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Commodities Briefing 29.Jul 2014

Posted on 29 July 2014 by VRS |  Email |Print

While on a visit to the commodities unit of a major investment bank in New York roughly seven years ago, one was enveloped by a sense of exuberance on the trading floor. No less than three executives claimed their institution was among the “few banks” with separate units dealing in paper crude oil barrels, as well as loading and dispatching the physical stuff on to tankers somewhere off a foreign shipping terminal.
Given that the global financial crisis hadn’t taken hold and the year was 2007, such a claim could well be classified as the market overstatement of the decade then. In actual fact, most major banks were trading derivatives, futures, options and physical commodities at the time. Fast forward to the second half of 2014, and it is a different scenario altogether………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Commodities hedge funds have not being doing well lately. Clive Capital shut its doors last year, so did Higgs Capital, Arbalet Capital and Schroders’ Opus commodities fund. Armajaro Asset Management, the coffee and chocolate specialist hedge fund, has not been without its problems – it biggest fund lost nearly 25% of assets in the first quarter – but it’s actually done surprisingly well.
In accounts posted on Companies House last week, Armajaro Asset Management LLP made a profit of $6.7m for the 12 months to September 2013 in what it describes as “difficult conditions”, compared to $7.9m in 12 months previously. At the end of the period its assets under management were $1.5bn………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Markets often do talk to us, if only we would listen. Our ears serve as only part of listening. An open mind is also required. Regrettably, minds receptive to new thoughts and questions have been somewhat outmoded in the investment world for many years. Why else do so many seem to ignore what commodities are saying?
Commodities may be saying that complacency on prices might be inappropriate. In the chart below is plotted the year-to-year percentage change for the U.S. consumer price index, black line, and a like measure for the median U.S. CPI as prepared by the Cleveland Federal Reserve Bank………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

According to recent estimates from the US Energy Information Administration, members of the Organization of the Petroleum Exporting Countries, excluding Iran, earned about $826 billion in net oil export revenues in 2013, a 7% decrease from 2012 earnings. But this was still the second-largest earnings totals during 1975-2013—the timespan of how long EIA has tracked OPEC oil revenues.
For each country, EIA derived net oil exports based on its oil production and consumption estimates from the latest edition of the EIA’s Short-Term Energy Outlook. For countries that export several different crude varieties, EIA assumes that the proportion of total net oil exports represented by each variety is equal to the proportion of the total domestic production represented by that variety………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

“The world of energy may have changed forever,” according to Professor James Hamilton of the University of California. “Hundred dollar oil is here to stay.” Hamilton, who is one of the most respected economists writing about oil, made his bold prediction in a paper on “The Changing Face of World Oil Markets”, published on July 20.
“Old hands in the oil patch may view recent developments as a continuation of the same old story, wondering if the high prices of the last decade will prove another transient cycle with which technological advances will eventually catch up,” he wrote. “But there have been dramatic changes over the last decade that could mark a major turning point.”……………………………………….Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Has the BP Deepwater Horizon disaster run its course? The Obama administration may think so, having shifted gears in recent weeks and removed potential barriers to more drilling off the coast of the Atlantic Ocean. This is in addition to earlier moves that eased the steps for developers to pursue oil and gas deposits in the Gulf of Mexico and possibly off the coast of Alaska.
For a White House that has targeted oil company tax breaks and toughened drilling safeguards in the wake of the BP disaster, it’s a change of pace. But it is actually part of an previous plan — an Energy Security Trust Fund — to redirect some of those oil and gas revenues toward green energy ventures. That’s an idea that has resonance among key lawmakers on energy panels from oil and gas states………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Energy firms will be able to bid for licenses Monday to explore for shale gas in Britain, three years after the controversial fracking process caused seismic tremors which led the government to suspend operations.
Business and Energy Minister Matthew Hancock said shale gas has the potential to increase the country’s energy supply but stressed national parks will be protected. “Done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country,” he said………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

So far, the gold price in 2014 in the first six months has been trading in a tight range between $1190 and $1390. The yellow metal had one significant rally in February / March and one moderate rally starting in June.
The spikes in the gold price in 2014 have been driven partly by fear and partly by inflation expectations. The first rally coincided with the outbreak of tensions in Ukraine. The second (modest) rally was driven by the US Fed statement mid June that inflation expectations are soaring………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

First, it’s worth putting silver’s recent rise in context. Here are three important facts about the recent rally. 1. While the metal has had a respectable run over the past month, silver is still playing catch-up after losses earlier this year. Between late February and early June, silver prices fell roughly 15%.
In addition, even with the recent rally, for the first half of the year silver has trailed gold, which has gained nearly 10% versus roughly 7.5% for silver. Prices are based on spot prices for both gold and silver from Bloomberg. 2. The recent jump in silver prices is partly a function of the metal’s volatility. Silver tends to be a relatively thinly traded market………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

After rising nearly 12% from its June lows, silver has been garnering some attention lately, leaving many investors wondering whether they should raise their allocations to the precious metal. Russ explains why now probably isn’t the best time to allocate more to either silver or gold.
After rising nearly 12% from its June lows, silver (SLV) has been garnering some attention in recent weeks, as investors and market watchers look for something to get excited about amid the broader market’s low volatility and slow grind higher. It’s no wonder, then, that many are asking whether it’s time to jump on the silver bandwagon………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Small cap investing has been out of investors’ favor this year, giving up all its gains made last year. While large caps are clearly leading the broad market rally, small caps are lagging after their past 15 years of outperformance. This indicates a trend reversal after a long-standing preference for small caps.
In fact, the small caps, as represented by the popular ETF ( IWM ), lost about 0.9% in the year-to-date time frame, compared to a gain of 8% for SPY and 5.5% for IJH . This is because small caps seem overly priced at current levels after rising for several years………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

On Friday, a new petition seeking the right to offer non-transparent active ETFs titled “The Capital Group ETF Trust” went into the regulatory pipeline at the Securities and Exchange Commission. It might be the biggest ETF story of the year.
That filing follows the fairly standard boilerplate we’ve seen from State Street, BlackRock and Invesco PowerShares. That boilerplate points to the ETF structure being put forth by Precidian investments, which itself has also filed to run nontransparent active ETFs………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Yuanta Securities Investment Trust Company (Yuanta SITC) is reportedly poised to launch the first commodity futures ETF in Taiwan as early as the fourth quarter this year, according to a report from Commercial Times.
The move comes after the island’s financial regulator amended the ‘Regulations Governing Futures Trust Funds’, which loosens investment constraints for index equities futures trust funds………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

The Japan Exchange plans to build a new derivatives trading system with Nasdaq OMX and Japanese software vendor NTT Data Corporation, as part of a medium-term strategy to grow trading and prepare for swap market reforms.
The exchange group said in an announcement that it plans to replace its current system, also supplied by Nasdaq OMX, in 2016. According to the Japan Exchange its new derivatives exchange will improve risk management functions and allow it to list a wider range of products than is currently possible………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

The country’s agriculture growth is likely to remain muted at 1 per cent in FY’2015 largely due to strong statistical base-effect, rating agency CrisilBSE -2.60 % said.
Monsoons are currently 24 per cent below the long period average, which is worse than the deficiency seen in fiscals 2009 or 2012. While 2009 turned out to be a drought year, rains recovered sharply in the latter half of the season in 2012………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Now that consumers can use digital currencies like bitcoin to buy rugs from Overstock.com, pay for Peruvian pork sandwiches from a food truck in Washington, D.C. and even make donations to political action committees, states are beginning to explore how to regulate the emerging industry.
Digital currencies — also known as virtual currencies or cash for the Internet —allow people to transfer value over the Internet, but are not legal tender. Because they don’t require third-party intermediaries such as credit card companies or PayPal, merchants and consumers can avoid the fees typically associated with traditional payment systems………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Foreign-exchange volumes in the U.S., U.K. and Australia fell in April from a year earlier, according to reports from the world’s biggest central banks, amid subdued price swings and a probe into trading activity. Average daily currency turnover in North America was $811.1 billion, a 20 percent drop from a record $1 trillion in April 2013 and a 0.6 percent decline from October, the Federal Reserve-sponsored Foreign Exchange Committee said in a statement on its website, citing a twice-yearly survey.
In the U.K., April’s $2.4 trillion in turnover was 6 percent below the record high of $2.6 trillion a year earlier, the Bank of England’s Foreign Exchange Joint Standing Committee said. Daily U.K. trading rose 7 percent from October………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Japan and Mexico have signed a deal for Japanese companies to earn carbon credits by investing in technology to cut greenhouse gas emissions in Mexico - in Japan’s 12th bilateral carbon agreement. The programme, known as the Joint Crediting Mechanism (JCM), lets companies in Japan, the world’s fifth-biggest greenhouse gas emitter, use lower-cost emission cuts abroad to help meet domestic targets.
“The objective … is to establish the basis through which the participants will promote the investment and the use of technologies, products, systems, services and infrastructure in order to reach a low carbon growth in Mexico,” the Embassy of Japan in Mexico and Mexico’s Ministry of Environment and Natural Resources said in a joint statement on Monday………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

The government’s plans to launch a carbon emissions trading scheme next year have become a hot subject of national debate because of the strong call from industries to delay it until 2020. New Deputy Prime Minister Choi Kyung-hwan’s pro-business stance is adding to the intensity of the debate.
The debate surrounds Korea’s plans to open a carbon trading market next January to impose what industries here say would be the world’s toughest caps on greenhouse gas emissions. The scheme is in line with the Seoul government’s commitment in 2009 to restrict greenhouse gas emissions to 30 percent below business-as-usual levels by 2020………………………………………..Full Article: Source

Posted on 29 July 2014 by VRS |  Email |Print

Australia’s repeal of a pioneering tax on carbon emissions has dealt a sharp blow to struggling international efforts to coordinate on global warming and comes ahead of key climate-change talks next year.
On July 17, Australia’s parliament pulled the plug on the 2012 tax, which charged 348 businesses such as steelmakers and power companies A$25.40 (US$24) per ton of carbon dioxide emitted. The levy was slated to evolve next year into an emissions-trading system that would link to the European Union’s………………………………………..Full Article: Source

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