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Commodities Briefing 13.Aug 2014

Posted on 13 August 2014 by VRS |  Email |Print

As geopolitical risk and fears of stock market falls continue to loom large, some investors believe now may be the time to back commodities – despite the woeful returns from the asset class over recent years. Commodities have performed poorly since 2010, with the Bloomberg/UBS Commodity index falling 30% over that period. And while the index rose 7.1% in the first half of 2014, its best start to a year since 2008, a difficult July saw many of those gains evaporate.
But as fears of a market correction gain ground, with some seeing the FTSE 100’s weakness over the last fortnight as a prelude to a further falls, some are taking a shine to commodities, which traditionally have shown a low correlation to broader markets. Their resilience in times of geopolitical stress is adding to their appeal, as tensions persist between Russia and the West and the US conducts air strikes in Iraq………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Commodities declined in July as fundamental risks subsided, according to Credit Suisse Asset Management. The Bloomberg Commodity Index Total Return performance was negative for the month, with 17 out of 22 Index constituents trading lower. Energy was the worst performing sector, down 7.80%. Despite concern that geopolitical risks and events in the Middle East could lead to strength in crude oil, we have largely seen the opposite as many of these fears have yet to result in actual material reductions in production.
Agriculture decreased 7.31% as grains continued to trade lower following the June 30th USDA Quarterly Grains Stocks and Acreage Report which revealed generally larger supply expectations due to rapid planting progress and mild weather. (Press Release)

Posted on 13 August 2014 by VRS |  Email |Print

Many times, we see that the top-performing commodities on our list will tend to follow a similar theme, such as agricultural commodities, precious metals or energy. Typically driven by similar macro-economic forces, similar commodity types quite often behave like “birds of a feather.” However, this week is a little different, with the top three commodities coming from three distinctly different commodity types.
This seems to indicate that in today’s financial landscape there is no one or two major themes influencing the commodity markets, but instead multiple currents and crosscurrents at play whether they be geopolitical, weather related or economic………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

The Energy Information Administration decreased its 2014 price forecast for West Texas Intermediate crudes after the U.S. reached its highest monthly production in 27 years.
WTI will average $100.45 a barrel this year versus the July projection of $100.98, the EIA, the Energy Department’s statistical unit, said today in its monthly Short-Term Energy Outlook. Brent will average $108.11, down from $109.55. Oil output was 8.5 million barrels a day in July, the most since April 1987, the EIA said………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

The International Energy Agency said Tuesday it sees a need for more OPEC crude on the global market for the remainder of 2014 and in 2015 than it previously forecast despite global demand growth being curtailed.
In its latest monthly oil report, the IEA raised the “call” on OPEC by a combined 400,000 b/d for the third and fourth quarters to 30.8 million b/d. This compares to previous forecasts of 30.7 and 30.5 million b/d, respectively. For 2015, the call has been raised by 100,000 b/d to 29.9 million b/d………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

US and EU sanctions on Russia’s oil sector are unlikely to have a major effect on production, the International Energy Agency said on Tuesday, chiming with comments from some market watchers that the restrictions are toothless.
“Neither set of sanctions will have any tangible near term impact on supplies. Even for the medium term, their impact appears questionable,” the energy watchdog for wealthy nations said in its widely-followed monthly oil market report………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Oil markets have been startingly calm in recent months despite unrest in some of the world’s largest oil producing regions. The price of London-traded Brent crude oil is actually down $5 since mid-May.
The reason is that the world doesn’t need as much of the stuff right now - and global production continues to ramp up. Tuesday, the International Energy Agency announced global oil demand growth in Q2 had fallen to 0.7 million barrels a day, the slowest place since Q1 2012………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Gold has been trapped in a narrow range over $1,300 per ounce, struggling to extend its rally, even as a whole raft of geopolitical tensions remain unresolved.
The yellow metal has failed to “find the vigor usually associated with rising fear,” according to analysts, even as U.S. forces carried out air strikes in Iraq, and NATO warned of the “high probability” of a Russian invasion of Ukraine Monday. Indeed, known holdings of gold by exchange-traded funds remaining close to its lowest point this year………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Gold prices are modestly higher in subdued early U.S. trading Tuesday. Some safe-haven demand is still present in the market place, evidenced not only by the firmer gold prices but also by a stronger U.S. dollar and higher U.S. Treasury prices. December Comex gold was last up $3.20 at $1,312.50 an ounce. Spot gold was last quoted up $0.80 at $1,311.75. December Comex silver last traded up $0.014 at $20.175 an ounce.
There are still geopolitical hotspots in the world that have the attention of the market place: civil war in Iraq, in which the U.S. has just injected military force; the Russia-Ukraine tensions; and the Israel-Hamas fighting. ……………………………….Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Gold prices are showing some modest gains on geopolitical concerns, but silver prices are struggling to show similar strength and that may be sign that gold’s strength could be limited.
Last week December gold futures on the Comex division of the New York Mercantile Exchange settled up 1.25% on the week while September silver fell 2.1%. That’s unusual because gold and silver generally trade in tandem. Gold received a late-week boost on geopolitical tensions, but silver was unable to follow suit………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Gulf region’s investments in the aluminium sector are forecast to reach $55 billion by 2020, compared to $30 billion in 2011, thanks to smelters’ expansion and new projects in the region, according to organisers of Aluminium Middle East exhibition.
Statistical data shows that the Gulf aluminium industry is growing by 8.4% annually, compared to an average annual global expansion of 3.5%, making the Middle East the fastest growing aluminium market in the world, said the event organisers who cited figures by Harbor Intelligence, a firm specialised in global aluminium market trends, analysis and forecasts………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Hedge funds and other speculators increased their bullish bets on aluminum with prices climbing to a 17-month high today amid forecasts for a shortage.
The net-long position in aluminum rose to 146,418 futures and options by Aug. 8 from 141,277 contracts a week earlier, the London Metal Exchange said in its second weekly Commitment of Traders report. Zinc has the highest share of money manager bets on higher prices at 28 percent of open interest compared with 25 percent for aluminum and 22 percent for copper………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Zinc and nickel paced gains by industrial metals in London amid signs demand is improving in China, the biggest consumer. Aluminum rose to the highest since February 2013. Industrial production in China maintained its pace of growth last month, economists surveyed by Bloomberg said before data due tomorrow.
Zinc trading volumes in Shanghai were more than triple the average today, data compiled by Bloomberg show. Money managers’ long position in zinc came to 28% of the open interest as of Aug. 8, the most among six main metals traded on the London Metal Exchange, data from the bourse showed. Still, that’s down from 30% a week ago………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

The commissioning of new iron ore capacity combined with a dearth of disruptions to supply have boosted availability of cheap iron ore, which has weighed on prices. In most regions, steel prices have remained low because raw material prices have fallen and competition between steelmakers remains active.
The exception is North America where disruptions to steel production and pent-up demand that has built up following weather-related issues in the first quarter have sent prices significantly higher. Still, this has opened the window for imports, which are likely to weigh on prices before too long………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Indonesia’s ban on nickel ore exports is resonating globally as prices climb to the highest since 2012, prompting companies from Avebury Nickel Mines Ltd. to Poseidon Nickel Ltd. to restart operations at idled mines.
Avebury, based in Perth, plans to reopen a deposit in Tasmania six years after it was mothballed. Poseidon is preparing to resume production at a mine in Western Australia, while Panoramic Resources Ltd. may restart mining at its Copernicus deposit in the same state. More producers globally may reactivate facilities as prices extend gains, according to OAO GMK Norilsk Nickel, the world’s largest supplier………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

In the age of energy conscious consumers that are opting for electric vehicles and solar homes, coal stocks seem to be a relic of a forgotten era. Recent strength in this segment, however, may have traders and investors rethinking their views on coal mining companies as an investment opportunity.
The MarketVectors Coal ETF is the only ETF that tracks the niche global coal industry. This ETF has amassed $180 million in total assets spread between 36 worldwide companies. Often times the first (and only) ETF dedicated to a small industry have an advantage in terms of first-mover publicity that gives it an edge in asset gathering and notoriety………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Eaton Vance put 18 funds into registration via two different filings. covers equity funds, while the second filing covers mostly fixed-income funds. The nontransparent actively managed funds will rely on the ETMF structure that is based on patents the mutual fund firm purchased from ETF industry figure Gary Gastineau.
The funds will be traded and priced based on net asset value rather than deriving their prices from daily portfolio transparency………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Exchanges in Asia are nervously eyeing a new trading link between Hong Kong and Shanghai, and mulling how to stay competitive on worries it will soak up funds from global money managers.
Amid already tepid trading volumes across the region, officials at exchanges in Asia are worried the Hong Kong-Shanghai link will leave less money for them if it proves successful and they don’t take measures to keep up. The trial programme is due to launch in October and would create a combined market capitalisation of $5.5 trillion, according to data from the World Federation of Exchanges………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Ukraine’s currency hit its weakest level against the dollar on Tuesday after Moscow said 280 Russian relief trucks would enter the country. On Monday, Kiev agreed to an international humanitarian convoy to the east of the country, but said on Tuesday that it would refuse entry to Russian trucks and consider their arrival as an act of aggression.
The hryvnia weakened by more than 4 per cent to 13.4 per dollar in afternoon trading, having previously touched its all-time weakest level of 13.7150. The rouble also weakened 0.78 per cent to touch 36.194 against the dollar………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Global food supply expectations have got a boost as the US Department of Agriculture forecast a record global wheat crop and a new high mark for US corn output. Other important US crops, including rice and soybeans, were also forecast to gain significantly, likely helping to keep a lid on the rise in global food prices in the first quarter of the year.
The USDA said US wheat production was solid, and coupled with strong increases in Russia, Ukraine and China, would take the total world crop for the 2014-2015 crop year to 716.1 million tons, up 2.0 million tons from 2013-2014………………………………..Full Article: Source

Posted on 13 August 2014 by VRS |  Email |Print

Hundreds of millions of ­dollars of emissions reduction projects will be rendered effectively worthless if Labor, the Greens and crossbench senators vote down the Coalition’s direct action scheme.
At risk will be 153 projects around Australia which include efforts to harness waste gas from landfills run by councils, tree planting and deforestation prevention schemes, and the prevention of emissions from piggeries. They are run under the existing Carbon Farming Initiative which was part of Labor’s carbon pricing scheme………………………………..Full Article: Source

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