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Commodities Briefing 06.Aug 2014

Posted on 06 August 2014 by VRS |  Email |Print

July was the worst month for commodities overall since May 2012, and the weak performance is likely to continue into August, market watchers said. But weaker markets can offer buying opportunities for savvy traders, they added.
The S&P GSCI lost 5.3% in July, giving up almost its entire gain for the year, and as of Monday has roughly a flat return year-to-date. According to data released by S&P Dow Jones Indices, one of the worst performers in their indexes was unleaded gasoline, which fell 8.1% in July. This is the fifth-worst July on record since 1988 and is also the worst July since July 2008. The agriculture sector lost 8.7% in the S&P GSCI index, falling to its lowest level since July 2010………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

If war breaks out, then what you play is gold, oil, commodities, etc. War is not good for anything except for real assets because people need real assets during the time of war - whether they are involved in the war or just protecting themselves. Other than that, I do not see any of this being good for anybody or anything.
Natural gas prices are very low. They are down 60-70 per cent from their all-time high. There has been a glut in the US in a way where the prices have been set on the futures exchanges. That glut is probably not going to last much longer, so I would suspect that natural gas is a good bet for people to start looking for investments………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Resources sector equities are currently more attractive than direct investments in physical commodities and investors should focus on investing in ‘companies not commodities’ to benefit from an increasing global demand for resources, according to Baring Asset Management (Barings).
The opportunity in resources equities is as strong as it has been for several years, believes Barings. Its positive outlook is based on the size of differential between what it sees as positive company specific drivers versus a negative – often macro driven – consensus view………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

With new rules and new markets, African companies are fighting for a bigger stake in the continent’s resource bonanza. At the same time, multinational traders like Glencore are targeting Africa as they seek to control commodity value chains.
For a couple of days in mid-June, as the rest of the world settled down to watch the World Cup, Chad made a rare foray into the global news headlines. Idris Déby Itno, its dapper deal-making president who had paid a call a month earlier at the Elysée Palace to see France’s President François Hollande, announced that Chad’s capital, N’Djamena, was going to be headquarters for the regional campaign against jihadists in Nigeria, Mali and beyond………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Oil prices rose in Asia Tuesday on fresh fears of supply disruptions in the Middle East, analysts said. US benchmark West Texas Intermediate (WTI) for September delivery rose 10 cents to $98.39, while Brent crude for September gained 15 cents to $105.56 in afternoon trade.
“We haven’t seen signs so far that the ongoing conflicts in the Middle East could cause disruptions, but those concerns are still there at the back of investors’ minds,” Desmond Chua, market analyst at CMC Markets in Singapore, said. WTI on Monday snapped a five-day losing streak to gain 41 cents in New York trade following continued violence in crude producer Libya, where at least 22 more people died in Tripoli over the weekend………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

The oil price is unlikely to fall despite the onset of fracking, and investors looking to capture the gains available in the oil and gas sector should focus on US-listed companies, according to Pascal Menges, manager of the Lombard Odier Global Energy fund.
Menges told What Investment that even with the twin threats of the global financial crisis and the advent of fracking technology, the oil price since 2008 has been ‘flat’, rather than falling, while between 2004 and 2008 it rose consistently………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Average OPEC oil production dropped slightly in July to 30.2 million b/d, compared to 30.3 million b/d registered in June and 30.9 million in the same month last year. For the first seven months of 2014, total OPEC output has averaged 30.1 million b/d, down 2.2 per cent in year-on-year terms. The fall in aggregate production in July was due almost exclusively to lower output from Iran and Iraq, which saw drops of 140k b/d and 100,000 respectively.
In the case of Iraq, oil output has now slumped by 300,000 in the past two months to sit at 3.0 million b/d. Although there are ongoing concerns that the weakened security environment across the country could eventually undermine investment and hence production growth, the largest and most important oil fields do not yet appear to have been affected………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Ben Bernanke, the former chairman of America’s Federal Reserve, famously told Congress that no one really understood gold. NM Rothschild, the Victorian banking and bullion magnate, said the same, if more wittily. “I know of only two men who really understand the value of gold, an obscure clerk in the basement vault of the Banque de France and one of the directors of the Bank of England.
“Unfortunately, they disagree.” Plenty of analysts now ignore Rothschild’s joke, and make a living trying to predict the direction of gold. But they’ve been confounded so far this year, forecasting fresh falls after 2013’s crash only to see gold outperform other assets………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Gold prices will reach $1,400 an ounce, the highest price since last September, by the end of the year, according to USAGOLD Centennial Precious Metals Inc. Higher demand from Asia and an anticipation of accelerating inflation are lifting the price, the precious metal dealer’s chief market analyst Peter Grant told Bloomberg.
Gold bullion prices will rise even if the Federal Reserve increases the interest rates that banks charge one another for short-term loans, which affects the rates banks charge customers for loans, to forestall future inflation. That’s because higher borrowing costs will likely come with rising consumer prices, he said………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Silver’s nearly 15% rally from the first week of June that took it from a low of $18.75 to a high of about $21.50 appears to have ended. Silver has given up about half of those gains and is currently trying to hold the $20 mark. Back in the glory days of silver’s bull market (pre-2012), silver had large rallies that easily exceeded the most recent 15% run-up.
There is still some negative psychology in the precious metals market. Fundamentals for silver don’t seem to matter, at least in the short-term. The hedge funds are still overbought according to the COT report………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

ETF Securities looks for improving industrial demand to ultimately underpin silver, although worries about rising U.S. interest rates may pressure precious metals in the near term.
“From a fundamental perspective, the strong correlation to gold continues to pressure the silver price lower….Largely to blame is the stronger U.S. dollar and improving investor sentiment, which is being buoyed by the robust U.S. recovery and the re-rating of the potential for tighter Fed policy as the central bank remains on track to wind down its bond buying by year-end,” said the provider of metals exchange-traded funds………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

The shift in investor sentiment that has helped propel the price of zinc to a near three-year high has been highlighted by a new report from the London Metal Exchange that details long and short positioning in industrial metals.
Figures from the exchange’s Commitment of Traders Report, published for the first time on Tuesday, shows money managers held a long position of nearly 135,900 futures contracts in zinc as of August 1 – nearly 30 per cent of open interest, or total number of outstanding contracts………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Copper prices slipped on Tuesday, under pressure from data showing growth in China’s services sector slowed to its lowest level in nearly nine years, raising concerns about the demand outlook from the world’s top metals consumer.
Three-month copper on the London Metal Exchange (LME) ended at $7,055 a tonne, down 1.05 percent. The metal, used in power cables and construction, is down more than 4 percent in the year to date, weighed down by expectations of rising supplies this year and lacklustre demand………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

The metal markets have been looking very bearish as of late, and this is a little surprising given the recent activity in global markets. Last weeks Argentinian debt default had some minor impact on the markets. Was it a shock? No, markets knew well in advance that the possibility of a default was very realistic and they even knew the day it was going to happen; probably why it didn’t make massive headlines.
On top of this American markets disappointed as data was weaker than expected; unemployment data was the worst as the unemployment rate lifted to 6.2%, and non-farm payroll came in at 209K verse an expected 230K, well below what was anticipated by markets………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

In last year’s gold-market selloff, the flight of exchange-traded fund investors got lots of blame for driving prices lower. Lately, though, the same crowd appears be playing a supportive role.
Some 11.1 tons of new gold entered the market’s biggest ETF in July, according to fund-sponsor data. For SPDR Gold Trust (GLD), iShares Gold Trust (IAU) and similar funds, July brought the biggest investor inflow since November 2012, Commerzbank’scommodity strategists estimate this morning, although it’s not enough to convince them prices will rise:……………………………………….Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

CME Group Inc. plans to start U.K. and Dutch natural gas futures while keeping the energy trading platform it agreed to buy from GFI Group Inc. independent. The world’s biggest derivatives exchange may offer gas trading at the U.K.’s National Balancing Point and the Title Transfer Facility in the Netherlands as early as next month, Martin Fraenkel, CME’s managing director for International Energy, said.
The expansion means the Chicago-based bourse will rival other exchanges that feed prices into the Trayport Ltd. system it agreed to buy last week………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Negligible inflation and a desire to maintain exchange rate stability in spite of capital inflows were the key factors prompting Romania to cut interest rates to an all-time low, analysts said on Tuesday.
On August 4, the National Bank of Romania (BNR) reduced its key policy rate to 3.25 per cent from 3.50 per cent. Reuters quoted Governor Mugur Isarescu as telling reporters that more easing was possible………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

“The decision to unify Cuba’s dual currency and exchange rate cannot be postponed,” says Joaquin Infante, advisor to the head of the Cuban Association of Economists. The interview with Infante touches on one of the hottest issues of concern to Cubans who have to cope with wages that have not kept up with the cost of living particularly in the last decade.
Most affected are public employees who still make up the majority of the labor force and retirees living on government pensions that are insufficient to cover even basic necessities such as food, electricity, and cooking gas, much less a new pair of shoes………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

Elevated Bitcoin prices have deterred new investors and seen transaction fall back to 2012 levels. The ascent of digital currency Bitcoin has been halted. Transaction levels have been crumbling this year, and priced in dollars total volumes are now back to the levels seen in 2012.
Widely touted as a rival to traditional state-issued currencies, cryptocurrencies such as Bitcoin became increasingly popular late last year………………………………………..Full Article: Source

Posted on 06 August 2014 by VRS |  Email |Print

The Coalition government has recently axed Australia’s carbon “tax”, leaving us with no carbon price. Alternatives include the government’s “Direct Action” plan, or Clive Palmer’s proposed emissions trading scheme. Neither, as currently proposed, provides an effective price on carbon.
Former Labor climate change minister Greg Combet recently said that the carbon price repeal was “no more than a setback” and that carbon prices are the “most economically efficient, environmentally effective and socially fair” way to reduce carbon emissions………………………………………..Full Article: Source

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