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Commodities Briefing 11.Jul 2014

Posted on 11 July 2014 by VRS |  Email |Print

Commodity funds delivered robust returns in the second quarter, consolidating their recovery since the start of the year, with rallies in energy and metals boosting the top performers in the Lipper Global Commodity group.
Leading commodity fund managers say base metals should continue to perform well in the second half of 2014, with investor sentiment towards China improving, but the upside for oil is seen as more limited. Commodities have put in a solid performance so far this year, although returns eased a little in the second quarter………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Oil-price hedging by producers and consumers is declining as a result of stricter of regulation that’s caused banks to exit commodities markets, according to Threadneedle Asset Management Ltd.
Trading of futures for delivery later this decade has diminished as some banks either leave commodities altogether or curb trading, Nicolas Robin, a fund manager at Threadneedle, said at a presentation in London yesterday. Increased regulatory oversight has caused a slump in energy trading on exchanges, Platts, a company publishing prices for commodities including oil, said the day before………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

OPEC expects its share of the world oil market to shrink in 2015 for a third year running, due in part to the U.S. shale oil boom, giving the exporter group little comfort from an acceleration in global demand.
Making its first 2015 forecast in a monthly report, the Organization of the Petroleum Exporting Countries said demand for its oil next year would average 29.37 million barrels per day (bpd), down 310,000 bpd from 2014………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

The Organization of Petroleum Exporting Counties said Thursday it expected the world will need more oil because of improvements in the global economy. Global oil demand for 2015 is expected to grow by 1.2 million bpd to average 92.3 million bpd as the world economy picks up steam, OPEC said in its monthly market report.
“Despite some weakness in the first half of the year, the world economy continues to recover,” the report said. “Global gross domestic production growth in 2014 is now forecast at 3.1 percent, slightly higher than the estimated 2.9 percent for 2013.”……………………………………….Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Rising U.S. oil consumption will reverse a four-year demand decline in rich nations and drive a pick up world-wide next year, the Organization of the Petroleum Exporting Countries said Thursday. The assessment—the first given for 2015 by the oil producers’ group—shows the U.S. is scooping more of its own oil amid a production boom just as OPEC’s role continues to decrease.
In its monthly oil market report, OPEC said global oil demand growth will pick up next year amid robust economic growth. World consumption will increase by 1.21 million barrels a day in 2015, compared with a rise of 1.13 million barrels a day this year, the group said………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Non-OPEC oil supply is expected to rise by 1.6 million b/d in 2015 from a year earlier, led by increasing US liquids exports, a senior oil analyst at the Institute of Energy Economics, Japan said Thursday. Yoshikazu Kobayashi, oil group manager at IEEJ’s fossil fuels and electric power industry unit, said the outlook considered rising LPG supplies from the US and a recent US Commerce Department decision allowing exports of lightly processed condensates.
“We expect to see US condensates flowing into the Asian market from now on,” he said, adding that US condensate export volumes would be limited but would nevertheless help reduce procurement prices of naphtha and light crudes in Asia………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Energy prices are tumbling, a setback for investors who were betting that supply shortfalls would drive markets higher. Natural-gas futures hit a six-month low on Thursday. U.S. oil futures ended slightly higher, snapping a nine-session losing streak, the longest since December 2009.
It is a sharp turnaround for both markets, where investors until recently were overwhelmingly bullish, and a welcome relief for consumers, who had watched gasoline climb steadily for much of this year………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Gold and silver prices rose to three-and-a-half month highs on Thursday as European stock markets fell and the dollar weakened following the release of the Federal Reserve minutes.
The yellow metal jumped 1.3 per cent to a peak of $1,345 a troy ounce, while silver surged as much as 2.3 per cent to $21.55 an ounce. Both precious metals have rebounded strongly since early June, with gold up 8 per cent and silver 16 per cent………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Gold futures closed Thursday at their highest level in nearly four months as renewed worries about Europe’s banking system fanned investor demand for haven assets.
Gold for August delivery, the most active contract, rose $14.90, or 1.1%, to settle at $1,339.20 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the highest settlement price since March 19, when futures closed at $1,341.30 a troy ounce………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Mining is highly cyclical, with commodity prices rising and falling in long-term trends. For Foolish investors, these cyclical industries allow for classic value investing, with the market offering great companies at deep discounts that can yield market-crushing long-term total returns. This article highlights silver and explains the long-term bullish case for the precious metal.
More importantly, it offers a low-risk way for long-term investors to profit immensely should silver prices soar. Silver has many important uses other than jewelry or a store of value that can justify long-term price appreciation………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

India surprised bullion markets by keeping the import duty on gold and silver unchanged at 10 per cent in its fiscal budget, a move likely to limit overseas purchases by the second-biggest bullion consumer and further encourage smuggling.
Indian gold futures jumped 2 per cent on Thursday, widening the premium over global prices which had narrowed on the expectation of a duty cut. India’s biggest gold trade group had said on Wednesday that the finance minister would likely cut the gold import duty to 6 per cent in the newly elected government’s first budget presentation………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Many experts have been calling “game over” for more than a year, yet the stock market continues reaching new highs. And while the “average length” of a bull market is quoted as being anywhere from four to nine years or more – the experts can’t agree on that either – at five years at counting, many believe the current bull market is at least approaching retirement.
And that always brings out the promoters of a precious metal play. Is it time to put a little gold or silver in your portfolio? In a typical Wall Street hedge, Russ Koesterich, chief investment strategist for BlackRock says yes – and no………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Indian Finance Minsiter Arun Jaitley’s proposal to impose 2.5 per cent basic customs duty on metallurgical coke, in line with the duty on coking coal, will result in a rise in cost of steel production by Rs 450-500 a tonne. Most large steel companies will prefer to pass on the increased burden, as coal forms a large chunk of their manufacturing cost. The impact of reduction in the duty on steel-grade limestone and dolomite from five per cent to 2.5 per cent will be marginal.
“The finance minister has tried to please stainless steel makers only, with his move to increase the basic customs duty on their imported flat-rolled products from five per cent to 7.5 per cent. It will, however, have no benefit for carbon steel makers. Our costs will go up by $6-7 a tonne. We have to see if we can raise the prices for end-consumers,” said R K Goyal, managing director, Kalyani Steels………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Copper futures swung between small gains and losses on Thursday, after data showed that China’s exports rose less than expected in June. On the Comex division of the New York Mercantile Exchange, copper for September delivery tacked on 0.1%, or 0.4 cents, to trade at $3.252 a pound during European morning hours. Prices held in a narrow range between $3.245 and $3.257 a pound.
Copper prices ended Wednesday’s session down 0.28%, or 0.9 cents, to settle at $3.248 a pound. Futures were likely to find support at $3.237 a pound, the low from July 7 and resistance at $3.294 a pound, the high from July 8………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

The energy sector, in particular oil, has caught investors’ attention for most of this year. Thanks to encouraging economic trends across the globe and geopolitical tensions, oil prices have been trading comfortably above the triple-digit mark. The favorable demand/supply dynamics is also supporting oil price increases.
Economic activity in the world’s largest oil consumer picked up strongly after freezing temperatures, housing market started showing signs of improvement, and the job market accelerated with the strongest growth seen last month since the technology boom in late 1990. The improving health of the economy will prompt further demand for oil in the coming months………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

While the summer months spur rapid price increases in energy costs, another key indicator of consumer behavior is seeing a wave of deflationary selling pressure. Agricultural commodities such as corn, wheat and soybeans have been in a freefall since peaking in May.
The price action of these core food ingredients is indicating a glut of supply that may ultimately translate into lower prices of finished products as well………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

A year after introducing a transaction tax on non-farm futures and witnessing the worst settlement crisis in the spot market, the government on Thursday almost gave the commodity markets a notable miss with no worthwhile announcement.
While the Budget’s focus on farming and warehousing would strengthen the primary agriculture market and aid the functioning of the spot and futures markets, analysts said finance minister Arun Jaitley has refrained from addressing any of the vexed issues………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Agricultural commodities from Wheat to Soybeans, and from Sugar to Cotton, are going through extremely strong selling pressure as I write this. Everything is being thrown out, the baby together with the bathwater, in what appears to be a forced liquidation.
Keep in mind that Commitment of Traders positioning by hedge funds, shown in the chart above, has lagged by a whole week. It will be very interesting to see how many funds will stay net long after this recent panic selling episode………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

Finance Minister Arun Jaitley announced a price stabilisation fund, steps to set up a national market for farm produce, irrigation schemes, new agricultural universities as well as initiatives to increase warehousing and rural internet connectivity.
Jaitley said food price volatility was a big concern, and announced a Rs 500 crore fund for farm price stabilization. He said the government wanted agriculture to grow although weak rainfall was a concern. He said state governments should encourage development of farming markets and said that national market was the way forward………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

U.S. and Chinese leaders have agreed that China will reduce its intervention in the currency market when conditions are ripe, reaching an understanding on a prickly issue that has hurt ties between the world’s two biggest economies for years.
China’s Central Bank Governor Zhou Xiaochuan said on the sidelines of annual high-level talks between the two nations that China will “significantly” reduce its yuan intervention when some prerequisites are met. He did not give further details………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

In recent years, China has signed a flurry of currency deals with countries around the world. One notable absence: the U.S. The Chinese government has been pushing for a greater role for the tightly controlled yuan in global trade, investment and finance, as part of its effort to revamp the country’s creaky financial system and to one day challenge the U.S. dollar’s dominance in the international monetary system.
To promote the yuan on the world stage, Beijing has been trying to foster yuan-trading hubs outside the mainland by making it easier for foreign banks to obtain the yuan as well as to clear yuan-denominated transactions………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

It seems to be a fitting finale for the Carbon Price Mechanism, with chaos yesterday as the Palmer United Party backed out of its agreement to support the government’s carbon tax repeal bills, seeking a last minute amendment to include penalties for companies that fail to pass on the full savings from the carbon tax repeal.
The government will introduce a set of amended bills to repeal the carbon tax to the House of Representatives on Monday. The bills are then expected to go to the Senate, where debate is likely to be guillotined to force a vote prior to the end of the week………………………………………..Full Article: Source

Posted on 11 July 2014 by VRS |  Email |Print

China’s Tianjin has extended the deadline for its biggest carbon producers to comply with the city’s emissions trading scheme a second time, giving companies two more weeks to hand over permits to the government.
The delay is the latest in a string of hiccups as governments and company officials in seven regions running emissions schemes gather experience in carbon trading, Beijing’s favoured approach for reducing greenhouse gases………………………………………..Full Article: Source

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