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Commodities Briefing 13.Jun 2014

Commodities lose status as world's best performing asset class in 2014: Deutsche Bank
Commodity finance in China: An assay-light strategy
Have large banks in China fallen victim to a commodities fraud?
China Commodity Loans Add to Surge in Offshore Borrowing
Metals Maneuver May be Losing Shine
Uncertainty over Iraq pushes oil price to three-month high
Quiet So Far, Oil Prices Could Rise as Insurgents Gain in Iraq
OPEC facing dark clouds on supply horizon
For OPEC, the price of oil is just right, for now
OPEC sees oil market balanced for rest of 2014
Non-OPEC and OPEC crude balance
Platinum, palladium sink as S. African strike nears end
Forget OPEC, let's talk about 'NOPEC': Insana
Gold Market 'Frozen' In Place, Traders Awaiting Fresh Catalysts
Are Gold Miners Worth Investing In?
Is Silver Set Up For A Huge Short Squeeze?
Gold Much Harder Sell, Palladium Looking Strong (Video)
China Won't Sink Copper's Ship
A Comprehensive Guide To Mining Industry ETFs
Natural Gas ETF Burns Brighter After Supply Miss
Euronext, Dalian exchanges to cooperate on commodities
FMC sets new norms for commodity exchanges
Threadneedle Italy sees value in commodities
Stumbling Start To June For Agricultural Commodity ETFs
UK plans to make currency-rigging a crime but rejects EU rules
Why China May Continue Depreciating Its Currency?
U.S. EPA chief: Carbon rules to lower consumer bills
ABN Amro Becomes Latest Bank to Withdraw From Carbon Trading
Germany backs EU carbon market reform by 2017
EU May Decide on Carbon Reform by Mid-2015, Delbeke Says

Posted on 13 June 2014 by VRS |  Email |Print

Commodities have lost their status as the world’s best performing asset class as gains in the livestock, agriculture and precious metals sector have been surrendered during the second quarter.
Deutsche Bank said in an update on commodity indices that the performance of Dow Jones UBSC Index (DJUBSCI) was affected by losses in agricultural and livestock sectors while gains in energy complex helped Standard & Poors GSCI to post positive returns………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

At the best of times, seizing collateral on defaulted loans in China is a fraught task, plagued by patchy enforcement. These are not the best of times in the port of Qingdao, a trading hub in the north-east. Police are investigating whether companies have committed fraud by pledging the same holdings of copper and aluminium to multiple banks, multiple times. The banks are scrambling to see how much of the metal sitting in Qingdao’s warehouses actually belongs to them.
More than just a fraud, the tale exposes China’s financial idiosyncrasies and the lengths to which firms sometimes go to borrow money. Regulators have tried to choke off credit to metal traders in recent years as part of efforts to slow pell-mell construction. Traders have devised a simple workaround………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Large banks and trading firms are frantically trying to determine whether they have fallen victim to a suspected commodities fraud emanating from the giant Qingdao Port in northeast China.
Citigroup and several other big Western banks are concerned that their loans may lack the appropriate collateral of big stockpiles of copper and aluminum at the port. The banks have inspectors on the ground who are trying to assess whether enough of the metals are there………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

The commodity-backed loans at the center of a probe into an alleged financial scam at a Chinese port are part of a ramp-up in offshore borrowing by Chinese companies that Beijing is looking to tamp down.
As Chinese authorities tightened credit at home in the past year, local firms instead looked abroad for financing. Asian-Pacific banks alone had $1.2 trillion in loan exposure to China at the end of 2013, up two-and-a-half times from 2010, according to Fitch Ratings………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Spiraling violence in Iraq and a possible resolution to South Africa’s mining strikes are adding a fresh element to a profitable metals trade. For the last several months, some investors struck a delicate balance using commodities whose prices were moving in opposite directions: buying futures in platinum and palladium, while betting against gold, several traders and brokers said.
Platinum and palladium were surging on a prolonged miners strike in South Africa, a key producer of both metals. Gold was losing ground, as a stabilizing U.S. recovery and buoyant stock markets eroded the need for the metal as a hedge against uncertainty………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Traders bet on advances by Isis militants disrupting supplies from one of world’s largest exporters. Escalating violence in Iraq sent the price of oil to a three-month high as traders bet that advances made by insurgents could disrupt supplies from one of the world’s largest oil exporters.
Brent crude futures rose 2% to $112.12 a barrel, the highest price since early March. The initially calm response to Sunni militants’ overrunning of Mosul, Iraq’s second largest city, on Tuesday turned to alarm as Isis, the al-Qaida splinter group, announced its intention to take Baghdad………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Military advances by Islamic insurgents in northern Iraq have had a negligible impact on global oil futures so far – but that’s likely to change if Baghdad doesn’t re-establish its authority soon.
Iraq may evolve as a “significant wild card,” oil-trading advisory company Ritterbusch & Associates commented overnight, following the loss of a second major city to insurgents. Prices are likely to climb if tensions continue to rise, the firm said………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

OPEC faces a period of static oil prices as traders track supply-side uncertainties surrounding Iraq, Iran and Libya, as well as Ukraine, analysts said Thursday. The oil exporters’ cartel opted this week to maintain its crude output ceiling, expressing confidence in the market despite global tensions keeping prices high.
OPEC, which will convene again in late November to assess the state of the market, remains happy with Brent oil prices hovering close to $110, benefitting producers………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

The world oil market has set up quite nicely for OPEC. Dramatic changes in oil production around the globe are balancing each other out instead of wreaking havoc. This has helped world oil prices stay high enough to provide OPEC countries with robust income, but not so high that they scare customers away from buying more of their precious product.
Brent crude, the most important international oil benchmark, has hovered in the range of $110 per barrel over much of the last 4 years, with remarkably low volatility for oil markets. That has also led to stable gasoline prices for U.S. drivers, who have been paying in the neighborhood of $3.50 per gallon over the period………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Oil markets should be balanced during the second half of this year with extra production sufficient to meet growing demand, OPEC said on Thursday, suggesting oil prices may be fairly stable despite worries over lost supply.
Oil prices rose sharply on Thursday with Brent crude climbing above $112 for the first time since March on worries that violence in Iraq could disrupt supplies. But the Organization of the Petroleum Exporting Countries, which supplies a third of the world’s oil, said rising oil production should be more than sufficient to meet demand………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

On 11 June, OPEC reaffirmed the group’s crude oil production target of 30 million bpd which has been in place since December 2011. The target is slightly above the 29.8 million bpd call on OPEC crude oil and global stocks during the year so far. For 2014 in total, the average call on OPEC and global stocks is expected to be 0.3 million bpd lower than 2013 levels with an additional 0.2 million bpd decline during 2015 to hit an average of 29.6 million bpd.
Growing non-OPEC supply, particularly from contributing tight oil production growth in the US, drives the expected easing of global oil market conditions and contributes to the forecast of moderate crude oil price declines, the North Sea Brent crude oil process averaging US$ 108 /bbl in 2014 and US$ 102 /bbl in 2015, down from an average of US$ 109 /bbl last year………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Palladium posted its biggest daily losses in almost a year on Thursday after South African producers struck a deal with the union to end a crippling five-month strike, and violent conflict in Iraq burnished gold’s safe haven status.
Taking a step closer to resuming operations after the longest strike in the 130-year history of South Africa’s mines, Amplats, Implats and Lonmin reached an agreement in principle with the Association of Mineworkers and Construction Union (AMCU) about wages………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

With the U.S. leading the way in the fracking revolution, Canada in tar sands and with a newly liberalized energy sector in Mexico, North America could easily rival and exceed OPEC’s production of crude oil, natural gas, distillates and other petrochemical products—making North America the envy of the energy world.
Combined, NOPEC could become the “swing producer” of energy products in world markets, helping to drive down prices of energy products that are currently hostage to OPEC’s whims, geopolitical risk and, on occasion, excessive speculation that whips oil markets round and round………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

The recent range-bound state of the gold market reminds Phil Flynn of a scene from the movie “Frozen,” where a princess inadvertently uses her magical powers to cast a spell and unleash an eternal winter on the kingdom.
“That’s what I feel like the gold market is,” said Flynn, a senior market analyst with Price Futures Group. “We’ve been frozen.” Frozen in place, that is. The most-active Comex August contract meandered between roughly $1,268 and $1,330 an ounce for roughly two months before breaking through the bottom of that band on May 27………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Gold mining stocks were hammered last year as gold prices fell almost 30%. Investments in gold fell as investors pulled money out of exchange traded funds. This was mainly due to the fact that the U.S. Federal Reserve indicated that it will start winding up its quantitative easing program.
The Fed has already started easing its bond purchases this year, however, surprisingly gold and gold mining stocks have performed well. So are gold miners worth investing in after last year’s sharp decline?……………………………………….Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

An interesting and rare set-up has developed in the Comex silver futures Commitment of Traders weekly position report (COT report). This is a report issued by the CFTC (Commodity Futures Trading Commission) which shows the long/short futures positions for various categories of traders.
The position report issued last Friday for Comex silver futures traders shows extreme positioning for both the “commercial” and “managed money” segments. In addition, there are signs of possible supply/demand stress for physical silver in China. As I will detail below, both indicators are indicative of a possible short squeeze developing in silver………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Which precious metal will most likely prevail this coming year? Palladium says Philip Newman, director of Metals Focus, to Kitco News at the IPMI Conference. “I think, in terms of palladium, the underlying supply-demand picture is very strong from a price point of view,” he says. “I think we’ll see gold and silver struggle relative to the PGMs.”
Newman says gold and silver prices will most likely remain range-bound for the next few months and even into early next year. “This year, we’re not seeing mass liquidations, that is really behind us, but at the same time we’re not seeing a great deal of net new demand from the investment community coming in.” ……………………………………….Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

In China’s latest metals-for-loans scandal, it is easy to make mountains out of molehills. As far as copper is concerned, investors should try to see the issue for what it is—a medium-size molehill.
Copper spot prices have slumped 4% since reports that Chinese authorities are cracking down on traders who use metals such as copper as collateral for loans. The case is complicated by evidence that a trader may have used metal stored at the northeastern port of Qingdao as collateral for multiple loans, possibly defrauding several Western banks, including Standard Chartered and Citigroup……………………………………….Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

The rise in global population, growth in the Chinese economy, urbanization of the Asian countries and increasing requirements of the developed countries have created an unprecedented demand for minerals and metals. The metals & mining industry caters to this ever-rising demand through extraction (mining) and primary and secondary processing of metals.
However, of late, the tepid global economic growth and a slowdown in the Chinese economy have emerged as major headwinds for the metal industry worldwide. Let’s have a sneak peak at what is in store for the major industrial metals ― Iron, aluminium and copper………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Natural gas prices and related exchange traded funds surged Thursday, experiencing their largest one-day move in almost two months, after new gas injections failed to impress. The United States Natural Gas Fund jumped 4.8% Thursday.
NYMEX natural gas futures were up 4.9% Thursday, trading around $4.73 per million British thermal units. According to the Energy Information Administration, producers pushed 107 billion cubic feet of gas into storage for the week ended June 6, compared to forecasts calling for an increase of 110 bcf, Investing reports………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

European market operator Euronext announced on Thursday plans to develop ties with China’s Dalian Commodity Exchange in a move to boost its agricultural derivatives business following its spin-off from IntercontinentalExchange.
Euronext, which kicked off an initial public offering on Tuesday, operates Paris-based agricultural derivatives and has stressed innovation in derivatives as a focus for the company after its IPO………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Commodity market regulator Forward Markets Commission has amended regulations for corporate governance and independent director in commodity exchange. The regulator has now aligned the norms in line with the new Companies Act.
The new FMC norms lays emphasise on appointment of different committees to assist the management take decisions. To start with, it has suggested formation of eight committees, including the one on technology………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Alessandro Aspesi has worked for Threadneedle Investments since 2007 and has spearheaded the opening of the Italian office in 2008. Six years on, he looks at the broad picture to give an outlook of the Italian market and of Threadneedle business in the country.
As of 31 March 2014, the London-based fund manufacturer had £89.7bn AUM globally distributed across retail and institutional clients. In Italy, the business is almost equally divided between retail clients (40%) and institutional clients and discretionary portfolio management (60%)………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Agricultural commodities have seen smooth trading this year, enjoying a huge rally in the first four months of the year on adverse weather conditions and growing demand. This trend now seems to be reversing on accelerated crop plantation, especially in the U.S., and eased dry-weather concerns following rains.
This is especially true as wheat saw the worst slump in its prices in 15 years early this month on speculations of increased global supply. Wheat harvest in the European Union is expected to be the most since 2008. As per FAO, global wheat production would be 702.7 million metric tons in the 2014-15 season, up from 701.7 million metric tons projected in May………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

British finance minister George Osborne rejected European Union plans to outlaw currency market manipulation on Thursday and instead set out his own proposals to make rigging exchange rates a criminal offence.
EU laws taking effect in 2016 will make it a criminal offence with a four-year jail term to rig key prices in a wide range of financial markets. But Osborne does not want these laws to apply in London, the world’s biggest centre for currency trading………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

So you’ve heard it all. The 3% decline of the Chinese currency this year is just a small blip. The Chinese central bank engineered the depreciation just to scare off the currency speculators. China’s RMB will return to its upward climb soon enough.
Maybe not, says Carl Huttenlocher, chief investment officer of Hong Kong-based US$2.4 billion-under-management multi-strategy hedge fund Myriad Asset Management………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

Environmental Protection Agency chief Gina McCarthy said on Thursday that newly proposed rules to slash carbon emissions from U.S. power plants will cut electricity bills after 2030 by forcing power plants to become more efficient.
Speaking at a forum on energy efficiency in Washington, which she likened to “preaching to the choir,” McCarthy took issue with critics’ claims that the EPA’s clean power plan will cause consumer electricity prices to skyrocket, in part by forcing older coal-fired plants to close………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

ABN Amro Bank NV, the Dutch state-owned lender, withdrew from carbon trading, becoming the latest bank to exit the market after prices slumped.
ABN Amro closed its carbon desk after reviewing market activities and is working with clients to dispose of its portfolio of business, spokesman Arien Bikker said by phone today. The bank will continue to offer clearing services for carbon permits and offsets, he said. It has been active in the European Union emissions market since at least 2005………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

The German government wants the EU’s carbon market reform plan to be implemented by 2017, four years earlier than the European Commission has proposed, Germany’s Environment Minister Barbara Hendricks said on Thursday.
The European Commission, the EU executive, has proposed setting up a so-called market stability reserve from 2021 to hold and release permits to balance supply in the bloc’s Emissions Trading System (ETS) and better respond to economic changes………………………………………..Full Article: Source

Posted on 13 June 2014 by VRS |  Email |Print

European Union policy makers may reach a decision in the first half of next year on a proposal to strenthen the world’s biggest emissions market by curbing oversupply, according to a senior EU official.
EU governments and the European Parliament are unlikely to finish work on the reform proposed by the European Commission before the end of this year, said Jos Delbeke, director general for climate at the EU’s regulatory arm………………………………………..Full Article: Source

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