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Commodities Briefing 23.Jul 2014

Posted on 23 July 2014 by VRS |  Email |Print

When is an investment bank committed to a business? Until it’s not! That oft-quoted adage could be heard in the City of London on Tuesday morning after Credit Suisse joined the ranks of investment banks exiting commodities trading. The bank announced that it was winding down its derivative-focused commodities unit to focus on more profitable businesses such as structured products and credit.
Like its peers, Credit Suisse blamed tighter regulation and lower profitability due to stable prices for oil and other commodities for the decision, revealed after the bank announced its biggest quarterly loss since the collapse of Lehman Brothers………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

The trend of major banks leaving the commodities business could hurt liquidity in the short term, but eventually other trading firms will fill the void, say veterans of the commodities business. Most do not look for a major impact on the price trend of commodities in general; after all, speculators can establish either long or short positions. Nevertheless, some pointed out that past moves by banks to exit happened to coincide with a bottoming in commodities prices.
Credit Suisse said Tuesday it plans to wind down its commodities trading to focus on other areas of its business. Previously, Deutsche Bank, JPMorgan and Barclays also said they are either scaling back or exiting the commodities arena………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

It’s rather bizarre that we’ve heard so much from pundits and Republican policymakers about the horrors of quantitative easing, how we’ve needed to end the problem for too long, and now — when we’re less than three months from closing the program, nobody in Washington or on Wall Street is talking about it.
It’s odd but true — in the wake of such noise making, the debate has abruptly turned to interest rates. Certainly, interest rates are important. Still, how are we looking right past the end of quantitative easing without acknowledging that we’re finally going to be done with printing money?……………………………………….Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

For the past two decades, growth in the global economy spelled higher revenues for the Organization of Petroleum Exporting Countries. Not any more.
The CHART OF THE DAY shows how last year was the first since 1993 that the value of OPEC’s total crude exports didn’t track the direction of global gross domestic product. The bottom panel shows how the group supplying about 40 percent of the world’s oil fetched lower average prices and also shipped fewer barrels year on year………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

World stock markets and global economic recovery are at risk from a sharp rise in oil prices triggered by military conflicts, a leading economist said. A combination of fighting in the Middle East and the shooting down of the passenger jet over Ukraine sent crude oil prices rising by $2 a barrel in the past week, said Steen Jakobsen, chief economist at Saxo Bank.
He said markets had got used to believing that low interest rates would save the world economy and had been duped into believing what happened in the real world did not matter. Jakobsen added: “We smiled while globalisation reduced prices and made our companies more profit now the escalation of wars reflect a world where growth is short and energy is expensive and increasingly hard to get………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Oil prices rose Tuesday, supported by a threat of tougher sanctions against Russia and fierce fighting in Gaza, but lost steam as the dollar rallied against the euro, traders said. Brent North Sea crude for delivery in September had edged up four cents to stand at $107.72 a barrel in late London deals, after trading up 64 cents around midday in the British capital.
US benchmark West Texas Intermediate (WTI) for August was 14 cents higher at $104.73 a barrel, pulling back from levels above $105 seen earlier in the day………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Half way through 2014, markets remain confused where gold prices are headed. Investors are still in dilemma and are now looking at fresh set of factors that will drive the price trajectory for rest of the year. While there was no real sign of sustained economic strength in 2013 for the world economy, just the idea of Federal Reserve in the US may start tapering at some point was enough to send gold bullion prices lower and the “bull run” in gold ended losing around 30 per cent of its value last year.
Investors lean toward gold and other precious metals as a hedge against both a weak dollar and inflation. A tapering of the Federal Reserve’s monetary policy suggests that the US economy is getting stronger………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Gold will drift lower in the second half of 2014, leading to a second yearly drop in the average price after a dizzying decade-long rally, as U.S. monetary policy returns to normal and Asian demand is weak, analysts forecast in a Reuters poll.
The survey of 31 analysts and traders this month returned an average forecast for the third quarter at $1,270 an ounce, down from the average first-half price of $1,290 an ounce. In the last three months of the year, it is seen averaging $1,255………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Weakness on equity markets helped gold prices rise slightly on Monday as heightened geopolitical tensions in Ukraine and Gaza boosted the demand for safe-haven assets. Gold for August delivery was 0.3% higher at $1,313.90 per troy ounce on the Comex division of the New York Mercantile Exchange.
The metal declined by 2% last week as comments from Federal Reserve Chair Janet Yellen about a possible sooner-than-expected rise in interest rates sent the dollar to a four-week high against 10 major currencies………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Gold investors are enjoying some respite in 2014 after a long period of falling prices, with the precious metal emerging as one of the year’s best plays to date.
Since the start of the year to 11 July, the price of bullion has firmed by 11% to nearly $1,339 per ounce. Silver, which typically mirrors the fortunes of gold, has also enjoyed strong gains, moving 10% higher to $20.75 per ounce. In contrast, global equities, as measured by the MSCI AC World index, have risen 6%………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

The Middle East will take a bigger share of gold demand as buyers from Kuwait to Saudi Arabia to the United Arab Emirates diversify investments and Dubai nears offering a contract for immediate delivery bullion.
MKS (Switzerland) SA, a Geneva-based bullion trader and refiner, expanded into Dubai three years ago and employs 25 people there, with the gold trade an “important market,” said Frederic Panizzutti, chief executive officer of MKS Precious Metals DMCC in the emirate. A spot gold contract due to start on the Dubai Gold & Commodities Exchange this year will draw business from London, said Gerhard Schubert, head of gold and commodities at Arab Banking Corp., a Bahrain-based bank………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Palladium will reach its highest yearly price on record this year and could top that in 2015 as expectations for lower South African output combine with a recovery in demand and doubts over Russian supply, a Reuters poll showed.
Palladium, which has averaged $777 an ounce in the first half, is expected to average $805.50 an ounce in the full year, up more than 10 percent from 2013 and its highest since Reuters data began in 1984, a survey of 31 analysts and traders showed. Next year it is expected to extend that average to $875………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

World crude steel production for the 65 countries reporting to the World Steel Association (worldsteel) was 137 million tonnes (Mt) in June 2014, an increase of 3.1% compared to June 2013.
World crude steel production in the first six months of 2014 was 821.3 Mt, an increase of 2.5% compared to the same period of 2013. The EU 28 showed an increase of 3.8% while Asia and North America reported growth of 2.9% and 1.7% respectively in the first half of 2014. South America and C.I.S. produced -1.0% and -2.6% less each………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Most of the base metals climbed at the non-ferrous metal market here today on stockists buying amid sustained demand from industrial users in the backdrop of higher London Metal Exchange (LME) cues.
Meanwhile, copper sheet cuttings and lead eased owing to subdued demand from consumer industries. The industrial metal, zinc and aluminium spurted in early trade at the LME as investors bought metals amid supply constraints and a brighter global growth outlook………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

In investing, the term commodity spans a great deal of assets and sectors. Precious metals, industrial metals, agriculture, livestock, and energy are just some of the varied classes that fall into this diverse arena. In an ideal world of inflationary and deflationary pressures, all of these sectors would move in a similar direction according to cyclical forces.
However, the reality is that significant divergences can appear based on a host of factors for each sub-grouping. Individual influences can include: supply and demand, governmental policy, geopolitical events, weather patterns, and other subtle nuances that affect each commodity differently. ……………………………………….Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

A short exchange-traded fund (ETF) is designed to profit from a decline in the value of the underlying index. A short ETF gets its name from the fact that it is designed to benefit in the same manner as a short position in an underlying index. Thus, a short ETF will be profitable if the underlying index or asset declines in price, and will incur a loss if the underlying index or asset gains in price.
Short ETFs can be used for speculation or hedging.Short ETFs are widely known as “inverse ETFs”, and sometimes as “bear ETFs.” Short ETFs are not constructed through short positions in the constituents of an index, but rather, through the use of derivative instruments like options, futures and swaps………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

As the world reviews the effects of climate change, global population growth and inadequate or aging infrastructures, investors can consider water industry-related exchange traded funds to capture potential long-term opportunities.
For example, the First Trust ISE Water ETF and PowerShares Water Resources Portfolio both track U.S. companies that derive their revenue from products that conserve and purify water………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Investors are buying metals from zinc to aluminum at the fastest pace since 2009, betting demand gains will tighten supply, just as Citigroup Inc. and Macquarie Group Ltd. predict this year’s rallies will end.
Exchange-traded funds in the U.S. backed by base metals took in new money this year equal to 18 percent of their market capitalization, more than any commodity group, data compiled by Bloomberg show. Hedge funds are the most bullish on copper in at least eight years, after spending March and most of April betting prices would drop. The Bloomberg Industrial Metals Subindex is heading for its biggest annual gain since 2010………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

It is tough times for the commodities market - after the levy of Commodity Transaction Tax (CTT), and the NSEL fiasco , volumes in the commodity space have dropped by more than 40%. This has forced two commodities exchanges - Anil Ambani promoted ICEX, and Ketan Seth promoted United Commodity Exchange to shut their trading operations over the last one year.
Now, the country’s third largest commodity exchange, the National Multi Commodity Exchange or NMCE, famous for its rubber trade is also facing threat of a possible closure. NMCE, which was under the FMC scrutiny over related party trades few years back, has been served with a tax penalty of around Rs 15-20 crore. For NMCE whose volumes dropped by 60%, over the last one year, this tax impact will be a major concern as its net worth stands at just Rs 19 crore………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Currency News UK - Pound to Dollar Currency Predictions: will cable tumble into the 1.5000’s? Big news stories dominated last week’s session, with the shooting down of Malaysia Airlines flight MH17 and the international reaction to it, along with the ongoing situation in Iraq and an escalation of violence in Gaza. The latest GBP USD exchange rate today trades at 1.70669.
In amongst all of these risk events came a set of interesting comments from US Federal Reserve Chair Janet Yellen which could prove to have a marked effect on the relative value of the US Dollar during coming months………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Since 1987 when the Economic Community of West African States (ECOWAS) Monitoring Cooperation Program (EMCP), saddled with the responsibility of introducing a common currency in the sub-region, was adopted, the body has continued to push for the implementation of the policy.
Those involved in this project strongly believe that a common currency for the West African Monetary Zone (WAMZ) would facilitate trade in the region and also stimulate growth. The proposed currency, which has been christened ‘eco,’ according to the plan, will be initially introduced in the member countries of WAMZ………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

An international partnership across India, Africa and the US has formed the ‘One Agriculture-One Science: A Global Education Consortium’ initiative aimed at revitalising global agricultural education, capacity building and technology transfer, according to the International Crops Research Institute for the Semi-Arid Tropics (Icrisat).
‘One Agriculture-One Science’ is a consortium of agricultural education institutes, research organisations and other related agencies specifically focusing on addressing changes and adaptations required for agricultural education to better contribute and more effectively impact development goals, particularly the attainment of food and nutritional security and sustainable agricultural production in developing countries, Icrisat stated in a release………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

Australia’s pioneering carbon-pricing mechanism has failed to survive its infancy. In a major victory for Prime Minister Tony Abbott, parliament agreed on 17 July to axe the scheme with immediate effect.
The repeal scraps both the unpopular carbon tax, established in July 2012, and proposals to turn it into a more flexible emissions-trading scheme in mid-2015. The initiative would have seen large companies and utility firms buying and selling emissions allowances in a joint market with the European Union (EU)………………………………………..Full Article: Source

Posted on 23 July 2014 by VRS |  Email |Print

The UK and Germany lead a list of the EU’s most polluting coal-fired power stations compiled by environmental campaigners, who say coal emissions are undermining efforts to combat climate change. Both countries have nine of the so-called “dirty 30” and the campaigners say coal burning is increasing due to the relatively low price of the fuel compared to gas.
“Germany and the UK are the self-declared climate champions of the EU,” says the new report. “However, Germany uses more coal to generate electricity than any other EU country, while the UK comes third in absolute coal consumption for power after Poland.” The report argues current EU policy on climate, energy and air pollution in the power sector is not strong enough to achieve the switch from coal to renewable energy and energy efficiency………………………………………..Full Article: Source

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