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Commodities Briefing 14.May 2014

Posted on 14 May 2014 by VRS |  Email |Print

Commodity traders are placing their bets on El Nino. The periodic weather phenomenon leads to torrential rain in South America and droughts in Asia and Africa, and may provide a needed boost for commodities after last year’s slump in prices.
Weather forecasters around the world are predicting that a shift in climate patterns could occur this summer, with some warning of the strongest El Nino in more than a decade………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

We take a look at key areas of the commodity markets. There’s been no shortage of volatility in commodity markets this year. From coffee’s spectacular surge to copper’s brutal plunge, there’s been ample opportunity to generate hefty returns or losses.
In terms of sector performance, agriculture has been far and away the best performer so far in 2014. Led by coffee—which at one point was up a whopping 95 percent year-to-date—the sector has delivered fantastic returns for investors. At the heart of the increase in coffee prices has been the severe drought in Brazil. What has been called the worst drought in decades is expected to sharply reduce coffee supplies in the world’s largest grower and exporter………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

China’s crude oil runs, oil demand and total base metals production unexpectedly fell in April from the preceding month, with slackening power generation also fanning concerns that the world’s second-largest economy is not yet on a stable footing.
Although record-high daily crude steel output was a bright spark in April’s output figures, slowing real estate investments and falling property sales are set to drag on the steel sector in the coming months, analysts said………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Iron ore prices are expected to drop sharply over the next two years and the price of commodity exports will keep falling until 2020. Treasury has published tables that suggest the price of iron ore, Australia’s largest export, which has already declined sharply this year, will keep falling to as low as $90 a tonne by June 2016, from about $120 now.
That is based not on the more widely quoted spot prices but on a measure that includes long-term contracts and exchange rate shifts. The weak outlook for commodity exports overall means the terms of trade – the ratio of import prices to export prices – will fall 6.75 per cent next year and 1.75 per cent in 2015-16………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

The global oil market will remain “fairly balanced” in 2014 as supply disruptions including delays at the Kashagan field in Kazakhstan prevent the build-up of a surplus, according to OPEC. The Organization of Petroleum Exporting Countries, responsible for 40 percent of the world’s oil supply, estimates it will need to provide an average of 29.8 million barrels a day this year, about 100,000 a day more than the group projected last month.
OPEC raised the estimate because of lower output from natural gas liquids, the group’s Vienna-based research department said in its monthly market report today………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

OPEC has raised its forecast on the demand for its oil in 2014 to 29.8 million barrels per day (bpd), 110,000 bpd higher than its previous projection, the Vienna-based cartel said Tuesday. In its latest monthly report, the Organisation of the Petroleum Exporting Countries (OPEC) said its oil output in April rose by 131,000 bpd to 29.59 million bpd, largely due to higher supply by Iraq and Saudi Arabia, Xinhua reported.
Owing to the decrease of the non-OPEC crude output in April, the share of OPEC oil in total global production increased slightly to 32.6 percent compared to the previous month……………………………………….Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Though the European economy is showing signs of recovery, OPEC said Tuesday much of the growth in oil demand is coming from the Middle East and China.
The Organization of Petroleum Exporting Countries said in its monthly market report for May global oil demand is expected to increase by 1.14 million barrels per day to 91.15 bpd this year. “Almost half of annual oil demand growth is seen coming from China and the Middle East,” OPEC’s report said………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Top Obama administration officials are considering relaxing federal laws banning crude-oil exports, a move that would upend decades-old policy, cause a political stir in Washington and sway the global oil market.
U.S. Energy Secretary Ernest Moniz said Tuesday that some of the fast-growing supply of domestically produced oil isn’t suitable for refining locally, which could warrant re-examining a nearly 40-year-old law that bans exports of most crude………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

The oil market has heated up the during the past several months as the price of oil remained above the $100 mark. It should cool down. Here are three reasons the price of oil should drop to the mid $90s.
1. OPEC oil production could start to rise: According to the recent Organization of Petroleum Exporting Countries’ monthly report, OPEC oil production during March dropped by 626 thousands of barrels a day mainly because of lower production in Libya, Angola, Iraq and Saudi Arabia………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Environmentalists have celebrated the rapid growth of renewable power. But a new International Energy Agency report makes clear that coal is still a major, and growing source of electricity. Unless we spend more time developing carbon-free coal technologies, there’s little hope of holding back global temperature increases
The growth of renewable energy has gotten a lot of attention recently — and with good reason. Buoyed by falling costs, wind and solar PV electricity generation has experienced double-digit growth globally in recent years. In the U.S. alone, demand for solar power increased by 41% in 2013………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

The financial sector has never been known for its transparency or forthrightness. In fact, it’s probably the single most mysterious industry there is. Bullion banking is so shrouded in secrecy that even most bankers don’t understand it. Recently, bullion bankers have come under fire for allegedly dishonestly fixing gold and silver prices.
Whether or not the allegations are true, the ongoing investigation into bullion banking has led to some surprising discoveries about the industry. The question raised by the investigation is whether or not some bullion bankers are playing by the rules………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Anticipation of favourable policies under a stable govt at the Centre, aided by a possibly stronger rupee, are expected to bring bullion price down. Gold prices are likely to decline further, amid expectations of a further rise in the rupee against the dollar and favourable policies after a stable government is formed at the Centre.
Speculation is strong that a Bharatiya Janata Party-led government will review the import duty on gold, currently at a high of 10 per cent. And, ease the ‘80:20 rule’, under which at least 20 per cent of imported gold needs to be supplied to jewellery exporters. These hopes have brought down the premium on physical gold sales to $15 an oz or Rs 300 per 10g………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Is it time to short gold? That’s the latest call from MacNeil Curry, head of global technical strategy at Bank of America Merrill Lynch, who says the yellow metal is poised to drop as much as 9 percent.
“First and foremost, we’ve been in a medium-term downtrend since peaking out back in March at about the $1,392 area. And price action since the beginning of April has done nothing to reverse that downtrend. All we’ve been doing is consolidating,” Curry said……………………………………….Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

With the drastic fall in prices, gold miners have lowered the prices they use to calculate their gold reserves,according to SNL Metals and Mining. Gold prices have fallen 15% on a year-on-year basis so far. As the gold price climbed steadily from 2002 to 2012, gold producers increased their reserves calculation prices to allow profitable mining of lower-grade, higher-cost ores.
Examining the nine-year reserves history of five major producers— Barrick Gold Corp., Newmont Mining Corp., Goldcorp Inc., AngloGold Ashanti Ltd., and Kinross Gold Corp. — shows a 14% weighted-average decline in their reserves prices from 2012, an 11% average decline in their total reserves (net of changes due to acquisitions, divestitures, and production), and an 8% increase in their weighted-average reserves gold grade, SNL Metals and Mining said in a report………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Aluminium is literally one of the most common elements on Earth. So how did it come to be that aluminium once cost more than gold? Was it similar to how the relatively common and easily acquired mined diamond came to be seen as valuable in the last century due to strict control of supply to consumers and some of the best marketing the world has ever seen?
(For reference, the cost of mining a 1 carat diamond is about $US50, though it sells for drastically more than that, even low quality ones for industrial use. On the high end, suitably high quality ones will sell for, on average around $US25,000 once cut and polished, generally by cheap labour in places like China.)……………………………………….Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

The Chinese are likely struggling with their rare earth assets due to decades of inefficient, wasteful processing and non-existent environmental standards. No one really knows the full extent of the damage done by China’s rare earth industry, and the shape these mines are in. Could it be that China will have to secure both a supply of heavy rare earths and a supply of light rare earths sooner than the rest of the world anticipates?
“As China begins to look elsewhere to secure new REE feedstock, perhaps the rest of the world should do the same, given the strategic importance of these metals to military and to industry. To that end, why not look to Quebec?“……………………………………….Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

China’s average daily crude steel output hit a record 2.29 million tonnes in April, as steel mills lifted production to meet seasonal demand, though signs of weakness in factory output and the property sector could feed through later in the year.
Steel demand in China, the world’s top producer, traditionally improves in the second quarter as construction and manufacturing pick up alongside warmer weather. April’s crude steel output of 68.84 million tonnes, was below the record high of 70.25 million tonnes in March, data from the National Bureau of Statistics showed………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Commodities have outperformed equities so far this year. But given their varied outlook, investors can use these individual funds to fine tune their exposure. In the past year, some commodities have risen at warp speed while others have lagged. While agricultural commodities have collectively outperformed U.S. stocks in early 2014, investors and traders will have to be more selective going forward.
You know, an 18 percent gain over 12 months isn’t a bad return. That’s how much the S&P 500 has appreciated since April 2013. But now the index is now stalled. In fact, since New Year’s Day, domestic equities have been ceding ground to commodities—a reversal of a two-year trend………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Assets under management at global inverse and leveraged exchange traded products resided at $61.5 billion at the end of last month, a 1% decline from the end of March, but still up 6% from the end of 2013.
BOOST ETP, which was recently acquired by WisdomTree (NasdaqGS: WETF), the fifth-largest U.S. ETF sponsor, said short and leveraged “investors repositioned bearishly across major asset classes in April. Lacking momentum, the directionless equity markets have led S&L investors to reduce their bullish stance in equities, as the $636 million redemptions in long positions contrasted the $487 million creations in short positions………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

High Frequency Trading (HFT), through systematic computer based algorithms by gauging market movements and eventually acting upon pre-defined protocols, has become a popular mode commodity derivatives trading.
Such techniques initially introduced in fixed income, currency, and equity markets are now increasingly being applied to trading in bullion, energy, and the agricultural commodities. HFT has contributed to a surge in the number of trades in NYMEX crude from under 1 million in 2005 to almost 42 million in 2011, and in CBOT corn from 133,000 to 10.7 million………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Last week the most anticipated/hyped/controversial ETF filing of the last 10 years — the Winklevoss Bitcoin Trust — moved a step closer to becoming reality, announcing it had chosen to list on the Nasdaq Composite Index.
Though it’s still hard to imagine that a bitcoin exchange-traded fund will be approved by the Securities and Exchange Commission, given its multitude of unique risks, it’s made it this far and can’t be laughed off. That won’t stop us from trying………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

China’s economic growth relies heavily on investment, which means that it requires major injections of capital. One of the ways China achieves that is by increasing the money supply - literally, printing more currency (the renminbi, or the yuan, as the unit is more colloquially known).
“In the past 30 years,” explained a government economist, Wu Xiaoling, in 2011, “we have used excessive money supply to rapidly advance our economy.” At the end of 2013, the excess of money supply totaled 110.65 trillion yuan ($17.77 trillion), four times more than 10 years earlier - a clear sign that the government is printing money faster than the economy is expanding………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

A Scottish retailer will only use bitcoin for three days this week in a bid to test out whether the cryptocurrency has the potential to take over from pound as the country’s new currency in the event of independence.
CeX, the second-hand electronics, DVD and video game store, has turned its Glasgow Sauchiehall store into a “pound-free zone” for the next three days, only accepting bitcoin as payment for any good bought - as well as only paying customers in bitcoin………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

With more schemes on the way, experts say China will soon be regulating about 1 gigatonne of carbon dioxide, or nearly 10 per cent of the annual emissions that make it the world’s biggest carbon polluter.
As prices languish in the largest carbon market in the EU and Australia ditches plans for a carbon tax, environmental activists have seized on China’s efforts as proof that action to tackle climate change is far from dead………………………………………..Full Article: Source

Posted on 14 May 2014 by VRS |  Email |Print

Thanks to the purchase of millions of emissions reduction certificates in foreign countries, Switzerland has managed to meet its goals under the Kyoto protocol. But do projects in developing countries really benefit the climate?
Ji’an, a city in the province of Jiangxi in southern China. Tons of rice grain husks are being burned in ovens. The electricity and heat created in the plant are distributed among the area’s residents, reducing their coal use. The project’s promoters call it a model for the entire country………………………………………..Full Article: Source

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