’s tightening cycle. The RBNZ raised interest rates Thursday for the second straight month, to 3.0%, as the economic expansion gains momentum and inflationary pressures increase.
This time, though, the RBNZ abandoned its usual attempts to talk down the currency – which jumped as a result – and noted that the strong local dollar might limit how much the bank needs to raise rates. The so-called Kiwi dollar was trading at 0.86 to the U.S. dollar Thursday afternoon………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

With the eurozone facing the threat of a prolonged period of “low-flation”, the European Central Bank has been urged to stretch its monetary policy toolkit further and deploy more unconventional measures.
One widely flagged option would be to cut the interest rate that banks receive for parking their money with the central bank to below its current zero level. Frankfurt would then replicate an experiment first tried by Denmark’s central bank, which in 2012 cut its deposit rate to -0.20 per cent………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Only 130 Australian companies will have any limits set on their greenhouse pollution. The Coalition has confirmed it will provide an additional $1bn to its emissions reduction fund but has also revealed that only 130 Australian companies will have any limitations on their greenhouse pollution after the carbon tax is repealed.
The government will start auctions under its “direct action” climate policy later this year, paying companies or organisations that volunteer to reduce emissions until Australia reaches its emissions reduction target of 5% by 2020………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

Pronounced dead-on-arrival upon its introduction in 2013, the carbon tax bill authored by Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.) is attracting a healthy bit of lobbying, suggesting both industry and environmental groups are looking down the road to a resurrection of legislation that failed in the Senate in 2010.
A total of 36 companies and organizations reported lobbying Congress in the first quarter of 2014 (Jan. 1 through March 31) on the Boxer-Sanders bill, and 10 lobbied on a yet-to-be introduced climate bill being readied by Rep. Henry Waxman (D-Calif.) and other House and Senate Democrats. Some of those groups lobbied on both bills………………………………………..Full Article: Source

Posted on 25 April 2014 by VRS |  Email |Print

South American countries should consider creating fiscal stabilization funds to buffer their economies against a decline in commodity prices expected to damp growth in the coming years, the International Monetary Fund said.
Setting up stabilization funds and accelerating infrastructure investment would allow the economies to increase productivity to sustain growth as a decade-long commodity boom peters out, the Washington-based fund said in a report posted on its website………………………………………..Full Article: Source

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