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Commodities Briefing 16.May 2014

Posted on 16 May 2014 by VRS |  Email |Print

Singapore-listed Olam, one of the world’s biggest traders in commodities such as nuts, cotton, coffee and cocoa, reported its third-quarter earnings on Thursday–net profit more than doubled from the previous year to 396.1 million Singapore dollars ($316.8 million).
In March, Singapore state investment fund Temasek Holdings Pte. Ltd. made an offer as part of a consortium to buy the remaining 47.5% it doesn’t already own of Olam for about $2 billion, one of a series of mergers and acquisitions moves in the commodities space globally in recent months………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

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. Here we take a look at year-to-date performance in a number of the most important commodities and analyze how investors can position themselves to profit in the coming months.
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………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Opec, the oil-producing cartel, will need to increase production significantly in the second half of the year in order to meet world demand, according to the west’s energy watchdog.
While production gains of about 400,000 barrels a day in April have gone some way towards easing tight global markets, the International Energy Agency says a bigger increase will be needed in the second half of the year when consumption picks up after the northern hemisphere summer………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

The Organization of the Petroleum Exporting Countries will need to sharply boost its output in the second half of the year, an energy watchdog said Thursday, but the organization responded it can easily cover any new demand for its oil. The views are in contrast with concerns just a few months back that OPEC may be overproducing and risked facing an oil glut.
In its monthly oil-market report, the International Energy Agency—which advises industrialized nations on energy matters—said its most recent forecasts “call for a significant rise in OPEC production from current levels for the second half of the year.” It upgraded its estimated demand for the group’s oil by 140,000 barrels a day, to 30.7 million barrels a day, for the second half of this year………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

The price of oil was up slightly in April, as China ramped up imports and tensions over Ukraine continued, according to the International Energy Agency (IEA). There was a sharp rise in Chinese crude oil imports, which implies that the world’s second-biggest economy is starting to build up its energy stock – which can be a good forward indicator of economic growth. As its economic growth is currently slowing, China is also likely to be eying the security of its supply.
It has ramped up its imports from countries including Russia, Oman, Angola, Iraq – and even Iran, which sent over 600,000 barrels a day to China in April, the highest since June 2012………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Middle East crude producers played down the threat of a competitive battle with Russia over Asian markets at a Moscow energy conference on Thursday, even while Russian comments emphasized its push to the east.
Russian Prime Minister Dmitry Medvedev told ministers from OPEC countries including Saudi Arabia, Algeria, Iran and Kuwait and some former Soviet states at the 14th International Energy Forum that Moscow would play an active role in Asian markets………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

OPEC Secretary-General Abdalla el-Badri said oil supplies from North America “will play an important role in the coming few years,” but he cast doubt on their sustainability over the long term.
Speaking May 15 in Moscow, el-Badri acknowledged that oil supply from producers outside of OPEC are expected to increase by more than 4 million barrels per day (bpd) between 2013 and 2018, with much of that coming from North America. But he cautioned that the addition of non-OPEC oil supplies to the global market “should be viewed as a periodic shift.”……………………………………….Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

ExxonMobil’s publication of a report into its climate risks felt like a ground-breaking moment in the debate about carbon-stranded assets. Just a month later, another such moment has arrived, in the form of the latest report from Carbon Tracker, the campaign group that highlights the risks that climate change presents for investors.
The report says that energy companies have earmarked an estimated $1.1 trillion of capital expenditure for projects that can only make money if the oil price remains higher than $95 per barrel, while some are only viable at a price of $120-$150………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

On Wednesday, Peter Schiff — the President of Euro Pacific Capital — and Nouriel Roubini — NYU Economist — debated the state of the economy, the future of inflation, and the direction of gold prices. Both figures are well-known for correctly predicting the housing crisis well before it happened.
Schiff argued that the economy is weak and it continues to weaken given the Federal Reserve’s policy of easy money, low interest rates, and quantitative easing. He argued that as a result, gold prices would continue to rise, and that we will ultimately see a much higher gold price in the coming years, and the Federal Reserve continues to purchase Treasury bonds in order to subsidize America’s debt………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

The Chinese are buying less gold this year and demand during the Golden Week holidays that began on 1 May dropped some 30% from a year ago, according to a leading bullion exchange. After an extraordinary year for gold sales in 2013, the situation is back to something like 2012, according to Haywood Cheung, president of the Chinese Gold & Silver Exchange Society.
While China beat India as the biggest bullion consumer last year, the buying craze triggered by a price slump last April has not been repeated, according to Heraeus Metals Hong Kong………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

The escalating anxious that gold prices would fall as the Indian Rupee gains strength against the US Dollar has spiked to sell the domestic gold. As per the market review, Last days, the gold has gained as the jewelers have sold out the past orders for the precious metal.
Mr. Anish Jitendar Jain, director of a Mumbai based scrap gold firm said that the people are rushing to market to sell out their gold ornaments. They have panicked that the gold prices would plunge after the election results………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

I like gold. My wedding ring is simple but classy. My crowns in my mouth are so good that I forget they are there. The electronic contacts in my computer work just fine. Gold is great. But not as a steady measure of purchasing power, nor as a guaranteed investment.
“Gold has the same purchasing power today that it had in 1913,” I continue to read. So let’s look at the data and see what we can conclude about gold, its stability and purchasing power, and then we’ll turn to gold as an investment………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Global physical demand for silver rose 13 per cent in 2013 to an all-time high, driven primarily by a 76 per cent increase in retail investment in bars and coins, coupled with a sturdy recovery in jewellery and silverware fabrication.
Data compiled by a leading New York-based research agency, The Silver Institute, showed total physical demand for silver at a record 1,081 million ounces (Moz) or 30,649 tonnes in 2013, as compared to 954.4 Moz or 27,057 tonnes the previous year………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

As silver prices slumped 36% in 2013, retail investors took advantage of the dips and sent physical silver demand up 13% to an all-time high, according to World Silver Survey 2014.
Released Wednesday by the Silver Institute, the report showed the main driver of last year’s robust silver demand was individual purchases of bars and coins. Add in a solid recovery in jewelry and silverware fabrication, and retail silver demand rose a whopping 76% in 2013………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Towards the end of last year we noticed that The Real Asset Company clients were going hell-for-leather for Silver bullion investment. I would guess that during November we sold more silver than gold, in dollar terms. This was interesting given both gold and silver fell and yet there was an almost delayed reaction from silver buyers, who saw a four year lows in the industrial precious metal.
So, it came as no surprise when the Silver Institute yesterday released their World Silver Survey 2014 with the headline ‘Total physical silver demand achieved record level in 2013’. Andrew Leyland, of GFMS was impressed by silver’s performance and said that ‘silver seems to have retained a lot more loyalty than the other precious metals.’……………………………………….Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Silver’s average price in 2013 was $23.79 per ounce, 23.6 percent lower than the previous year, Thomson Reuters GFMS states in its World Silver Survey 2014, released yesterday. That’s the metal’s largest year-on-year percentage decrease since 1985, when it sank by 25 percent, and its second double-digit decline in a row.
Those numbers raise the question of what went wrong last year. CPM Group provided an answer back in April, stating that shorter-term investors “disillusioned by the inability of silver to rise strongly following the highs reached in 2011″ were “primarily responsible” for the metal’s fall. That’s because they moved “their funds into other asset classes like equities and real estate that [are] perceived as providing better profit opportunities.”……………………………………….Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

A global commodities expert says palladium prices look set to rise over the next two years, and platinum could start behaving more like gold and less like an industrial metal due to Chinese jewellery demand. Leon Westgate from Standard Bank, London was speaking at a recent seminar organised by online precious metals trader, GoldMoney.
Martyn White , Head of European Business Development, GoldMoney hosted the event which was aimed at giving potential investors and their intermediaries insight into what is driving the markets………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Shorting gold when it rose to a record $1,895 per ounce on September 6, 2011 would have been a great trade, with the benefit of hindsight. It is down to $1,305 currently, with most of the decline occurring last year after the bulls lost their confidence in the precious metal when it didn’t soar after ECB President Mario Draghi’s whatever-it-takes speech and on the introduction of Abenomics.
A few contrarians I know are turning bullish on gold. They note that both the price of gold and the price of silver seem to be finding support at their 2013 lows. Silver is back at that low. However, it settled at its highest level in a month on Wednesday, buoyed by a report that said physical demand for the metal rose to a record last year………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Nickel prices are typically not on U.S. investors’ radar, but they’ve certainty been gaining attention this year. Prices have skyrocketed year-to-date on the London Metal Exchange as concerns over tight global supplies grow.
Prices for the metal have gained roughly 50% so far this year on the LME — from a low $6-a-pound range to more than $9 a pound, outperforming other commodities and equities, according to Jeb Handwerger, a metals and mining analyst and investor………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Despite a recent recovery in copper prices on the London Metal Exchange and economic reforms pledged by China, the world’s largest copper consumer, market analysts were still bearish this week on the metal’s price for the rest of the year.
Goldman Sachs cited factors such as a surge in supply and a weak Chinese construction sector. Goldman Sachs forecasted copper prices would sink to $6,200/mt by the end of the year, compared with a price at $6,845/mt as of early Wednesday trading………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Investing in gold ETF allows for redemption via physical gold when you cash out. Gold ETF investing has been stressful over the last few years, as gold prices have gone on a wild ride. Investing in gold across calendar 2013 meant a 28% decline, but this year gold ETF investors have outperformed with a nice 8% return vs. about 2% or so for the S&P 500 since Jan. 1.
But for many precious metal investors, short-term volatility is not the point. Investing in gold is about security to them, and the reassurance that your money is in a tangible asset that cannot go to zero the way junk bonds or momentum stocks can………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

The Motley Fool’s energy bureau chief, Joel South, spoke with Michael Levi about his new book, coauthored with Elizabeth Economy, By All Means Necessary: How China’s Resource Quest Is Changing the World. As the David M. Rubenstein Senior Fellow for the energy and environment at the Council on Foreign Relations, Levi is no stranger to the impact that countries and their decisions have on the rest of the world.
In fact, Levi also writes a blog for the CFR, Energy, Security, and Climate, where he discusses the relationship between energy, the world, and its inhabitants. In By All Means Necessary, Levi analyzes the impacts and effects China’s resource hunt has on the world and international affairs, specifically looking at the synthesis of economics, security, and politics………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

For the last few years, commodities have dragged behind surging equities as it seemed that the commodity supercycle was beginning to cool off. However, 2014 has seen broad commodity indexes outpace equities. Beating gains of just over 2% in a little more than four months isn’t anything to write home about, but hard assets are holding their own nonetheless. However, most commodity indexes are benefiting from one hard asset in particular — coffee.
Coffee futures have had a rough go over the past few years, losing 12%, 43%, and 33% in 2011, 2012, and 2013, respectively. Thanks to a drought in Brazil, where the vast majority of coffee beans are produced, prices have been surging in 2014. ……………………………………….Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

“A Britain carried aloft by the march of the makers”. So George Osborne, the chancellor of the exchequer, used to describe his vision for the economy. The plan was for a revival in manufacturing and exports, driven, at least in part, by a weaker pound. Sterling had fallen by 30% during the financial crisis as traders bet that Britain, with its large financial sector, would be hit harder than most countries.
But since early 2013 the pound has climbed back, appreciating by 10% in trade-weighted terms (see chart). In some ways this is splendid news. It reflects the strength of GDP growth in Britain, which is now the strongest in the G8, as well as the expectation that interest rates will rise sooner as a result. Sterling looks like a relatively safe and stable storehouse for foreign cash as emerging markets wobble. But what does it mean for the British economy?……………………………………….Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

Carbon-permit prices in the European Union’s emissions trading system will rebound once policy makers agree on a “sustainable” overhaul of the market, according to German Environment Minister Barbara Hendricks.
She commented by e-mail on the EU proposal to introduce a carbon-market stability reserve, talks on 2030 climate and energy policies, and the effect of the crisis in Ukraine………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

European Union carbon permits fell the most in almost three weeks in London after the market regulator said a surplus of the emission allowances expanded last year.
Permits for December dropped 6.8 percent, the most since April 25, to 4.81 euros ($6.60) a metric ton at 4:40 p.m. in London on the ICE Futures Europe exchange. The contract slid as much as 8.5 percent earlier today. The allowances dropped for a third consecutive year in 2013………………………………………..Full Article: Source

Posted on 16 May 2014 by VRS |  Email |Print

California’s benchmark carbon contract slipped 8 cents from its close one day earlier to settle at $11.73 a tonne on Thursday as traders positioned themselves ahead of Friday’s state-run allowance auction, where permits are expected to clear near the floor price.
The state will offer about 17 million allowances covering emissions this year and 9.2 million allowances covering emissions in 2017 at the auction, the cap-and-trade program’s seventh overall………………………………………..Full Article: Source

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