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Commodities Briefing 11.Aug 2014

Posted on 11 August 2014 by VRS |  Email |Print

Diversified commodity exchange-traded products (ETPs) attracted strong inflows in July as a pick-up in economic growth in China and the United States encouraged investors to return to the unloved asset class. Investors injected $936 million into broad-basket commodity ETPs last month - the biggest inflow for this segment in three years, data from asset manager BlackRock showed.
That compared with the high watermark for the category in February 2011 of $1.5 billion in inflows, according to Ursula Marchioni, head of ETP Research EMEA at BlackRock’s iShares. Industrial metals ETPs also attracted a robust $117 million as the tide began to turn for the more cyclical commodities……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Citi is confident that it can run a lucrative commodities business in less volatile, more heavily regulated markets, the bank’s head of commodities sales told Metal Bulletin. Increasing compliance costs and low volatility have together driven margins in commodities banking progressively lower over the past few years and changed the landscape of the sector markedly, Citi’s José Cogullodo said in an interview.
With costs rising and order volumes falling, running a vanilla agency-style commodities brokerage is not an attractive proposition in the post-crisis, post-supercycle environment, he said. In addition, new regulations are prohibiting banks from trying to boost profits by trading commodities for their accounts. In any event, this is becoming less rewarding as commodity prices chop about in narrower ranges, he said…………………………………….Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

China’s imports of iron ore and soybeans maintained their upward trajectory in July but shipments of crude oil, copper and coal dropped, underscoring the relatively sluggish domestic demand in the world’s second-biggest economy. Copper shipments fell 2.9 percent compared to June, coal imports dropped 8.1 percent and crude oil imports slid 1.1 percent to their lowest daily rate since March, but July deliveries of iron ore surged 10.7 percent and soybeans rose 17 percent on the month, customs data showed on Friday.
The rise in imports of both iron ore and soybean, however, was attributed by analysts to opportunistic buying on favourable price moves, with subdued domestic demand seen potentially driving a surge in the stockpiles of both the commodities……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

OPEC trimmed its 2014 global oil demand growth forecast for a second consecutive month and said the group managed to increase output in July despite violence in Iraq and Libya, pointing to more comfortable global supplies. In a monthly report on Friday, the Organization of the Petroleum Exporting Countries trimmed its projection for growth in global demand this year to 1.10 million barrels per day (bpd), down 30,000 bpd, citing weaker-than-expected U.S. demand.
“The slow and uneven global recovery continues,” OPEC said in the report. In 2014, “U.S. oil demand remains strongly dependent on the development of the U.S. economy, however the risk is skewed to the downside compared to the previous month.”…………………………………….Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Energy businesses are selling assets and took on $106bn in net debt in the year to March. The world’s leading oil and gas companies are taking on debt and selling assets on an unprecedented scale to cover a shortfall in cash, calling into question the long-term viability of large parts of the industry.
The US Energy Information Administration (EIA) said a review of 127 companies across the globe found that they had increased net debt by $106bn in the year to March, in order to cover the surging costs of machinery and exploration, while still paying generous dividends at the same time. They also sold off a net $73bn of assets……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Very interesting research released last week by the U.S. Energy Information Administration shows that the domestic E&P sector may be headed for some difficult times.
The Administration calculated the spending habits of oil and gas firms operating within the U.S., tallying both incoming operational cash flow and outgoing capital expenditures for these companies. The results are surprising, revealing that today’s oil and gas sector is spending well beyond its means……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

The average price of a gallon of gasoline in the United States fell by six cents in the past two weeks as crude prices have continued a broad decline, according to the Lundberg survey released on Sunday. Prices fell to an average of $3.52 per gallon for regular grade gasoline, according to the survey conducted Aug. 8. That extends a decline in prices to seven weeks, survey publisher Trilby Lundberg said.
“It is lower crude oil prices that bring this lower pump price,” Lundberg said. “Crude oil is the overwhelmingly most important factor both in the price of gasoline and in directional price move.”…………………………………….Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Iran’s crude oil production (excluding gas condensates and natural gas liquids) declined by 9, 800 barrels per day and stood at 2.762 million barrels per day in July, compared to June. Iran’s crude oil output increased by 86,000 bpd in 2Q14 compared to 4Q13, according to a monthly report based on secondary sources, released by OPEC Aug. 8.
Iran and the six world powers including the U.S., the U.K, France, Germany, Russia and China reached an interim nuclear deal Nov.23, 2013. The agreement entered into force Jan.20, 2014 and extended by Nov.23, 2014……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

All that glitters isn’t gold—at least for the investors who are eschewing the precious metal in favor of the companies that mine it. After years spent in the shadow of gold, miners are back in favor, driven by stronger earnings and cuts to mining costs. The NYSE Arca Gold Miners Index, which tracks 39 gold-mining companies, has soared 26% so far this year, compared with a 8.9% rise in gold and a 4.5% increase in the S&P 500.
The gold-miner rally is a boon for high-profile hedge-fund managers such as George Soros and John Paulson—as well as traditionally gold-focused traders like Peter Palmedo and Eric Sprott. Their gold bets were pummeled last year, when a rise in bond yields and muted inflation dulled gold’s allure, sparking a stampede that drove the precious metal’s price down 28% and the gold-mining index down 54%……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Gold snapped a three-week losing streak and saw solid gains last week as a result of renewed safe haven demand, but silver registered losses for the fourth straight week, following the broad commodity market lower. A stronger U.S. dollar has been a key factor in limiting recent gold price gains and, with the eurozone economy now stumbling badly, the strong inverse correlation between the two could continue to hold metal prices in check.
U.S. stocks and bonds both rose last week and this too limited the upside for gold while the latest ETF flows indicate U.S. investors may again be souring on the metal, due in part to its inability to break free of its recent trading range……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

ETFGI’s analysis finds ETFs and ETPs listed globally gathered US33.8 Bn in net new assets in July, pushing YTD NNA to US160.5 Bn, a new record level of NNA at this point in the year, outpacing the previous high of US149.9 Bn set in 2013. Assets declined slightly (0.4%) from their record high of US2.64 Tn in June to US2.62 Tn at the end of July. The global ETF/ETP industry now has 5,410 ETFs/ETPs, with 10,477 listings, from 222 providers listed on 60 exchanges, according to preliminary data from ETFGI’s end July 2014 Global ETF and ETP industry insights report.
The ETF/ETP industries in Europe and Japan have gathered record levels of YTD NNA at US42.7 Bn and US14.9 Bn, respectively. New record highs in assets were reached at the end of July by ETF/ETP industries in Canada with US66 Bn, Asia Pacific (ex-Japan) with US103 Bn, and Japan with US91.5 Bn……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Considering that Bitcoin is a digital currency, it has been commended for its capacity to dodge traditional transaction networks, and therefore it functions as a peer-to-peer, independent payment solution. While the concept may be seen as revolutionary, detractors made sure to point out that lack of regulation triggers, uncertain security measures and volatile price swings. Thus far, the uncertainty has barred Bitcoin from turning into a mainstream investment class for speculative traders.
To break down barriers, the acclaimed Winklevoss brothers, filed SEC documents in an attempt to register the first Bitcoin related ETF, named the Winklevoss Bitcoin Trust. There are many questions concerning the feasibility and role of the Bitcoin Trust ETF, however. The fund, which is still in awaiting SEC approval, has stirred things up……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Taxpayers in an independent Scotland would be hit with a £30 billion bill if Alex Salmond got his way on a currency union with the rest of the UK because the deal would “inevitably break up”, sending shockwaves through the economy, an economist has warned.
The first minister has been on the back foot on the currency issue since the leaders of the Westminster parties vetoed his plan for a union and he was unable to explain his “plan B” during a televised debate with Alistair Darling……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

A formal currency union would not be in the interests of an independent Scotland, the leader of the campaign to keep the United Kingdom together has said, stepping up pressure on nationalist plans to keep the pound. With just over five weeks to go until the September 18 independence referendum, uncertainty over what currency would be used if Scotland leaves the United Kingdom remains a major campaign issue.
Britain’s three main political parties have ruled out a formal currency union, but Scottish nationalist leader Alex Salmond has said that Scotland “cannot be stopped from keeping the pound”……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Banks have had a chequered involvement in commodities over the years, and have much to mull over as the race to expand in the market begins once again. When grain merchants in sixth-century Lombardy began issuing loans to farmers in return for a share of future crop production, they were laying the foundations of the modern banking system.
By also accepting readily marketable commodities such as gold as collateral for those loans, and later issuing money backed by that collateral, the Lombardy merchants were building a framework for the world’s first private and central banks, as Randall Guynn, a lawyer at Davis Polk who represents many of the world’s leading merchant banks and broker-dealers, told the US Senate Banking Committee last year……………………………………..Full Article: Source

Posted on 11 August 2014 by VRS |  Email |Print

Environmental activists who have been campaigning for three years to get New Jersey to rejoin a regional cap-and-trade system have a potent new ally: Organizing for Action, President Obama’s grassroots lobbying operation.
OFA’s role in the New Jersey fight showed up as the state held a hearing on Friday on its controversial exit three years ago from the Regional Greenhouse Gas Initiative, or RGGI, a carbon trading pact. The hearing was called after a state judge ruled earlier this year that Gov. Chris Christie’s unilateral withdrawal had violated the rules of due process……………………………………..Full Article: Source

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