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Commodities Briefing 09.Jul 2014

Posted on 09 July 2014 by VRS |  Email |Print

The best commodities performance in years has rekindled interest in exchange traded funds that allow investors to trade the price of energy, metals and grains on stock markets. At one time, some ETFs were so large that critics contended they distorted wholesale markets for food and energy. Assets held in many of the biggest funds have shrunk from their peaks.
But new figures show investors began to creep back into commodity ETF products as the benchmark Bloomberg Commodity Index rose 7.1 per cent in the first half of the year. The direction of flows varied by geography and sector, however……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Global commodity exchange-traded products posted a second straight quarter of investment inflows during the April-June period, with the biggest gains coming from the platinum group metals, ETF Securities said Tuesday.
Overall, commodity ETP flows were helped by increasing confidence in China’s economic outlook and the global economic recovery, said the firm, which provides a number of metals ETFs……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

The U.S. Energy Information Administration raised its 2014 and 2015 average price estimates for crude oil, gasoline and natural gas, according to a monthly report released Tuesday. “The escalating conflict in Iraq, continued record-high levels of Chinese crude oil imports in 2014, and ongoing delays to Libyan oil exports have contributed to upward price pressure,” the government agency said.
For 2014, the EIA forecast average prices of $100.98 a barrel for West Texas Intermediate crude oil , up from an estimate of $98.67 in the previous monthly report. It estimates an average 2015 price of $95.17, up from $90.92……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

The U.S. Energy Information Administration increased its 2014 and 2015 price forecasts for West Texas Intermediate and Brent crudes because of the upsurge of violence in Iraq. WTI will average $100.98 a barrel this year versus the June projection of $98.67, the EIA, the Energy Department’s statistical unit, said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $95.17 in 2015, up from the previous month’s estimate of $90.92.
The EIA boosted the forecast for Brent to $109.55 for this year from $107.82. Next year’s forecast was raised to $104.92 from $101.92. “Price forecasts were raised primarily because the problems in Iraq caused us to scale back our production projections,” Tancred Lidderdale, an economist with the EIA in Washington who helped write the report……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

The U.S. Energy Information Administration Tuesday slashed its forecasts for how much it sees world oil demand growing in 2014, while increasing its expectation for how supply will come from non-OPEC producers this year. The agency reported in its July Short Term Energy Outlook that U.S. oil output in 2015 will likely average its highest level in 42 years, while also raising its forecast for U.S. and international oil prices.
U.S. crude oil production is expected to increase from an estimated 7.4 million barrels per day in 2013 to 8.5 million bpd in 2014 and 9.3 million bpd in 2015. “The 2015 forecast represents the highest annual average level of oil production since 1972,” the EIA said……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

The DOW drop below 17,000 has seemed to some a sign that maybe a correction is here. Talk of bubbles in some asset classes is spreading, the potential for less quantitative easing and higher interest rates, and the crying need for profit taking in stocks suggests to some analysts that the equities market will at least pause, possibly pull back notably. As always, there are those that disagree.
But, if there is an equities correction, such as a drop of 20%, would that affect oil prices? Two schools of thought exist on this (don’t you hate that?), one suggesting that a bear market on Wall Street would pull down oil prices, the other that oil might become a perceived safe haven, or at least a parking spot, for the cash which institutions would have……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Bloomberg reported Monday that U.S. crude oil production hit 11 million barrels a day during the first quarter of this year, beating both Saudi Arabia and Russia. In fact, it looks like America is going to remain the world’s top oil producer for the rest of 2014. The federal International Energy Agency has already predicted that America will replace the Saudis as the world’s biggest oil producing country by 2020.
This begs a question. Why does this nation still have a Strategic Petroleum Reserve? Maybe it’s time for this relic of Carter-era energy policy to get the heave-ho in the face of the realities of America’s new era of energy — and oil — abundance……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

To hedge, or not to hedge? It’s a question the gold industry has grappled with for decades and goes right to the heart of the question about why investors buy gold shares – to gain exposure to a rising gold price or invest in the exploration and development skills of miners.
Julian Baring, the UK fund manager dubbed the “Gold Guru”, once reportedly said he did not like hedging because behind every hedge there was invariably a ditch and these are usually wet and miserable places……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Gold is precious again. After investors sent bullion tumbling in 2013 by the most in three decades and kept dumping the metal earlier this year, demand is now up and prices are defying bearish forecasts. Money managers increased net-long positions for a fourth straight week through July 1 and holdings in exchange-traded products are climbing at the fastest pace since 2012.
“Gold’s performance has proven the bears wrong so far this year,” John Kinsey, who helps manage about C$1 billion ($935 million) at Caldwell Securities Ltd. in Toronto, said in a telephone interview yesterday. “We look for further strength through the balance of the year.”…………………………………..Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Assets in the SPDR Gold Trust, the metal’s biggest exchange-traded product that counts billionaire John Paulson as its largest holder, erased this year’s decline. Bullion’s 2014 rally is outpacing equities, Treasuries and bonds, defying bearish forecasts from Goldman Sachs Group Inc.
Escalating tensions in Iraq and Ukraine boosted demand for the metal as a haven, and the Federal Reserve affirmed that U.S. interest rates will stay low for a “considerable time,” spurring inflation concerns. Money managers increased bets on a Comex futures rally for the fourth straight week, government data showed……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Since 2008, we have seen evidence of a consistent economic recovery both in the US and around the world. These positive trends have some drastic implications for investors and those that are considering gaining exposure in precious metals. In areas like stocks, the central benchmarks have risen to new record highs and those that are not already long equity markets might find it difficult to navigate the current market.
“It is not easy to buy into stocks at such elevated levels,” said Vlad Karpel, options analyst at TradeSpoon, “so more traders have started to consider buying gold as a way to profit from the market valuations that are present now.” And when we look at the most likely trends that will be seen through the rest of this decade, there is a strong case that can be made for why increased inflationary pressures could bring the price of gold back closer to its 2011 highs……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Palladium capped the longest rally since 2000 on signs that demand will climb for the metal used in pollution-control devices in cars amid lower supplies from South Africa, the world’s second-largest producer.
Palladium has gained 22 percent this year as output slowed during a five-month strike by 70,000 employees in South Africa that ended last month. Auto sales in the U.S. headed for the biggest year since 2007, while retail deliveries of cars, multipurpose and sport utility vehicles climbed 14 percent in China last month, the Passenger Car Association said……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Steel is vital for any economy. In a lot of ways, steel consumption in an economy reflects the economy’s health. It shouldn’t surprise you that steel consumption fell by as much as 50% in some countries during the recession of 2008.
We use steel in our daily lives—whether in the car we drive, the bridges we drive on, or the homes we live in. You can describe steel’s importance in a simple quote from the World Steel Association, “steel everywhere in our lives.” The sector also supports around a million jobs in the U.S., directly or indirectly……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Industrial metals will probably be the greatest beneficiaries of China’s intensifying policy-easing measures in the third quarter, according to Morgan Stanley.
Economic growth in China is set to improve, helped by easing and stronger export markets, metals analysts including Joel Crane wrote in a report today, citing the bank’s chief economist for China, Helen Qiao……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Energy exchange-traded products (ETPs) attracted almost $200 million in June as investors moved into crude oil after civil war broke out in Iraq, the latest monthly flows data from asset manager BlackRock showed. Worries that Iraq’s crude exports would be disrupted by violence have proved largely unfounded to date, but the rapidity with which Islamist militants seized territory in the north and west last month alarmed the market, driving up futures prices.
The S&P GSCI Energy index was up 3.2 percent in June, with Brent up 3.8 percent and unleaded gasoline up 3.6 percent. “The bulk of the energy flows went into crude oil ETPs, and most of that went into Brent-tracking products,” said Nick Brooks, head of research and investment strategy at ETF Securities, an issuer of ETPs……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

If you like the idea of dividend investing but don’t have the time or knowledge to manage a portfolio of individual stocks, don’t despair: You can still enjoy the benefits of dividends, without all the work. The solution: exchange-traded funds.
The number of dividend-oriented ETFs has exploded in recent years as companies respond to the investing public’s growing appetite for income. In Canada, there are at least eight ETFs with the word “dividend” in their name, and many more that use dividend stocks as a component of a broader income-oriented strategy……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

The Essential Commodities Act (ECA) was enacted by the Central Government in 1955 to control and regulate trade and prices of commodities declared essential under the Act. The Act is again in the limelight, as the Government is making it more stringent while bringing onions and potatoes under its purview. Here are some facts about its provisions that you may want to know and explanations about how the Act works.
The Act empowers the Central and state governments concurrently to control production, supply and distribution of certain commodities in view of rising prices. The measures that can be taken under the provision of the Act include, among others, licensing, distribution and imposing stock limits. The governments also have the power to fix price limits, and selling the particular commodities above the limit will attract penalties……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

Asia’s central banks snapped up dollars and other currencies in June at the fastest pace since 2011, bringing total foreign-currency reserves to $7.47 trillion, the latest in a series of records, in an effort to fend off the impact of a wave of cheap global capital.
According to the latest data, holdings in Hong Kong, Singapore, South Korea and Taiwan all hit new highs, while Japan’s reserves rose to $1.28 trillion. Citigroup Inc. economists estimate that China will report a record $3.99 trillion in reserves within the next week……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

According to Fabrice Brégier, chief executive of Airbus’s passenger jet business, the euro is far too high. Quoted in this morning’s FT, he called on the European Central Bank to take immediate steps to devalue the currency by around 10 per cent against the dollar. His opinion echoes remarks by Sir Mike Rake, president of the CBI, about the pound sterling, which he similarly views as far too high.
It scarcely needs saying that race to the bottom, competitive currency devaluation is ultimately a zero sum game that benefits no one. Unfortunately, that hasn’t stopped several of the world’s major currencies from playing it. The US was first out of the hatches with central bank money printing (quantitative easing) in the immediate aftermath of the Lehman Brothers collapse, followed swiftly by the Bank of England……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

South Korean companies will be required to disclose carbon emissions in their balance sheet to inform investors and stakeholders when the cap-and-trade system takes effect next year, the Korea Accounting Standards Board (KASB) said Tuesday.
The accounting standard agency has recently drawn up a draft that requires companies to include activities related to greenhouse gas emissions in financial statements sent to the Korea Exchange, the nation’s main bourse. The exchange is preparing to open the carbon exchange market at the start of 2015……………………………………Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

In the face of resolute climate change inaction by their elders, it is now up to young people to take action to stop climate crime and save the world. Humanity and the Biosphere are increasingly threatened by man-made global warming but climate change inaction means that it may soon be too late to act to prevent catastrophic global warming.
This climate change inaction is associated with a $10 trillion annual increase in the circa $200 trillion Carbon Debt for young people and future generations. Young people must now realize the truth in the 1960s slogan “Don’t trust anyone over 30” and that the answer of their elders to the question “What did you do in the War on Terra?” …………………………………..Full Article: Source

Posted on 09 July 2014 by VRS |  Email |Print

The European Union should overhaul its emissions program to ensure it encourages investment in clean energy without recurrent market intervention, according to the chair of the industry committee in the EU Parliament.
Jerzy Buzek, who was elected yesterday to head the panel for 2 1/2 years, said the EU emissions-trading system has failed to stimulate a switch to low-emission technologies because of a combination of a flawed design and an economic crisis. The proposal by the European Commission to start automatic supply controls to lift the price of emission permits after a 78 percent decline over the past six years will not solve the problem, he said……………………………………Full Article: Source

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