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Commodities Briefing 02.May 2014

Posted on 02 May 2014 by VRS |  Email |Print

Some of the world’s largest banks are ditching their commodities business in moves that will become increasingly hard to reverse as a result of increasing regulatory pressures, says Joe Parsons. Barclays last week became the latest major bank to announce it will exit the majority of its commodities business, which includes energy and agricultural trading.
The move came after rivals JP Morgan, Deutsche and Morgan Stanley also either sold or said they will scale down a large part of their commodities business. Banks have tended to exit and re-enter markets at different times due to cyclical factors such as prices, demand for financing and levels of risk, according to Douglas Ziruys, senior vice president, Europe, of Fimetrix, a market intelligence firm for financial institutions………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

The price of Australia’s export commodities fell to a new four-year low in April. The Reserve Bank of Australia’s index of commodity prices was 1.3 per cent lower in foreign currency terms in the month. Prices for base metals and rural commodities rose in the month, but these rises were outweighed by falls for iron ore, coking coal and gold.
The April level of the index was 28 per cent below the July 2011 all-time high in July 2011, and as low as it has been since March 2010. There is some prospect of more stable prices recently………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Rabobank Australia’s Bruce King discusses how a possible El Niño may affect food prices this year with Angie Lau on Bloomberg Television’s “First Up.……………………………………….Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Since the beginning of this year, commodities have performed remarkably well. For example, while the S&P 500 has gained 2%, the Dow Jones Commodity index has gained 10%. Why have commodity values increased? Well, it is due to a number of reasons that include more positive news regarding the global economy, international political concerns, and extreme weather conditions.
Which Commodities are Currently Increasing in Price? Two commodities that have done particularly well are coffee and nickel with increases of over 15% in the past month alone. Coffee is up in price mainly due to the dry weather Brazil is experiencing, and nickel is mainly up in price due to the mineral ore export ban Indonesia imposed in January. However, as the economies in China, Europe, and the US improve, most base metals have benefited from the more positive economic news………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Some of the world’s biggest commodities traders are buying up key pieces of the infrastructure that’s driving the US energy production boom. Secretive commodities investors like Vitol Group, Trafigura Beheer B.V. and Mercuria Energy Group are among the firms amassing physical assets like shale oil wells, oil and gas pipelines and offshore drilling projects in the US, Bloomberg reports.
Why? The controversial fracking boom, which has driven US energy production sharply higher in recent years. Commodities firms want to get a piece of that production. They also see opportunities for arbitrage—that is profiting from price discrepancies—in the sometimes inefficient US oil and gas transport system………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Opec’s oil output has risen in April from March’s three-month low, a survey found, although African outages and sabotage in Iraq are keeping supply far below the group’s target. Supply from the Organisation of the Petroleum Exporting Countries has averaged 29.68 million barrels per day (bpd), up from a revised 29.52 million bpd in March, according to the survey based on shipping data and information from sources at oil companies, Opec and consultants.
The impact on Opec output from unrest and unplanned cutbacks in Iraq and Libya is helping to prop up benchmark Brent crude , which is trading at more than $108 a barrel despite the US shale boom and other non-Opec supply growth………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Iran’s oil exports fell in April for a second month, according to sources who track tanker movements, moving closer to levels allowed by November’s interim deal on curbing Tehran’s nuclear programme.
The decline may reflect seasonally lower crude oil demand and U.S. pressure on some customers take less. Signs of higher Iranian sales since late 2013 have led to concern in Washington that a softening of sanctions has given Tehran’s economy a boost………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

The global fossil fuel industry faces a loss of $US28 trillion ($A30.2 trillion) in revenues over the next two decades, if the world takes action to address climate change, cleans up pollution and moves to decarbonise the global energy system.
The assessment, made by leading European broking house Kepler Chevreux, underlines what’s at stake for the fossil fuel industry from a push to cleaner fuels and concerted efforts to reduce emissions, and helps explain the enormous push back from the oil and coal industries in particular against such policies………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

We can’t ignore it anymore - the markets are rigged. The LIBOR scandal broke almost two years ago, and the banks found responsible for manipulating that key index are still dealing with lawsuits. Meanwhile, allegations of gold market manipulation have been simmering for over a decade and grew into an inferno after the spot price dropped dramatically last spring.
Yet I’m left wondering what the conspiracy theorists hope to accomplish. Yes, I believe in exposing truth for its own sake and that the individual investor should have the same opportunities in the marketplace as the big institutions. But with these conspiracists, there is often a subtext of, “Because the price is suppressed, buying gold is for suckers.” I think this conclusion is precisely wrong………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

The Federal Reserve once again didn’t do gold any favors this week. Spot gold was down on Thursday to $1,279.24 per ounce on more outflows from gold exchange-traded funds (ETFs) after the Fed stuck with its plan to reduce its monthly bond-buying program. The yellow metal touched a one-week low of $1,277.09 earlier in the day.
The Fed’s decision to reduce its monthly bond purchases was reinforced by its view that the US economy is on the path to recovery. This week, US data showed that consumer spending was at its highest level in over four and a half years in March, while factory activity increased in April. Market watchers will be on the lookout for US nonfarm payrolls data, scheduled to be released on Friday………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

According to a Reuters report, Britain’s financial watchdog could intervene if there are too few participants to set commodity benchmarks including gold and silver. Since Deutsche Bank’s withdrawal from the fixing process, without a replacement, this leaves only four banks – Barclays, HSBC, Bank of Nova Scotia and Sociéte Generale involved in the twice daily London Gold Fixing process – and only two (HSBC and Bank of Nova Scotia) to fix the daily silver price.
Recently the London gold fixing process has come under considerable scrutiny following a research report by U.S academic, Professor Rosa Abrantes-Metz, and Albert Metz of Moody’s which suggested that the fixing process could be open to manipulation………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Silver is being undermined by its association with gold. While makers of everything from jewelry to solar panels are buying the most silver in nine years, prices are languishing. Investors are dismissing industrial demand and instead focusing on the waning appeal of precious metals as a haven, with the Federal Reserve paring economic stimulus measures, inflation muted and equities rallying.
Silver has been dragged down by a yearlong slump in gold, the commodity most widely held by investors in exchange-traded funds, following a decade-long rally that saw prices for both surge more than sixfold. The five most-accurate precious-metals analysts tracked by Bloomberg over the past two years predict silver will average $18.80 an ounce in the third quarter, the lowest since 2010, and gold will drop 7.8 percent………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Silver is being undermined by its association with gold. While makers of everything from jewelry to solar panels are buying the most silver in nine years, prices are languishing. Investors are dismissing industrial demand and instead focusing on the waning appeal of precious metals as a haven, with the Federal Reserve paring economic stimulus measures, inflation muted and equities rallying.
Silver has been dragged down by a yearlong slump in gold, the commodity most widely held by investors in exchange-traded funds, following a decade-long rally that saw prices for both surge more than sixfold………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Attention must be paid to the heavy rare earth sectors which is dominated by the Chinese. Tensions are increasing between the West (US, Europe and Japan) and the East (China and Russia) over trade, territories and natural resources.
No where is this more apparent than in the rare earth metals. These metals are critical for our high tech military applications, permanent magnets and green energy. The U.S. imports close to 100% of this material from China………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Weakening demand from China and the unraveling of copper-related financing deals continue to plague the price of Copper. Tuesday’s declines were a reversal after the metal hit a seven-week high on Monday following reports last week indicating that the Chinese State Reserves Bureau had purchased 200,000 tons of copper in March and April to move into state warehouses.
US copper producer grade 110 price saw a 0.5 percent drop on Tuesday, April 29, landing at $3.80 per pound and making it the biggest mover of the day. The price of US copper producer grade 122 fell 0.5 percent to $3.80 per pound………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Nickel prices declined for the third time in four days on concern that demand will ebb after a report showed manufacturing increased less than expected in China, the world’s largest consumer of industrial metals.
The Purchasing Managers’ Index at 50.4 in April trailed the 50.5 median estimate of analysts in a Bloomberg survey, Chinese government data showed today. Readings above 50 signal expansion. In the U.S., economic growth slowed to a 0.1 percent annualized rate in the first quarter from 2.6 percent in the previous three months,……………………………………….Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

It was not a memorable April for U.S. stocks, but it was not a dreadful month, either. When parsing through the best and worst exchange traded funds of the month, some obvious themes emerge.
Among the worst ETFs, momentum funds suffered. April’s worst non-leveraged ETFs run the gamut of social media, biotechnology, Internet and other momentum fare that investors have repudiated. Looking at last month’s top ETFs, two themes jump out: Commodities and global ideas. Many of last month’s best ETFs and ETNs are either direct commodities plays, global funds or global funds with some type of commodities exposure………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

The ministry of finance is working out a roadmap to substantially bring down the transaction cost of trading on the commodity exchanges . According to official sources, in line with the banking system, there is need for common clearing system of the commodity trades. This commonality of clearing of transactions will require a common platform where multiple trades across exchanges can be settled.
In the process, the traders can cut down the transaction cost by becoming the member of a single platform for clearing of trades. At present, a trader will have to pay fees for becoming a member of separate clearing platform floated by different commodity exchanges. This entails heavy cost, multiplicity of trades, cross margining etc………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

Independent Scotland must use sterling if it breaks away from the rest of the UK, research for the Scottish Chambers of Commerce finds. The creation of a Scottish currency or joining the euro if the country breaks away from the rest of the UK are “extremely unpopular with business”, research for the Scottish Chambers of Commerce (SCC) has found.
A survey by the SCC found that 63pc of companies believed a Scottish currency would have a “negative” or “extremely negative impact” on business, while 64pc said believed joining the euro would have a similar impact………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

South Korea’s won outperformed major global currencies in April, and according to HSBC, investors can expect the currency to continue rising this year. Over the past month, the won strengthened 3 percent against the greenback, its biggest monthly rise in nearly a year. The figure is well above the yen’s 1 percent rise, the euro’s 0.7 percent gain and the U.S. dollar index’s 0.7 percent decline in April.
The gains come after the International Monetary Fund said two weeks ago that the won was undervalued by as much as 8 percent and warned South Korea to limit foreign exchange intervention………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

China’s Communist Party has always had a problem with big landowners. In Communist culture, they are synonymous with evil. In January on the country’s most-watched television show—a gala at lunar new year—viewers were treated to a scene from a Mao-era ballet featuring young peasants fired with zeal for revenge against a despotic rural landlord.
Some critics rolled their eyes about such a throwback to the party’s radical past, but few complained about the stereotyping of landowners. Yet when it comes to letting individual families control large tracts of farmland, Communist Party leaders are beginning to have a change of heart………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

China is developing plans to expand its pilot carbon trading schemes into more of its key industrial regions, a top climate official said, as the country continues its drive to curb emissions.
China, the world’s biggest emitter of climate-changing gases, has over the past 10 months launched pilot carbon markets in six cities and provinces with a view to rolling out a national market later in the decade………………………………………..Full Article: Source

Posted on 02 May 2014 by VRS |  Email |Print

The massive subsidies given to the production and consumption of fossil fuels must be curbed if the world is to complete a transition to a low-carbon economy, UN experts have warned. The experts claimed that the support given to oil, gas and coal was contributing to fiscal instability and undermining efforts to prevent climate change.
The subsidies given to renewable energy have proved controversial in recent months, when so-called “green levies” were blamed for rising winter energy bills in the UK and subsequently cut by the government………………………………………..Full Article: Source

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