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Commodities Briefing 24.Jul 2014

Posted on 24 July 2014 by VRS |  Email |Print

Commodity markets are generally perceived to be fraught with risk given the volatility commodity prices demonstrate. And 2014 has been a year of contrasts. The year began with an extremely bullish situation in the grain and oilseed markets, pushing prices to new highs. In addition, the weather premium was built into prices of fears of El Niño striking later this year. Low inventories of some commodities such as soyabeans exacerbated conditions.
Mid-year, everything has turned around. The weather has been extraordinarily good in the North American continent. The dry and hot conditions expected in South America that could have pushed the sugar prices higher has not turned out as bad as feared. Rainfall from the Indian monsoon isn’t great, but it isn’t that bad either. Overall, the weather premium has now been taken out of the market. ……………………………………….Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

OPEC member countries exported 4.5 mb/d of petroleum products in 2013, with the largest share devoted to Asian and Pacific countries (3.1 mb/d or 68.5 percent), the Organization of the Petroleum Exporting Countries (OPEC) said its latest “Annual Statistical Bulletin” released Tuesday.
The report noted that European and North American countries received smaller shares of OPEC petroleum product exports (0.6 mb/d or 14.0 percent and 0.2 mb/d or 5.2 percent, respectively). The refinery capacity of OPEC member countries increased by a 4.9 percent during 2013 compared to 2012. In 2013, OPEC Member Countries held 11.0 percent of total world refinery capacity, up from 10.5 percent in 2012………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Iran’s crude oil export dropped by 42.2 percent to 1.25 million barrels in 2013. According to the OPEC’s Annual Bulletin, released on July 19, Iran’s crude oil export was 2.537 million barrels per day in 2011, before the West imposed tough sanctions on Iran.
The crude oil in OPEC statistics includes a mixture of hydrocarbons that exist in a liquid phase in natural underground reservoirs and remains liquid at atmospheric, then it consists of crude oil, gas condensate, NGLs, etc. Before sanctions took effect in mid-2012, Iran was both the second major oil exporter and producer of OPEC………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

NYC-based PIRA Energy Group believes that with both the physical market and financial length bottoming, oil prices are at or near their lows. In the U.S., sharp crude stock reduction is offset by a product build. In Japan, crude stocks posted a large draw. Specifically, PIRA’s analysis of the oil market fundamentals has revealed the following:
Sharp U.S. Crude stock reduction offset by product build: Crude stocks fell for the week ending July 11, 2014 while product inventories built, causing an overall inventory build. This inventory pattern fits with record crude runs. Last year for the same week, inventories were down slightly so the year-on-year inventory excess widened. Crude oil and other products are up on last year while the four major product inventories are down………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Ask someone to identify a big geopolitical consequence of the ongoing U.S. oil production boom and odds are high that they’ll invoke Iran. (Every one of the links in that last sentence is an example.) Without surging U.S. oil production, they’ll argue, sanctions on Iranian oil exports would have led to a massive oil price spike. Here is a concrete case of the oil boom yielding greater U.S. freedom of action in the world, and a harbinger, it would seem, of things to come.
The historical account seems right, but it’s tough to see how the Iran experience might be repeated. The upshot is that the lessons for future U.S. freedom of action – and for geopolitics more generally – are being badly over-read………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

The price of gold is expected to rise over the coming months even if US Federal Reserve progresses with plans to tightening its monetary policy, according to analysts. Fed chair Janet Yellen recently suggested that the central bank could move to raise interest rates sooner than the market expects, assuming US economic indicators continue to show sustained improvement.
Capital Economics points out that any tightening of US monetary policy would act as a negative for the gold price “at face value”. Rising interest rates would be expected to hurt the price of gold and other non-yielding assets………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Gold price held steady on Wednesday in Asia after dipping overnight, and looked likely to hold above $1,300 an ounce in the near term as geopolitical tensions from crises in Ukraine and the Gaza strip brought safe-haven bids.
But sluggish physical demand in Asia in the seasonally quiet summer period could weaken support for any price rally and even fail to provide a floor if prices were to decline. Spot gold was little changed at $1,306.61 an ounce by 0627 GMT, after losing 0.4 percent in the previous session, pressured by firmer equities. U.S. gold edged up slightly to $1,308.40………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Marc Faber, publisher of The Gloom, Boom & Doom Report, told Bloomberg on July 21 that investors should be buying gold and gold miners to take advantage of the rally he expects in the price of the precious metal.
Faber recommends that investors protect the value of their assets by taking positions in gold and gold stocks to hedge against the negative impacts of worsening geopolitical situations and unrestricted money printing. The idea is that global investors will soon flock to gold again to protect against currency devaluation, inflation, and the unknown fallout of major global conflicts………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

1. A number of top bank economists have turned bullish on gold in the past few months. That’s helping to boost confidence amongst thousands of Western gold community investors.
2. Scotiabank and HSBC have lead the way on that front, and now top metals strategist Mike Widmer at Merrill Lynch has thrown his weight behind the bulls as well………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

An upward trend is afoot in the silver space, says Sean Rakhimov, editor of SilversStrategies.com. Rakhimov believes that at $26/ounce the reversal of the downward trend in silver will be confirmed and silver investors should set their sights on the next resistance level—$32/ounce. And if that threshold is breached, silver will test $50/ounce and more.
My outlook for silver for the next two or three years is somewhere between $50 and $100/oz. It could be shorter; it could be longer, but that’s not critical. I’m going to stay with it for the cycle; it could be another 10 years to the end of the cycle. I do not expect this next leg to be final but I expect it to be a substantial run comparable to 2010–2011 when silver went from roughly $10 to $49.50/oz. The next move could go from about $20 to roughly $100/oz, but that will take time………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Russian Palladium shipments have witnessed a rebound of the trend that has been in dominance over the past few years, despite a two-month spike in April and May.
Limited releases can be expected from Russian state stocks this year with palladium market delivering a sizeable deficit in 2014. A return to the consistently elevated shipments of most of the past decade cannot be expected, according to a Barclays report………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Although mainland imports are slowing amid tighter credit, prices are seen benefiting from strategic reserve purchases and power grid plans. While the worst fallout from the Qingdao metal-backed financing scandal may have passed, mainland copper imports are slowing, with volumes shifting from small traders to larger ones as banks become more cautious.
Still, analysts said, copper prices would be supported by strategic reserve buying and demand spurred by power grid construction. “Copper imports will likely be under pressure in the second half of the year, partly because of small traders going out of business amid tightened lending,” said JP Morgan Asia-Pacific head of basic materials research Daniel Kang, adding that their volumes would be taken over by bigger rivals………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Merk Gold Trust, a bullion-backed exchange-traded fund which allows its shares to be redeemed for physical gold, said on Wednesday it has made its first delivery in dozens of U.S. gold coins to an investor.
The ETF, launched by Palo Alto, California-based Merk Funds in May to offer a liquid trading product with the benefits of physical gold bullion, has accumulated 40,000 ounces in two months even in a bearish gold market………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

The first Exchange Traded Instrument (ETI) issued under the Malta Securitization Act went live recently on the European Wholesale Securities Market (EWSM). The “Dynamic Trading Strategies ETI” is linked to and backed by a performance linked bond issued by a Special Purpose Acquisition Vehicle allowable under the Securitization Act of Malta with the sole purpose of holding Managed Accounts at Interactive Brokers LLC and Sensus Capital Markets plc.
The EWSM is a joint venture between the Malta Stock Exchange and the Irish Stock Exchange and acts as an EU regulated market for arrangers and issuers of wholesale debt products………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Commodity exchanges’ turnover declined over 62 per cent to Rs. 17.25 lakh crore till July 15 of the current fiscal year due to poor trading volumes in almost all commodities, the Forward Markets Commission (FMC) said on Wednesday.
The business at these bourses stood at Rs. 45.53 lakh crore in the same period of last financial year, the regulator said in a statement. The maximum fall in the turnover was seen in bullion followed by energy, metals and agricultural commodities………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

One of the biggest shocks in markets and trading last year in India had to do with an exchange called the NSEL, or the National Spot Exchange Ltd. Investors and traders in the NSEL lost nearly Rs 5600 crore because the exchange was mismanaged.
While you might be unfamiliar with the scam, you might find the idea of a commodities exchange slightly intriguing and definitely different from the stock exchanges that are usually discussed in this space………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

EU ministers have given the final stamp of approval for Lithuania to join the eurozone next year. Amid fears of unjustified price hikes, the Baltic state will be the 19th nation to adopt the single currency.
Lithuania’s adoption of the euro currency was finalized on Wednesday as European Union ministers gave the green light for the Baltic State to join the bloc on January 1, 2015. The ministers’ approval was the final hurdle in Lithuania’s accession process into the eurozone………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

The European Central Bank (ECB) is under pressure from eurozone politicians to introduce quantitative easing (QE) to reduce the value of the euro against the dollar. Politicians say a fall of 10 per cent from $1.35 to $1.20-1.25 is needed to help eurozone companies export and tackle low inflation.
But not everyone is convinced a European version of QE would weaken the euro and, in the meantime, the strength of the euro and sterling against the dollar (and emerging market currencies) is having a major impact on investments………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

The European Union has expressed regret at the Abbott government’s decision to abolish carbon pricing and end Australia’s bid to link up with the world’s largest carbon market. EU climate action commissioner Connie Hedegaard on Thursday said Australia’s move wouldn’t deter the EU from working towards global carbon pricing with all international partners.
“The European Union regrets the repeal of Australia’s carbon pricing mechanism just as new carbon pricing initiatives are emerging all around the world,” Ms Hedegaard said in a statement………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Opposition Leader Bill Shorten has warned Australia’s decision to abandon carbon pricing puts it at risk of being isolated on the world stage. Mr Shorten made his case for emissions trading during a speech in the United States, where he also urged the Abbott government to make climate change a priority at the G20 summit in November.
The government has copped criticism as host of the global forum for not including climate change in the discussions, opting to focus specifically on economic growth, trade and investment………………………………………..Full Article: Source

Posted on 24 July 2014 by VRS |  Email |Print

Germany’s environment ministry believes it’s unlikely Germany will meet its 2020 greenhouse gas reduction goals. They say the country will come up seven percent short, but critics say it could be even worse.
Germany’s environment ministry has admitted the country is likely to fall short of its future greenhouse gas emissions targets by seven percent. Environment Minister Barbara Hendricks has said that Germany is on track to reduce its greenhouse gas emissions by just 33 percent in comparison to 1990 levels by the year 2020. This falls short of the country’s previously-stated aim of 40 percent………………………………………..Full Article: Source

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