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Commodities Briefing 13.May 2014

Posted on 13 May 2014 by VRS |  Email |Print

Bashed, beaten and unloved, mining stocks have fallen out of favor with investors in the last two years as commodity prices showed signs of peaking. But just when things could have turned from bad to worse it appears that the basic resources sector is the new contrarian play for 2014.
Nothing sums up the change in opinion better than JPMorgan’s assessment of the situation in a research note on Monday. Detailing a rebound in activity, the U.S. investment bank has stated it is now “overweight” on the mining sector, after being “underweight” for the last two years………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Financial, rather than industry players have become a much more important factor in the price action of almost all commodities. This in turn leads to greater price volatility, and greater correlation with other financial assets, therefore reducing the diversifying characteristics of the asset class.
That is not to say that there are no opportunities. There are. And we seek to take advantage of specific opportunities as we see them. But a blanket commodity-index exposure we believe has less value for these reasons, as well as for the simple fact that the broad commodity indices are overwhelmingly dominated by energy components………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Petroleum and Mineral Resources Minister Ali Al-Naimi says Saudi Arabia is willing to supply markets with more crude if rising tensions between Russia and the West over Ukraine cause a shortage.
Russia’s military intervention on Ukraine’s Crimean peninsula and its aftermath in eastern Ukraine have rattled oil markets for the last few months, keeping benchmark Brent futures near $108 a barrel after hitting $112.39 on March 3, the highest this year. “We are willing to supply any shortage which may arise,” Al-Naimi said. ……………………………………….Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Top global oil exporter Saudi Arabia will step in to cover any potential shortage arising from the Ukraine crisis, its oil minister said on Monday. Saudi Arabia, the only oil producer which can significantly alter output in response to changing demand, has in the past two years played the leading role in cushioning against supply disruptions from Libya, Nigeria, Iraq and South Sudan.
Russia, whose output has almost doubled over the past 15 years to more than Saudi Arabia’s, has always pumped at full stretch. It has irked Riyadh several times by first agreeing to cooperate in output policy, but then doing very little to reduce production………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

The oil market is stable and supply shortages can be covered, so the Opec has no reason to change its production levels, according to Saudi Arabia’s oil minister.
Opec’s current output of about 30 million barrels a day is the right level and global oil demand is “great,” Ali Al Naimi told reporters in Seoul. Saudi Arabia, the biggest producer in the 12-member group, is pumping about 9.6m barrels a day and has 12.5m of capacity, he said………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Oil production from the Organization of the Petroleum Exporting Countries (OPEC) totaled 29.72 million barrels per day (b/d) in April, up 160,000 b/d from March, led by increases in Iraq, Angola and Saudi Arabia, according to the latest Platts survey of OPEC and oil industry officials and analysts.
“There are a few striking numbers when you look at the country totals,” said John Kingston, Platts global director of news. “First, when there were the first signs of a loosening of Iranian sanctions, the expectation was that there might be a surge in Iranian output. But the country’s output has barely budged. Secondly, every so often there’s news out of Libya that indicates the country might be headed toward reversal of its depressed production. But April output is the lowest it’s been all year. It’s these sorts of numbers that help to keep world prices above $100/barrel.”……………………………………….Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

The global cost of securing a clean energy future is rising by the year, the International Energy Agency (IEA) warned Monday, estimating that an additional $44 trillion of investment was needed to meet 2050 carbon reduction targets. Releasing its biennial “Energy Technology Perspectives” report in Seoul, the agency said electricity would increasingly power the world’s economies in the decades to come, rivalling oil as the dominant energy carrier.
Surging electricity demand posed serious challenges, said IEA executive director Maria van der Hoeven. “We must get it right, but we’re on the wrong path at the moment,” Van der Hoeven told reporters in the South Korean capital………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

In May 2007, the Centre banned wheat futures trading after prices surged in the open market when production turned out to be lower than expected. Output then was 75.81 million tonnes against initial projections of about 80 million tonnes. The lower production also led to procurement by Government agencies for buffer stocks plunging to 11.12 million tonnes (mt).
Prices then rose to ₹1,000 a quintal in the open market, forcing the Centre to blame the increase on the futures trading and subsequently ban it. The then National Commodities and Derivatives Exchange chief PH Ravishankar said that the rise was not surprising since the futures market had been pointing to such a trend from 2006-end………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

While gold had a tremendous run in the last few years, fuelled by turbulence in the global economy, prices are likely to moderate in the medium term with an improving economic environment, experts said.
Nilesh Gupta, Chairman, Administrative Committee, India Bullion & Jewellery Association (IBJA) felt that there was an overall bearish mood about gold “on the part of the trading fraternity given the developments over several months in India, although there is optimism that a new government would tackle issues like high duty and the 80:20 scheme”. On Monday, gold was trading at $1,300 levels and at Rs.28,700 per 10 gram levels on the MCX………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Large speculators returned as buyers in gold futures and options positions on the Comex division of the New York Mercantile Exchange in the latest weekly commitments of traders report from the Commodity Futures Trading Commission, following mixed action by these traders in the previous report.
These fund managers narrowed their bullish positions in silver in the current CFTC reports, which are as of May 6. In the previous reports, large speculators were divided in their silver-market activity………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

The silver market cooled down in the past week. Will the price of silver remain close to $20? Or will it resume its downward trend? This week, several news items will be released and could influence silver investors. Let’s analyze the main events and publications that may move silver and silver ETFs.
The recent fall in the price of silver has reflected in a drop in the demand for silver ETFs including iShares Silver Trust (SLV). During last week, the Silver Trust’s price decreased by 2.2%………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Copper prices jumped to the highest level in two months on Monday after China unveiled a blueprint for reforming its capital markets, a move that investors hope will spark economic growth in the world’s largest consumer of the metal.
Copper for May delivery rose 6.6c, or 2.1 per cent, to $US3.1665 a pound, the highest closing price since March 7 on the Comex division of the New York Mercantile Exchange. It was the biggest percentage gain for the contract since December 4. The more actively traded July contract rose 2.2 per cent to $US3.1495 a pound………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Nickel prices will peak above $30,000 per tonne in 2015, on increasingly strong fundamentals, Citi analysts said this week. The group expects the alloying metal will see rallies to more than $22,000 per tonne in 2014, and above $30,000 in 2015.
“We […] would view moves towards $18,500 per tonne as representing positive entry points ahead of further 2014 rallies to over $22,000 per tonne, and 2015 peaks of over $30,000,” the group said in a research note………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Building an ETF portfolio can help solve those problems. But what’s the best approach to take when investing in ETFs? Below are three rules you should always follow: 1. Limit the number of holdings: We’ve all heard how important it is to have a diversified portfolio; holding lots of different stocks and funds is supposed to reduce risk.
But ETFs already have lots of holdings within them, so you really don’t need to hold ETFs at all. If you want a portfolio of Canadian equities, U.S. equities, international equities, and bonds, then four ETFs should be enough. This will save you a few dollars on trading fees, and make managing your portfolio far easier………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Exchange-traded funds and all the products related to them have terminology that’s foreign to many investors. People hear “ETF” and they assume every product that’s called an ETF is the same. They’re not. Product structure can have big implications for investors, especially if it’s held in a taxable account.
There are five basic exchange-traded product (ETP) structures: Open End Funds, Unit Investment Trust (UIT), Grantor Trusts, Limited Partnerships and Exchange-Traded Notes………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

The Australian dollar is range-bound thanks to a stronger greenback and ahead of the federal budget. At 7am (AEST), the local currency was trading at US93.62c, slightly down from US93.66c on Monday. The Australian dollar was directionless overnight with little economic data or news to drive the market, Westpac senior market strategist in Wellington Imre Speizer said.
The currency, boosted by stronger local data, had been stopped in its tracks this week by the strengthened greenback, he said. “The US dollar bounced back last week and that’s caused the Aussie to stall,” Mr Speizer said………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Chinese Premier Li Keqiang reportedly voiced concerns about the country’s enormous foreign exchange holdings this weekend, worrying that they could drive up price inflation. During a trip to Kenya, Chinese media reported that Li Keqiang had warned that the country’s reserves, which are the largest in the world, could become “a big burden”.
The Chinese government has acquired $3.95 trillion (£2.35 trillion) in foreign currency holdings, attempting to alter the value of their own yuan by selling more of it. Some analysts believe this will drive up inflation, since it increases the amount of the currency circulating in the economy………………………………………..Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

Julia Gillard’s decision to label her climate-change policy as a “carbon tax”, knowing it would be characterised as a broken promise, was endorsed by cabinet despite opposition from climate change minister Greg Combet and parliamentary secretary for climate change Mark Dreyfus.
“It was Julia’s decision,” Mr Combet told Philip Chubb for his book Power Failure, published by Black Inc. “I supported her as my leader, but I always referred to it as an emissions trading scheme that starts with a three-year fixed-price period.” During the 2010 election campaign, Ms Gillard pledged: “There will be no carbon tax under the government I lead.”……………………………………….Full Article: Source

Posted on 13 May 2014 by VRS |  Email |Print

The global cost of pegging global warming to 2 degrees Celsius has risen by $8 trillion in the last two years, due to soaring coal use which has eclipsed the roll-out of renewable energies, according to a new International Energy Agency (IEA) report released on 12 May.
A top IEA official told EurActiv that there should be a halt to the commissioning of sub-critical coal plants with no potential for retroactive fitting of carbon, capture and storage technology (CCS) that may one day pipe CO2 emissions for storage in geological formations………………………………………..Full Article: Source

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