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Commodities Briefing 07.Jul 2014

Posted on 07 July 2014 by VRS |  Email |Print

Business activity in emerging markets expanded last month at its fastest rate since March 2013, boosted by strong growth in China and India, a survey showed on Monday.
HSBC’s composite emerging markets index of manufacturing and services purchasing managers’ surveys jumped to 52.3 in June - well above the 50 threshold that indicates expansion - from 50.6 in May. Services activity growth hit a 15-month high and manufacturing output also rose, HSBC said………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Commodities are outperforming stocks. The Greenhaven Continuous Commodity ETF (GCC) has gained 8.77% through the first six-months of the year, while the SPDR S&P 500 (SPY) is ahead by 7.71%.
GCC is an outstanding barometer of the broader commodities market. Unlike several larger competing commodity ETFs, GCC equally weights a basket of 17 commodity futures contracts – including gold, oil, and sugar, among others. That means no single commodity dominates GCC’s performance, giving it a broader view of what’s really happening in the commodities marketplace………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Commodities are getting a demotion from foreign-exchange strategists. Banks from JPMorgan Chase & Co. to Citigroup Inc. are reducing the weighting given to exports in their currency forecasting models as policy makers tighten their grip on financial markets.
Traditional commodity currencies, such as those of Canada, Australia, New Zealand and Norway, have become decoupled from exports by the most in as much as 13 years. “The breakdown in correlations has been significant,” Niall O’Connor, an analyst at JPMorgan in New York who specializes in tracking trends in trading patterns, said. “It’s central-bank talk that’s really become the catalyst for price action.”……………………………………….Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Commodities have begun the second half of 2014 on a mixed note with Bloomberg Commodity Index (formerly DJ-UBS) falling for second week in a row. The losses were on account of decline in corn, soybeans, soft commodities such as sugar and Arabica coffee, according to Ole S Hansen, Head of Commodity Strategy at Saxo Bank.
The price of key crops such as corn and soybeans traded on the Chicago Board of Trade (CBOT) plunged on Monday following the release of two reports from the US Department of Agriculture. Both the quarterly stock report and the latest update on planted acreage surprised the markets with the stock report showing domestic stockpiles of grains as being significantly bigger than what was forecast………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

The U.S. will remain the world’s biggest oil producer this year after overtaking Saudi Arabia and Russia as extraction of energy from shale rock spurs the nation’s economic recovery, Bank of America Corp. said.
U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report Friday. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Until recently, the price of oil had been making higher highs as unrest in the Middle East continued. However, in recent weeks there has been a sharp fall, with the price of Brent Crude falling from $115 per barrel to under $111 per barrel as Libya announced that it would be increasing its supply to the global energy market.
Of course, as producers of oil, a higher oil price generally means more profit for BP and Shell, as it does not impact upon costs but does help to boost revenue. However, a sharp fall in the oil price does not spell disaster for either company, with them both offering great long-term potential………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

The gold bugs are stirring. A 10% gain by the yellow metal this year is rekindling hope among long-suffering bulls that the major bear market that began nearly three years ago finally might be over. They argue that gold will continue to rise because investors will be seeking a hedge against rising inflation, currency fluctuations and geopolitical uncertainty.
Yet according to Duke University finance professor Campbell Harvey —one of academia’s leading experts on gold prices—the odds are poor that the metal will return any time soon to its all-time high in August 2011. That month, the spot Comex gold contract reached an intraday high of $1,929.20, more than $600 above Thursday’s settle price of $1,320.40………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Gold producers will return to net hedging for the first time since 2011 this year, GFMS analysts at Thomson Reuters said on Friday, after Polyus Gold this week announced a two-year programme to sell gold forward.
Hedging, or selling future gold production, allows miners of the metal to lock in prices for their output. While it can protect producers when prices are falling, it can also stop them capitalising on a rising market………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

London’s century-old gold price fixing, tainted by a rigging scandal and attacked by critics as old-fashioned, goes under the spotlight this week in key talks aimed at modernizing the process. Analysts said that the market price of gold, which is driven by investment and jewellery demand, could climb as a result of an overhaul.
Buyers and sellers of the precious metal will meet in London on Monday to discuss the setting of the global benchmark, which affects the flow of billions of dollars worldwide every day………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Until recently, the world has forgotten about Gold and gold futures prices it would seem. A few years ago, all we heard about was gold and Silver futures making new highs on the back of the Federal Reserve’s constant money printing schemes. However, after a dramatic selloff in the world of precious metals it became very quiet.
Gold prices have been in a giant basing or consolidation pattern for more than one year. As can clearly be seen below, gold futures prices have traded in a range between roughly 1,175 and 1,430 since June of 2013………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

If iron ore prices “stagnate” at US$90 per ton through 2015, some miners’ key credit metrics might worsen significantly, based on scenario analysis on 10 major iron ore producers, Standard & Poor’s Ratings Services observed this week.
“In particular, miners with large iron ore exposure, but are unable to cut costs and are saddled with debt, will face a severe deterioration in earnings and credit metrics,” warned S&P Credit Analysts May Zhong, Diego H. Ocampo, Andrey Nikolaev, Amanda Buckland, Elad Jelasko, and Xavier Jean………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Palladium prices hit 13-year highs on Friday, driven by expectations that South African supply will remain constrained after a lengthy strike and that demand from Chinese and US carmakers will improve. Spot palladium hit a high of $865 an ounce, its highest since February 2001, and was up 0.9 per cent at $862.25 an ounce.
Holdings of palladium-backed exchange-traded funds - popular investment vehicles which issue securities backed by physical metal - have risen to a record 2.55 million ounces this week, suggesting investors’ appetite for the metal is firm………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

I completely understand that you might think I am crazy for trying to call a bottom in the metals and mining sector. I probably am. Furthermore, I understand the “China slowdown” mindset very well. After all, the interesting fact has been how strong Chinese growth has been and how the country hasn’t experienced one simple recession yet (similar to Australia, where we have not had a technical recession in over 20 years).
Quite an amazing feat to be honest, but eventually we will have a mean reversion (in both countries). Personally, I have been expecting the negative surprise and even a potential recession to occur since late 2010. I rightfully warned my business partners against expanding the mining exploration company back in those days………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

BlackRock’s exchange traded funds business past the $1tn milestone for assets for the first time in June, helped by a strong performance in Europe where the ETF industry registered record breaking growth in the first half of 2014.
Investors put a record $32.1bn into European listed ETFs (funds and products) in the first six months the year, compared with just under $4bn at the end of June last year, according to ETFGI, a consultancy………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Exchange-traded funds (or ETFs) of companies based in the U.S. saw strong growth of 33% in 2013, with $1.6 trillion in total assets by year end. Equities continued to lead the market. Equity assets increased by close to $400 billion in 2013 over the previous year. Cash flows into the U.S.
ETF market totaled a record $213.8 billion in 2013. Equity ETFs accounted for the lion’s share of the increase, recording $201.5 billion of inflows—72% higher than the previous year………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Among the half-dozen U.S. Treasury officials traveling to Beijing for talks with their Chinese counterparts this week, Sharon Yuan will, as usual, carry the heaviest suitcase.
Yuan’s stuffed gray Travelpro befits the scope of her two jobs. As head of the department’s trade and investment policy and its chief China coordinator, she often arrives before her colleagues and makes multi-city stops. After the July 9-10 U.S.- China Strategic and Economic Dialogue, she’s off to Brussels for trade talks………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

The real and potential money laundering and terrorism financing risks of virtual currencies have been highlighted by the Financial Action Task Force (FATF), an inter-governmental body established by the Group of Seven that sets policies and standards on anti-money laundering and combating terrorist financing.
In a report on virtual currencies FATF notes virtual currencies such as Bitcoin are potentially vulnerable to money laundering and terrorist financing for many reasons. FATF last year recognised “significant progress” by New Zealand in addressing previously identified deficiencies following the coming into force of our Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Act………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Repeal could cost $20bn over next four years and 59 economists insist a carbon price is the best way to reduce emissions. Supporters of emissions trading are making a last-ditch plea to the Senate not to repeal Australia’s laws – citing new analysis that shows “axing the tax” will cost the budget almost $20bn over the next four years and a letter from 59 leading economists insisting a carbon price is the best way to reduce emissions.
But the government is determined the carbon price repeal should be the first decision of the new Senate and, with the support of the Palmer United party (PUP), appears set to bring on the debate and finally achieve the tax’s repeal this week………………………………………..Full Article: Source

Posted on 07 July 2014 by VRS |  Email |Print

Australia could dramatically exceed its current emissions reduction target for just a fraction of the $2.55 billion the Coalition plans to spend on “direct action” by buying international abatement permits. The Climate Change Authority argues the nation’s emissions reduction target could be increased from 5 per cent to 19 per cent at a cost of just $500 million by buying international carbon abatement units.
The authority, in a report to be released today, finds that international CERs could be bought for just $1.15 a tonne up to 2020. This was significantly cheaper than trying to achieve emissions abatement entirely at home………………………………………..Full Article: Source

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