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Commodities Briefing 08.Aug 2014

Posted on 08 August 2014 by VRS |  Email |Print

The market has fought off geopolitical concerns with the brent crude oil price falling to the lowest level this year. The risk that new sanctions on Russia will constrain the country’s exports of energy, metals and grains is likely to be a latent concern in commodity markets for as long as the conflict goes on.
The global economic recovery is gaining traction. Growth in the Chinese economy has accelerated recently and the US recovery is strengthening. We are therefore optimistic on behalf of the global economy and expect growth above 4% next year………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

By extracting a $13 million penalty and imposing tough restrictions on future oil trading by Arcadia and others, the U.S. Commodity Futures Trading Commission (CFTC) this week sent a powerful signal that laws against market manipulation still have teeth.
The case challenges a now famous view expressed in 1991 by commodities lawyer Jerry Markham that manipulation of commodity futures prices had become an unprosecutable crime………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

The Australian economy typically underperforms in the aftermath of commodity price peaks, but that’s not the reason for the latest rise in unemployment. The tough times typically arrive after the price peaks, when prices are still relatively high.
There have been four major rises in Australia’s export prices in the past 50 years (using the price measure for goods exports from the national accounts, converted into foreign currency values using the RBA’s trade-weighted index of the Australian dollar)………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Unlike in recent years, growth in global gasoline consumption is outpacing diesel growth in 2014. At the same time, new refining capacity engineered to produce more distillate than gasoline is coming online in 2014. The narrowing spread for December 2014 futures contracts demonstrates how these two factors may be temporarily leading to a tighter global gasoline market than was expected at the beginning of the year.
On July 8, the futures price premium of New York Harbor ultra-low-sulfur diesel (heating oil) over reformulated blendstock for oxygenate blending (RBOB) for December 2014 delivery fell to 22 cents per gallon on the New York Mercantile Exchange (Nymex)………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Let’s start this analysis with the 2013 figures for the United States (right). In general, the oil export/import status looks better for the US than it has in a long time. Although the US is a major oil producer, it has been an even heavier oil consumer, importing millions of barrels per day of oil from more than 40 countries.
Last year, the US imported 7.7 million bpd of crude oil, according to the Energy Information Administration. This represents an improvement, about 23% less than in 2008, reflecting the early direction of President Obama’s policies and the success of an increased focus on natural gas by oil and gas companies………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

As tax breaks and incentives for renewable energy increase, corporations are entering the green energy landscape. There’s a popular meme that surfaces on green energy blogs, forums, and Facebook pages. The gist is that large corporations love oil and gas because they can own and control it. They’re against renewable energy because no-one can own the sun or wind.
The problem for anti-corporate green-energy campaigners is, increasingly: the meme isn’t true………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

CFTC position limits rule could limit the ability of energy firms to hedge, unless they aggregate commodity derivatives positions held across disparate business units.
A revived position limits rule from the US Commodity Futures Trading Commission (CFTC) could force energy firms to abandon the widely used practice of allowing individual business units to handle hedging for their own asset portfolios independently of the rest of the enterprise, industry groups have warned………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Gold held on to overnight gains above $1,300 on Thursday, trading near its highest in more than a week as fears of Russian military action against Ukraine and retaliation by Moscow over Western sanctions burnished gold’s appeal as a safe haven.
Russia will ban all imports of food from the United States and all fruit and vegetables from Europe, the state news agency reported on Wednesday, even as NATO said Russia had massed around 20,000 combat-ready troops on Ukraine’s border………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

We are soon entering a propitious period for gold in the annual calendar. Historically, prices have moved higher as gold traders and buyers returned from their summer holidays. In reality, it has been the approaching Indian holiday, wedding, and agricultural harvest seasons that have boosted gold demand and supported higher prices in world markets as summer draws to a close.
Until last year, India was the largest consumer of gold in the world market, but thanks to the imposition of gold-import barriers by the Indian authorities and the surge in Chinese demand, China rose to the top spot and India trailed behind. Nevertheless, India remains a major player holding much sway over the world price………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Eighty years of manipulating gold markets….stock, bond and currency markets. The manipulation of markets is not exclusive to gold. Stock, bond and currency markets are also manipulated, but there is one difference. Gold’s price is manipulated downward, while stock, bond and currency markets are typically manipulated upward.
In February 2014, Bloomberg reported there were indications that gold has been manipulated for the past decade………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

The precious metals are lynch pins. They are nagging and persistent counter-parties to money printing gone wild. It’s been this way for as long as commerce was semi-civilized. (Though given the amount of financial fraud, violence, and chaos in the world, the term “civilized” might need to be reconsidered)…
When prices began to fly, the point of no return will be long since passed. I believe we are living in limbo at the moment. We’ve passed the point of return, but have yet to move into the next (collective) phase………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

August has in recent history been a strong month for silver prices, though coming off a weak July and held back by speculator activity, it is having a slow start to the month. But silver prices are rising today. New York spot silver, which trades continuously from 6 p.m. Sunday to 5:15 p.m. EDT Friday, pushed up over $20 an ounce at around 9:30 a.m. EDT after slipping below that point yesterday. Tuesday marked the first time that silver was trading below $20 since mid-June.
Silver futures contracts for September delivery opened down 2.8% on the week at $19.79, but pushed back up above $20 and hovered around that level in the afternoon………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

From a standpoint of metals evolution, aluminum seems to have encroached on its main adversary, steel, in the booming global automobile industry, as lower costs, greater flexibility, and lightness have had a salutary effect on ever-increasing gasoline bills.
When analyzing typical materials content of manmade automobiles and light trucks, iron and molded steel still dominate with 55%. High strength steel makes up another 15%, while aluminum and plastics each comprise 10%. The final 10% consists of copper, titanium, etc………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

One of the very first metals ever taken out of the earth and used was copper. As early as 8000 B.C., it was used in coins and ornaments. By 5000 B.C., it was used to form tools that helped mankind emerge out of the Stone Age. Since that time, the metal has become ubiquitous, as copper is used now in building materials, power generation, plumbing, money, and even in electric vehicles.
The mining industry extracts copper ore from the earth, and prepares it to be used as a feedstock to produce copper-based products. Copper is found in large deposits. In its most basic form, copper ore comes in two types: sulfide ores and oxide ores. Each type requires a different method of extraction and processing by the copper industry………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

After some smooth trading in the first half of the year, gold has been stuck in a relatively tight range of around $1,300/oz lately. Though strengthening U.S. economic activity and a strong dollar are weighing on the performance of the yellow metal, renewed geopolitical concerns are reinforcing its safe haven appeal across the board.
This is especially true as tensions escalate in Ukraine with increasing Russian military action on the border, aggravating relationship between Russia and the western world on harsher sanctions. The list of woes go on with the Argentina default, a bloody Gaza strip, Iraq violence, Chinese slowdown and a struggling European economy yet again………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Commodity exchange traded funds are garnering more attention as investors hedge against swings in bonds and stocks, and play on long-term fundamentals. Funneling $1.2 billion into commodity exchange traded funds over July, investors have put more money into commodity investments in July than any single month over the past two years, reports Trevor Hunnicutt for InvestmentNews.
Broad commodity ETFs like the PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC), United States Commodity Index Fund (NYSEArca: USCI) and iShares GSCI Commodity-Indexed Trust (NYSEArca: GSG) attracted over half a billion in assets over July………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Many traders lump the Australian and Canadian dollars together in the broad category of so-called “commodity dollars.” In many ways, this categorization makes sense: both currencies have higher yields than many of their rivals and their economies depend on exporting commodities to one of the largest economies in the world (China in the case of Australia and the U.S. for Canada).
Though they share some similarities, the performance of the two currencies can often diverge based on idiosyncratic economic data. This week marks major clash between the two commodity dollars. Traders have/will get a look at employment data out of both Australia and Canada, as well the latest look at the RBA’s economic outlook and Canadian Building Permits and Ivey PMI data………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Dr Angus Armstrong says going it alone with the pound after independence would leave Scotland’s financial institutions without an effective lender of last resort. Keeping the pound without a formal currency union would force major banks to relocate from Scotland after independence, one of the country’s leading economists predicted.
Dr Angus Armstrong warned that if a separate Scotland goes it alone with the pound – so-called sterlingisation – the lack of an effective lender of last resort would see financial institutions flee south………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

If Aecio Neves wins the presidency this October, he would allow Brazil’s currency to float freely, leaving the market to set the exchange rate in a move that would likely help local industries struggling with a strong real.
Mansueto Almeida, a top economic adviser to the Neves campaign, told Reuters on Thursday that a free floating real will help restore balance to Brazil’s external accounts and make Brazilian manufacturers more competitive………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Russian PM Dmitry Medvedev has signed a decree on the full ban for imports of beef, pork, poultry meat, fish, cheese, milk, vegetables and fruit from Australia, Canada, the EU, the US and Norway. The ban will last a year, starting August 7.
The Prime Minister also said Russia has stopped transit flights by Ukrainian airlines to such destinations as Georgia, Azerbaijan, Armenia and Turkey, adding that the country was considering a ban of transit flights for European and US Airlines to the Asia-Pacific region………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

South Korea could compete with Europe in carbon credits, while China, Japan and even India are curbing greenhouse gases. Suddenly, Asia’s major economies are looking a shade greener, despite justified skepticism over the region’s patchy environmental record.
On Monday, Beijing’s Municipal Environmental Protection Bureau took a step toward cleaning up the polluted Chinese capital by announcing plans to ban the use of coal by the end of 2020, putting priority on electricity and natural gas for heating instead………………………………………..Full Article: Source

Posted on 08 August 2014 by VRS |  Email |Print

Four Wyoming lawmakers came away from a recent trip to China with a deeper perspective on China’s CO2 emissions policy, and what it means to Wyoming’s coal industry.
For some of the lawmakers, it’s a perspective that runs counter to the assumption behind a long-standing political dogma among Wyoming leaders. The dogma is simple: China isn’t cutting CO2 emissions, so why should we?: “There is a sense here (in Wyoming) that they (China) just don’t care, and they’re going to develop and make no efforts to deal with the environment………………………………………..Full Article: Source

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