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Commodities Briefing 02.Jul 2014

Underweight Commodities
Raw-Material Resurgence Following Record Exit From Funds
TDS Raises Commodity Forecasts, Sees Average 2014 Gold Price At $1,273/Oz
RBA commodity price index at 4 year low
Iraq conflict gives a jolt to oil prices
Increase in oil prices over the years have spurred innovations that have led to efficient use of energy inputs
Where The US Got Its Oil in 2013
Opec’s crude output climbs as members fill in for loss
Gold price set to average $1,290/oz in H2 – Heraeus
Gold bullion imports in India hit 13-month high
Gold Investing Sentiment Hits 4.5-Year Low
Did you know gold has reached double-digit gains in 2014?
Firm With ‘Critical Mass’ Seen Running New Silver Price
LME eyes July launch for silver fix pricing
Platinum at 10-month high on supply worries; gold eases
Platinum, Palladium: The Other Precious Metals
Precious Metals Rising, Switzerland’s Vaults Keep Platinum Prices High
Canada could become REE powerhouse - with some help
Gold Assets in Biggest ETF Posts Largest Two-Day Gain Since 2011
Several ProShares Commodities ETFs Changing Names, Indexes
5 ETFs Up At Least 10% in the First Half of 2014
Zimbabwe: 'Set Up Commodity Exchange'
Soybean weakness on record US acreage, Soymeal bullish
10 things you need to know about sustainable agriculture
Hungary's Currency Weakens on Government Plan to Convert Loans
US says China's currency undervalued
Hong Kong Defends Currency Peg for First Time Since 2012
Labor error costly to carbon trade consensus, says Shorten

Posted on 02 July 2014 by VRS |  Email |Print

Commodities generally marched to different drummers in the first half of 2014. The idiosyncratic responses of individual commodity markets to supply disruptions generated surprisingly strong returns.
Even accounting for these supply interruptions, however, commodity supply is still trending generally stronger amid subdued demand, and so we continue to recommend maintaining commodity positions below long-term target allocations. Nevertheless, we see long-term reasons why investors should continue to include commodities in a diversified portfolio………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Investors are being lured back to commodities after war and drought helped make raw materials the surprise best-performing major asset class in the first half.
About $5.9 billion was added to raw materials investments this year, compared with a record $50 billion withdrawn in 2013, Citigroup Inc. estimates. Assets under management of about $360 billion at the end of last year rose to $365 billion through May and probably increased again in June, the bank said……………………………………….Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

TD Securities raised second-half 2014 forecasts for a host of commodities, including gold, silver, base metals and some energy markets. In a research report released late Monday, TDS now forecast average 2014 gold prices at $1,273 an ounce, up $25 from their previous view, and silver at $19.87, up 55 cents. For the third quarter, their average gold price forecast is $1,260, up $60, and the fourth-quarter forecast is up $25 to $1,250. For silver, the third-quarter forecast is up $1.20 to $19.80 and the fourth-quarter forecast is up 64 cents to $19.64.
For 2015, however, the firm lowered its gold forecast for the first half of the year, leaving its second-half 2015 forecast unchanged. It lowered its 2015 average price forecast by $10 to $1,271. For silver, TDS upped its second-quarter 2015 forecast and lifted its 2015 average forecast by 6 cents to $19.88………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

The prices of Australia’s export commodities headed lower in June for the sixth month in a row. That left the RBA’s commodity price index, in foreign currency terms, at its lowest level since March 2010, and 32 per cent below its July 2011 peak.
The biggest contributor to the 1.8 per cent fall in June, a repeat of the decline in May, was a drop in the price of iron ore, the RBA said. Rural commodity prices also fell, but the price of base metals rose………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Oman crude oil on the Dubai Mercantile Exchange last month reached levels not achieved since last September on renewed tensions in Iraq and the potential threat to oil production.
The DME August-delivery Oman crude contract settled at US$109.44 per barrel, up $2.98 from the closing May price of $106.46 when the July contract settled. The monthly average of the DME, which is used by Oman and Dubai to set their official selling price, was $108.08 a barrel, up from $105.65 in May and also the highest since September. The $2.43 a barrel increase was the largest monthly rise since August, as crude oil prices finally broke out of the narrow trading ranges that had characterised the market this year………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Oil is a critical source of energy. In the past, a major oil price shock meant devastation for economic growth. “Our obsession with oil prices comes with good reason,” writes Morgan Stanley economist Ellen Zentner. “Abrupt and sharp increases in oil prices have played a key role in precipitating recessions in 1973-75, 1980-81, 1990-91, 2001 and 2008-09.”
Recent turmoil in Iraq has sent oil prices much higher. But economists aren’t ready to freak out just yet. “Over time, however, those shocks to the relative price of oil have spurred innovations that have led to a more efficient use of energy inputs,” continued Zentner………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

As events in Iraq continue to unfold, we have been getting quite a few queries on just how much oil the US imports from Iraq. In my previous post – The Top 10 Oil Producers in 2013 — I showed that even though the US is a major oil producer, we are an even greater oil consumer. So we import millions of barrels a day of oil from over 40 countries — one of which is in fact Iraq.
The Energy Information Administration (EIA) tracks US oil imports and finished product exports, and I have tabulated our Top 10 sources of crude oil imports from 2013. Overall, the US imported 7.7 million barrels per day (bpd) of crude oil in 2013, a 2 million bpd decline since 2008………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Opec crude production climbed for a second month in June as gains in Saudi Arabia and Nigeria made up for the loss of Iraqi barrels, a Bloomberg survey showed.
Production by the 12-member Organisation of Petroleum Exporting Countries (Opec) rose by 278,000 barrels a day to 30.223 million, according to the survey of oil companies, producers and analysts. Last month’s total was revised 43,000 barrels a day lower to 29.945 million because of changes to the Kuwaiti, Libyan and Ecuadorian estimates………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Heraeus sees the gold price averaging $1,290 per ounce in the second half of the year, it said, with the various factors driving the market to keep it largely in balance.
The yellow metal has risen almost 10 percent since the start of the year but this positive development has not been enough to “draw it out of its continual downtrend”, the precious metals group said in a report on Tuesday. ……………………………………….Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Gold bullion imports by the India’s northern state of Gujarat touched its highest levels in thirteen months during June, primarily on account of recent relaxations in gold import norms by the new government.
Per trade figures released June 30, the total gold imports during the month of June totaled 14.33 metric tonnes (MT). This is the first time in the past year that the monthly gold imports have touched double digits. Gold imports surged by 74% compared to 8.74 MT in June last year………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Gold investing amongst private households sank to the weakest sentiment in nearly 4.5 years in June. Bulls can blame last month’s jump above $1300 per ounce. It spurred the number of sellers on Bullion Vault – the world’s largest physical gold provider online – and deterred new buyers. That took our Gold Investor Index down to 51.2, the lowest reading since February 2010.
The Gold Investor Index is a unique window onto private investing behavior in gold. Unlike an exchange-traded trust fund (ETF), BullionVault has few professional money managers amongst its 52,000 users. Unlike a retailer dealing coins or small bars, we also enable our users to sell their vaulted property instantly, when they choose (and offering it at their own price too if they wish)………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Overnight gold futures hit a 14-week high on the Comex, settling at US$1,326.60 an ounce after peaking at US$1,334.90. The recent re-rating in gold has boosted the yellow metals gains to 10% for 2014, as tensions in Iraq and Ukraine lift demand for safe-haven assets.
There has been more fighting in the Ukraine, where a ceasefire between the Kiev government and pro-Russian separatists has floundered, and the situation in Iraq added to the improved mood over gold. Israel also launched air attacks in Gaza on Tuesday in retaliation for the deaths of three kidnapped teenagers………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

The replacement for the 117-year-old London silver fixing benchmark that’s ending Aug. 14 will probably be chosen as soon as one of the companies proposing an alternative wins “critical mass” support from the market, according to the London Metal Exchange.
Garry Jones, the LME’s chief executive officer, and Matthew Chamberlain, head of business development, spoke at a news briefing at the bourse today. The LME, Autilla Ltd., Bloomberg LP, CME Group Inc./Thomson Reuters, ETF Securities Ltd., Intercontinental Exchange Inc. and Platts have made proposals………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

British market is one of a number of firms vying to run the silver price mechanism. The London Metal Exchange (LME) is planning to launch its silver price settlement solution and test trade sessions on July 14, one month before the London Silver Market Fixing stops running the benchmark.
Speaking at briefing, a number of LME executives said on Tuesday market participants want an electronic solution and it is targeting a July launch date to ensure banks and other participants have time to prepare for the LME’s launch if it is successful in its bid………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Platinum rose to a 10-month high above $1,500 an ounce on Tuesday, boosted by new positioning by funds at the start of the quarter and long-term supply worries despite the end of South Africa’s mining strike.
Gold reversed gains as investors took profits after strong exchange-traded fund buying sent prices to a near two-month peak earlier, a day after data showed US gold coin sales rose to a five-month high in June on heightened geopolitical tensions………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Gold isn’t the only precious metal that glitters today. Platinum prices broke through the $1,500 an-ounce mark today and palladium futures gained as better than expected U.S. car sales and a strike in South Africa attracted buyers.
October platinum jumped $26.70 or 1.9% to $1,509.6, while September palladium climbed $9.45 to $852.60. The related ETFs also gained, with the ETFS Physical Platinum Shares (PPLT) up 1.25% and the ETFS Physical Palladium Shares (PALL) up 1.03%………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

This week we learned that a major reason for platinum’s price stability during the five-month-long South African mining strike was stockpiles of the metal held in Swiss vaults. The AMCU strike finally ended this week and miners went back to work for Lonmin, Impala and Anglo-American Platinum. Silver was the big winner on the LME, though, doubling the gains of its precious metal cousin, gold.
The week’s biggest mover on the weekly Global Precious Metals MMI® was the price of Japanese silver, which saw a 3.5 percent increase to JPY 680.00 ($6.70) per 10 grams. This week marked the third in a row of rising prices for the metal………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

A report by Canada’s House of Commons Standing Committee on Natural Resources says testimony before the group stressed “Canada has an opportunity to turn its rare earth deposits into a competitive advantage, and at the same time, secure its own supply of this resource into the future.”
In the report, “The Rare Earth Elements Industry in Canada—Summary of Evidence”, witnesses told the committee members that “Canada’s position is unique with respect to REE development not only because of its rare earth reserves, but also because of the country’s stable environment and mining expertise.”……………………………………….Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

After shunning gold for more than a year, investors are starting to test the waters as they snap up holdings in the world’s largest bullion exchange-traded product at the fastest pace since 2011.
Assets in the SPDR Gold Trust, which counts Billionaire John Paulson as its biggest holder, rose 1.4 percent to 796.39 metric tons in the two sessions through yesterday. That’s the biggest two-day gain since November 2011. Last year, more than 550 tons were sold from the fund as prices plunged 28 percent, the most in three decades………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

ProShares, the largest issuer of inverse and leveraged exchange traded funds, said today several of its commodities ETFs will change names and indexes.
“On or about July 1, 2014, the DJ-UBS commodity indexes will become the Bloomberg Commodity Index family. As a result, the names of these indexes are changing, as are the names of the ProShares ETFs that seek to track the indexes. Note that only the names are changing. The methods for selecting index components remain the same, as do the investment objectives of the ETFs,” said ProShares in a statement………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Despite a host of concerns, 2014 has so far been a great year for some corners of the investment universe. Though a brutal winter, a round of geopolitical crises, global growth worries and valuation concern in the U.S. paralyzed the country’s stock markets in Q1, we have seen strength in one segment of the investing world, namely, commodities.
Several natural resource ETFs were among the winners in the first half of 2014 scoreboard, while India was the only nation that breezed past the world on a sweeping election win for Modi. Though the overall bias was for safe assets in the marketplace, commodity and India ETFs posted huge gains so far this year………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

The Zimbabwe Government should expedite the operationalisation of the commodity exchange which was first mooted in the early 1990s with the aim of providing an orderly and transparent platform for marketing agricultural products.
A commodity exchange facilitates the orderly trading of any agricultural product in the country. Agricultural products traded on commodity markets across the world include wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies and oil………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Soybean prices have weakened globally on record acreage achieved by US farmers and plenty of inventories. However, soybean meal uptrend seen since August 2013 is likely to continue after a recent correction, analysts said.
Soybeans for November delivery at Chicago Board of Trade (CBOT) fell to $11.465 a bushel before recovering to $11.51 on Tuesday. US soybean meal futures receded 10% recently but the bullish trend seen since August last year………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

In a recent live chat, a panel of experts joined readers online to discuss the future of sustainable agriculture in the face of changing weather driven by climate change and increasing competition for food. Here are 10 things we learned:
1. We shouldn’t just “accept” climate change: Just because climate change is happening and its effects are already being felt, we shouldn’t give up on efforts to reduce greenhouse gas emissions. Agricultural GHG emissions, make up about 25% of global GHG emissions, but there’s a lot that can be done to reduce this………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Hungary’s currency weakened sharply on Tuesday in reaction to the government’s latest plan to ease the debt burden for foreign-currency borrowers at the expense of banks, with a European Union warning that the country may return next year under strict budget oversight adding to the forint’s slide.
The Hungarian forint fell about 1% against the euro intraday, with the euro trading above 312 forints by the end of the day after opening around 309 and 310 forints. The forint weakened as implications of the government’s plan to convert foreign-currency loans into forints at below-market rates sunk in, said Peter Attard Montalto, economist at Nomura………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

US Treasury Secretary Jacob Lew says China’s yuan currency remains undervalued, a longstanding sore point that will be raised at next week’s high-level bilateral negotiations in Beijing. Lew said that the yuan, or renminbi, has appreciated 14 per cent since 2010, when China began taking small steps to allow its currency to trade more freely.
‘It still needs to appreciate more. It’s undervalued,’ said Lew, who will lead the US economic team at the US-China Strategic and Economic Dialogue (SED) in Beijing next Monday and Tuesday………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Hong Kong’s de facto central bank stepped in for the first time since December 2012 to prevent the city’s currency from rising against the U.S. dollar, as demand rose on commercial activities.
The Hong Kong Monetary Authority said it bought $2.099 billion within the past 24 hours at HK$7.75 a dollar, the upper limit of a convertibility range that triggers intervention. The purchases, disclosed on the authority’s Bloomberg page, were confirmed by phone………………………………………..Full Article: Source

Posted on 02 July 2014 by VRS |  Email |Print

Opposition Leader Bill Shorten says Labor played politics too aggressively against Malcolm Turnbull as opposition leader, helping to destroy his leadership in 2009 and ruin a carbon trading consensus.
The admission, which amounts to a direct criticism of former prime minister Kevin Rudd, came as Mr Shorten reasserted Labor’s belief in serious climate policy, recommitted the party to an emissions trading scheme going into the 2016 election, and reminded Clive Palmer that an ETS had already been legislated………………………………………..Full Article: Source

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