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Commodities Briefing 14.Jul 2014

Posted on 14 July 2014 by VRS |  Email |Print

Commodity markets have suffered massive financial outflows over the past 18 months as investors, disappointed with poor returns in recent years, headed for the exit.
Last year, investors withdrew a net $47.1bn from commodity markets, Barclays says. The bulk of the redemptions, some $40.7bn, were gold related but the base metal, agricultural and energy-related commodity sectors also saw withdrawals. Outflows have continued this year, albeit at a slower pace, with a further $8.6bn being withdrawn as of the end of May, $8bn of which was from gold………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

What a difference six months can make. After a disappointing 2013, the commodities market came roaring back full throttle, outperforming the S&P 500 Index by more than 4 percentage points and 10-year Treasury bonds by more than 6.
Leading the rally was nickel, delivering a 37.14 percent return, followed by palladium (17.70 percent) and gold (10.90 percent). Nickel also saw the largest gain from last year, climbing more than 55 points to settle close to $19,000 per metric tonne. Gold jumped 38 percentage points to $1,327 an ounce, and palladium rose 16 points to $843 an ounce………………………………………..Full Article: Source

Posted on 14 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 About $5.9 billion was added to raw materials investments this year, compared with a record $50 billion withdrawn in 2013, Citigroup Inc. estimates.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 Monday.
While Citigroup and Goldman Sachs Group Inc. forecast in January that prices would fall or remain steady this year, Middle East unrest and pledges by central banks to keep interest rates low sent gold up 11 percent and boosted oil to a nine-month high. Lack of rain in Brazil lifted coffee 58 percent, helping commodities record the best first half since 2008………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Oil futures surged in mid‐June by $5/bbl to a nine-month high of more than $115/bbl for Brent as Islamist forces gained ground in Iraq, but later reversed their gains on confidence that Baghdad’s southern fields would remain untouched and improved prospects for a recovery in Libyan exports. Brent last traded at $108/bbl, WTI at $102/bbl.
OPEC supplies were virtually unchanged in June at 30.03 million barrels per day (mb/d), as lower Iraqi production offset gains in Saudi Arabia, Iran, Nigeria and Angola. The ‘call’ on OPEC for 2H14 was cut by 350 000 barrels per day (350 kb/d) to 30.6 mb/d on improved non‐OPEC supply and lower demand, and is forecast to dip to 29.8 mb/d in 2015 from 29.9 mb/d in 2014. ……………………………………….Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

OPEC is cutting its forecast of demand for its own oil by 300,000 barrels a day in 2015 because of an increased supply of crude from other sources, particularly the United States and Canada.
The cartel’s secretariat in Vienna issued its first estimates for the year on July 10 in its latest monthly report on the global oil market. Its conclusion: Demand for crude from the 12 OPEC members should remain at an estimated 29.7 million barrels a day (MBD) through 2014, but drop to 29.4 MBD in 2015………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

World’s top crude consumer, the United States, is now the world’s top producer too, overtaking Russia and the OPEC kingpin Saudi Arabia. In the first quarter of 2014, the United States extracted more than 11 million barrels of crude per day, compared with Russia’ daily output of 10.53 million bpd and Saudi Arabia’s 9.45 million bpd, Bloomberg reported citing Energy Intelligence Group. And the US was already declared in 2010 as the world’s largest natural gas producer.
Last month the Paris-based International Energy Agency too conceded that the US was the biggest producer of oil and natural gas liquids………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

In classic fashion market operators and manipulators gave a false signal to hopeful speculators, by nudging up oil prices on the Nymex, ICE and other oil markets, on Thursday 10th July. Then the market riggers crushed them, Friday 11th, with a 2.2% one-day crash of prices. To be sure we have to wait for Monday 15th trades to see if the new canonical oil price of $100-per-barrel can be set back in place like Humpty Dumpty, and will hold.
Chances are, it won’t. Two-percent-daily price cuts can slash oil back to where it belongs at about $80 per barrel, quite fast. Marketwatch was forced to comment, 12 July, that US WTI and ICE Brent futures dropped below $101 a barrel and $107 a barrel on Friday to mark a fourth weekly loss and their lowest close in two months………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

According to BP, drivers whose vehicles rely on burning oil have a little more than a half-century to find alternate sources of energy. Or walk. BP’s annual report on proved global oil reserves says that as of the end of 2013, Earth has nearly 1.688 trillion barrels of crude, which will last 53.3 years at current rates of extraction. This figure is 1.1 percent higher than that of the previous year. In fact, during the past 10 years proven reserves have risen by 27 percent, or more than 350 billion barrels.
The increased amount of oil in the report include 900 million barrels detected in Russia and 800 million barrels in Venezuela. OPEC nations continue to lead the world by having a large majority of the planet’s reserves, or 71.9 percent………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Goldman Sachs Group Inc.’s Jeffrey Currie isn’t backing down from his bearish call on gold. As bullion’s 11 percent rally this year beats gains for equities, commodities and Treasuries, he’s sticking with the view that the metal will be lower by the end of December as the economy improves.
Currie, who last year got ahead of the biggest gold collapse since 1980, is an undeterred bear even as hedge funds add to their bullish holdings for a fifth straight week and assets in exchange-traded products advance………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Bank of America Merrill Lynch has raised its 2014 gold price forecast, citing a lack of mine supply growth and steady demand for the yellow metal from emerging markets. The bank lifted its gold price forecast for this year by 0.8 per cent to $1,308 per ounce from $1,298, and kept its 2015 price outlook unchanged at $1,375 an ounce.
“We believe the continued monetary easing, accompanied by asset price inflation in many countries causes some apprehension that should bring investors back into the market,” BofA analyst Michael Widmer said………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

We here at TheStreet don’t claim to know where the gold price is headed tomorrow or next week, but we talk enough to the Wall Street pros to give you a sense of which direction the yellow metal is trending. The first half of 2014 was surprisingly strong for gold.
We say “surprisingly” because gold is coming off its worst full-year performance in more than three decades after a market crash in April 2013 fueled a 30% drop. But a drop of more than 9.5% from January through June of 2014 left many retail investors to wonder if the rise was a sign that $1,900 gold — where the market topped out in September 2011 after a decade-long bull run — was soon to return………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

A major Russian gold producer earlier this month entered into the gold mining industry’s biggest hedging transaction in six years. According to analysts at Thomson Reuters GFMS, gold producers will return to net hedging this year for the first time after 2011. Hedging future production certainly has its benefits.
It guarantees future cash flows, especially during a volatile period like the one seen in 2013 when gold prices fell nearly 30%. However, it also limits the upside potential for mining companies………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Silver is not just any old commodity. It is old money. Despite massive efforts and price fixing, clipping and manipulation, it has remained central to monetary and political systems for centuries. Today it is small and relatively dark in the context of modern investing.
Desperate times call for desperate measures. And the desperation to buy and hold metal should simply be proportional to the desperation of the will of the monetary powers to maintain the status quo………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Thomson Reuters and CME Group have won the deal to run the new platform that will replace the London silver price fix in a blow to the London Metal Exchange (LME) which had hoped to scupper the deal.
The existing pricing mechanism for the silver market ends next month and the London Bullion Market Association named the Reuters bid on Friday ahead of several other interested operators, including the LME………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Copper prices have retracted from lows of last month. Improving US housing market and a stronger Chinese consumption with the country’s Purchasing Managers’ Index rising to a seven month high of 50.8 in June, have all boosted sentiments. Following trends in the international market, the copper futures contract traded on MCX has also risen. It has rallied about 10 per from its low of ₹394.55 per kg recorded on June 9.
The construction sector consumes about 30 per cent of the copper produced globally. The US housing sector, one of the major consumers of copper in the world influences copper prices……………………………………….Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

ProShares – best known for its leveraged and inverse ETF lineup – has a little less than 150 products spread across various categories such as Inverse Bonds, Inverse Equities, Currency, Financials Equities, Hedge Fund, Volatility and Leveraged Commodities.
Among these, six of the issuer’s leveraged commodity ETFs have recently undergone an index change from the DJ-UBS commodity indexes to the Bloomberg Commodity Index family. Though these ETFs are now trading with a new name they have retained their old symbols. Below, we have highlighted the new names and indexes for these ETFs………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Most of the top 50 economies in the world have engaged in one form or another of monetary stimulus since the start of 2009. Halfway through 2014, most still endeavor to keep interest rates low to encourage borrowing by consumers and businesses; nearly all of those countries or regions also hope to fuel exports with modestly depreciating currencies.
Theoretically, tactics designed to devalue a currency as well as push borrowing rates into the basement should strongly benefit precious metals like gold. And in the first three years of ultra-accommodative policies (e.g., zero-percent overnight lending, quantitative easing, etc.), the SPDR Gold Trust roughly doubled in price………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Gold gain strength on a weaker dollar last week while inflows into exchange traded funds (ETFs) remain positive. Barclays said in a weekly report that release of FOMC minutes would have impact on the market. Tapering may conclude in October while but not confident enough to provide firm guidance on the expected timing of any rate hike.
“Gold ETP flows have been largely positive recently,and although they may have lent support to prices, we do not think this move is sustainable in the long term. Net speculative positioning in COMEX gold has continued to rise in recent weeks, with last week capping off a one-month streak of increasing net speculative positioning. In summary, investor demand has been strong lately, but we would caution against interpreting this as a longer-term change in investor sentiment.”……………………………………….Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Yes we are all too aware that Food, insurance and many other assets are more expensive these days. Speaking purely from a Commodities perspective, the Commodity Index TR has made a series of lower highs over the past few years. Early this year the index rallied up to falling resistance and now its breaking down below a couple of support lines.
Should we listen to the broader global inflation message or lack of with this index break down of late? I believe its important what the basket of commodities does going forward. I doubt that long bond players dislike this price action!!!……………………………………….Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

A secret internal assessment by Britain’s ministry of defence (MoD) has pegged the Indian rupee to be the major reserve currency that will be traded internationally in the next two decades.
The assessment available with TOI says that by 2040, the Rupee will challenge China’s Renminbi as the strongest global currency. At present however, given the strength of the Chinese economy in the near term, the Renminbi (RMB) will be the most traded global currency, rivalled only by the US dollar out to 2030………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

Investors may be underestimating the risk of a “material decline” in the Australian dollar, the governor of Australia’s central bank was quoted as saying Friday.
“It continues to be my view that on most standard metrics that you could devise, it’s hard to see how most of those metrics would have the Aussie dollar quite this high,” Glenn Stevens was quoted as saying in an interview with the Weekend Australian newspaper, according to a transcript of the interview published online………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

The federal government has cut a deal with Clive Palmer which it believes removes any more excuses to block the repeal of the carbon tax, the Coalition’s No. 1 election promise. On the weekend, Mr Palmer and the government agreed to changes to his key demands for stiff penalties and price disclosure provisions to ensure they would apply only to energy sup­pliers, not all businesses.
The government was prepared on Thursday to vote for Mr Palmer’s original demands in return for his support to repeal the carbon tax. But concern from industry and other senators about a red tape nightmare for business prompted the negotiations to remove any ambiguity………………………………………..Full Article: Source

Posted on 14 July 2014 by VRS |  Email |Print

A newspoll showing a majority of voters want Clive Palmer and his senators to immediately support the removal of the carbon tax reflects a “very strong and categorical vote” for the government’s agenda, Environment Minister Greg Hunt says.
The Newspoll, conducted exclusively for The Australian after last Thursday’s chaos in the Senate saw the repeal bills rejected, reveals 53 per cent want the controversial tax abolished. Only 35 per cent want the Palmer United Party to continue to block the removal of the tax, while 12 per cent are uncommitted………………………………………..Full Article: Source

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