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Commodities Briefing 05.Aug 2014

Posted on 05 August 2014 by VRS |  Email |Print

Despite the summer heat, commodities have been anything but hot. In July, commodities suffered their worst monthly decline since May 2012, as the widely watched commodities index, the S&P GSCI, erased nearly all of its gains on the year with a 5.3 percent drop.
The big drags on the index were energy and agriculture, which each responded to specific drivers on the supply side of the equation, according to Jodie Gunzberg, global head of commodities at S&P Dow Jones Indices. In the energy markets, Libya resumed exporting crude, which sent prices across the energy spectrum lower on the increase in supply. Meanwhile, agricultural commodities dropped nearly 9 percent, hitting the lowest level in four years as ideal weather conditions improved the supply outlook………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Hedge funds cut their bets on agricultural commodities to the most downbeat in six months, led by wheat, in which they came close to their most bearish positioning ever, with notable gloom over cotton price prospects too.
Managed money, a proxy for speculators, cut by more than 37,000 contracts its net long position in futures and options in the main 13 US-traded agricultural commodities in the week to last Tuesday, according to data from the Commodity Futures Trading Commission (CFTC) regulator………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Regulations over the past 5 years have made operations more complex for independent oil and gas producers, according to a recent survey, Profile of Independent Producers 2012-13, released by the Independent Petroleum Association of America. A vast majority of respondents indicated that regulations have resulted in increased administrative costs, with 48% reporting slight increases and 43% reporting significant increases.
Air pollution standards represented the most pressing concern for independents, as 33% said it had the largest impact on operations while 35% said it had the second-largest impact on operations………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Oil prices on both sides of the Atlantic climbed on Monday, as investors shifted their attention from worries about swelling supplies to concerns about ongoing violence in Libya and other global hotspots.
Oil prices fell sharply last week, with the front-month of Brent crude hitting its lowest level since April, and traded lower early on Monday before bouncing back into positive territory. Brent crude gained 57 cents to settle at $105.41 a barrel, off a session low of $104.52. U.S. crude gained 41 cents to settle at $98.29 a barrel, after touching a session low of $97.43………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

The unexpected increase in the production of shale oil, a light oil called condensate and natural gas in the U.S. has upended many assumptions about the U.S. energy market. As the oil and gas bonanza continues, the U.S. ban on crude-oil exports looks increasingly outdated, arbitrary and economically damaging.
With Europe poised to endanger its gas supply by imposing more sanctions on its major supplier Russia, the possibility of energy exports from America takes on an important security dimension too………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

I’m glad I’m not in OPEC members’ sweaty Gucci loafers right now. Sure, it must be nice to be an oil gazillionaire. But consider the problems. Oil production from OPEC members is down all over the place. Libya still hasn’t recovered from its 2011 uprising. It’s exporting only a third of the 1.4 million barrels per day (bpd) of oil that it could produce at full capacity. A Sunni uprising in Iraq threatens that country’s oil production.
OPEC doesn’t expect production to recover anytime soon. It says non-OPEC producers would have to step up and meet increasing oil demand. Here’s the thing: OPEC has another cause for concern. One that wasn’t in its recent forecast………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

We called the exact top in gold to the day in the last update 3 weeks ago, as it has since reacted back. Now the picture is more messy, with conflicting indications, but let’s see what we can make of it. There was no update for these 3 weeks as we were waiting for this decline to run its course (no point in working for the sake of it).
On the 6-month gold chart we can see how the forecast decline was kicked off by a sharp drop, but as it has proceeded it has diminished in force, and it now looks like the minor downtrend has developed into a bullish Falling Wedge………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Upbeat manufacturing data from China notwithstanding, all commodities have been exhibiting price volatility. In line with this, gold saw the third weekly drop, the longest streak of decline since September, amid speculation that an improvement in the US labour market will reduce investor appetite for the yellow metal, considered a safe haven. On August 1, gold traded in the international spot market near the lowest point in six weeks at $1,284 a troy ounce.
Normally, major events like a war or a terrorist attack lead to a spike in inflation as supply of certain goods (crude oil, for example) gets disrupted, increasing their demand. Going by the same logic, rising geopolitical uncertainties — be it in Ukraine or West Asia — is a fertile ground for gold. The metal sees a price spurt in such times because of safe haven demand and also because its price constantly gets adjusted to inflation………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

With Wall Street and a number of institutional investors like Ray Dalio and billionaire George Soros placing big bets on a recovery in precious metals, now is likely the time for investors to take the plunge. But the key question remains, which precious metal should they choose?
Gold has remained a firm favourite among investors and Mr. Soros has made a massive US$120 million plunge on the world’s largest gold producer Barrick Gold Corporation. However, my preference is to invest in Silver and not gold. Not only does it share similar characteristics to gold, including acting as an inflationary hedge, being a well of value in uncertain times and a safe-haven asset, it possesses four unique characteristics which could propel its price skyward………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Silver prices may have had an unremarkable July, trading down 3%, but if recent history is any indication, August could help steer prices in the right direction and draw in the bulls. One reason for a rosy silver price forecast for August is that the white metal has finished up every year in this month for the last five years, averaging a return of 10.4%.
In the last 10 years, silver has finished up seven times and averaged a 3.6% month-long return. The last two years have been even better - silver tallied double-digit gains in August, with an astounding 19.3% surge in 2013………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Nickel bounced from a one-month low on Monday as analysts said concerns about rising stockpiles outside China had been overplayed. Nickel for delivery in three months on the London Metal Exchange rose 0.4 per cent to $18,496 a tonne.
The metal, used to make stainless steel, has been the standout industrial metal this year, rising as much as 56 per cent as traders bet on shortages after Indonesia banned the export of unprocessed mineral ores in January………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Shipping rates are poised to rally in the second half of the year as Vale SA, the world’s largest iron ore producer, drives up exports of the raw material, according to Commodore Research & Consultancy.
Vale will sell 321 million metric tons of the raw material used in steel this year, the Rio de Janeiro-based miner said in a July 31 earnings statement. That implies its second half shipments will jump 22% compared with the first six months and increase demand for vessels, Jeffrey Landsberg, managing director of Commodore, a New York-based adviser to ship owners, said………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

While the price of oil, gold, cotton, soybeans and cattle make headlines every day, few investors have the money, skill or storage space to invest directly in physical commodities. After all, where are you going to store 10,000 gold ingots or 1,000 head of cattle as you wait for prices to rise?
Fortunately, exchange-traded funds (ETFs) that invest in commodities offer a convenient, low cost way to access the commodities markets. Before you invest in commodity ETFs, there are a variety of things to consider as you evaluate the multitude of offerings………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

After dragging through one of their worst months since May 2012, the commodities market and related exchange traded funds can still find some pockets of strength as seasonal trends start kicking in. The PowerShares DB Commodity Index Tracking Fund dipped 4.2% over the past month while the iShares GSCI Commodity-Indexed Trust fell 4.8%.
The widely watched S&P GSCI index fell 5.3% over July as energy and agricultural commodities pressured the broader market, reports Alex Rosenberg for CNBC………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Big U.S. oil companies like Exxon Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP) reported robust second-quarter results late last week. All the three firms topped our revenue and earnings estimates on higher energy prices, but XOM and CVX are still struggling with shrinking production volumes amid the boom in shale oil and gas business. On the other hand, COP witnessed an increase in production.
The largest U.S. oil company, Exxon Mobil , reported earnings per share of $2.05 that strongly outpaced the Zacks Consensus Estimate of $1.91 and the year-ago earnings of $1.55. Total revenue rose 5% year over year to $111.6 billion, trumping the Zacks Consensus Estimate of $109.1 billion……………………………………….Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Recent months have not been much fun for foreign exchange investors. Volatility collapsed to historic lows as major currency pairs have traded in narrower ranges, with flows and risk-taking dropping sharply. Corporate treasuries might welcome the seemingly reduced need to spend money on hedges, but most will also realise their increased vulnerability to any sudden spikes.
In the minds of many market participants it is clear who is “to blame” for low volatility, namely central banks. While the official side might dispute this simplistic view, it would seem quite clear that monetary policy has at the very least contributed substantially to anaesthetised markets………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Another day and another cryptocurrency is surging. However, this crypto is not one that has received the attention of Bitcoin, Darkcoin, Peercoin - and understandably so given its size and age.
This month-old crypto is none other than Britcoin, a digital currency that “upholds British morals”, according to its creator William Thomas. Quite how a decentralised peer-to-peer digital currency upholds the morals of a certain part of the planet’s surface, Thomas fails to specify………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Cheap imported carbon credits comprised 99.5 per cent of the units New Zealand emitters used to meet their obligations under the emissions trading scheme last year, Environmental Protection Agency figures released yesterday show.
Just under 91 per cent of the units surrendered by emitters were emissions reduction units (ERUs) created under the Kyoto Protocol. They represent emission cuts in former Soviet bloc countries that their governments certify arise from projects and investments which would not have occurred had they not given rise to these tradeable credits………………………………………..Full Article: Source

Posted on 05 August 2014 by VRS |  Email |Print

Australia’s repeal of its carbon laws is the culmination of some sorry chapters in Australian politics and policy, but is by no means the end of the story. The repeal represents a tragedy for Australian politics, a travesty for public policy and a train wreck for climate action. But there are significant remnants among the wreckage.
The last decade has seen Australian politics dominated by greed, self-interest, poor judgment and rotten luck. Despite this, a working and credible climate policy emerged. By establishing a bipartisan consensus for emissions trading in July 2007, the then-prime minister, John Howard, responded to years of growing climate concerns and business calls for greater carbon policy certainty………………………………………..Full Article: Source

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