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Commodities Briefing 15.Aug 2014

Posted on 15 August 2014 by VRS |  Email |Print

Commodities erased gains for the year as oil and grains declined on signs of ample supplies as economic growth halted in Europe and factory output slowed in China, the biggest consumer of industrial metals and energy.
The Bloomberg Commodity Index of 22 raw materials dropped 0.5 percent to 125.593 by 5:11 p.m. in London, for a 0.1 percent decline this year. Lean hogs, Brent crude and gasoline fell at least 2 percent today. Lean hogs, Brent crude and aluminum fell at least 1.6 percent……………………………………….Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

After skyrocketing over the past decade, commodity prices have remained stable or eased somewhat since mid-2011—and most projections suggest they are not likely to resume the upward trend observed in the last decade. This paper analyzes what this turn in the commodity price cycle may imply for output growth in Latin America and the Caribbean.
The analysis suggests that growth in the years ahead for the average commodity exporter in the region could be significantly lower than during the commodity boom, even if commodity prices were to remain stable at their current still-high levels. Slower-than-expected growth in China represents a key downside risk. The results caution against trying to offset the current economic slowdown with demand-side stimulus and underscore the need for ambitious structural reforms to secure strong growth over the medium term………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Oil prices skidded Thursday, hitting multi-month lows on a sluggish demand outlook. The European Union announced Thursday that euro-zone economic growth was flat in the second quarter. Demand for oil from European refineries has been weak this spring and summer, leaving some cargoes in the Atlantic searching for buyers last month.
Global supplies are ample, and investors are continuing to discount the possibility that violence in the Middle East and Eastern Europe could cause a supply interruption………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

The wave of resource nationalism among oil-producing nations that helped propel prices to a record in 2008 is dissipating as competition from U.S. shale stirs governments to offer better terms, the IEA said.
Sliding crude prices in the face of supply threats in Iraq and Libya reflect that industry concerns of scarcity have been replaced with a perception of sufficiency, said Antoine Halff, head of the Paris-based International Energy Agency’s industry and markets division………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Fighting across Iraq, Libya, Ukraine and Gaza, and an accelerating economy, should mean higher oil prices. Yet crude is falling. Six years ago, oil soared to a record $147 a barrel as tension mounted over Iran’s nuclear program and the world economy had just seen the strongest period of sustained growth since the 1970s. Now, West Texas Intermediate, the U.S. benchmark price, has traded below $100 for 10 days and Brent, the European equivalent, tumbled to a 13-month low.
What’s changed is the shale fracking boom. The U.S. is pumping the most oil in 27 years, adding more than 3 million barrels of daily supply since 2008. The International Energy Agency said yesterday that a supply glut is shielding the market from disruptions. Bank of America Corp., Citigroup Inc. and BNP Paribas SA concur………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

From the charts it increasingly looks like somebody somewhere is enforcing an unofficial trading band, capped on the top-end by SPR releases or Opec production hikes, and propped up on the bottom-end by monetary policy and strategic supply cuts.
But the weirdest thing of all is that the prospect of supply disruption isn’t doing much to prices at all. More than that, our old friend contango is threatening to make a significant come back in the Brent market………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

More news likely to put downward pressure on oil prices overnight as it emerged that Libya’s largest oil-exporting port is to resume service shortly. As Summer Said and Benoit Faucon report, the Es Sider port will resume operations next week. The port is capable of loading around 340,000 barrels of oil per day and there are some big tankers anxiously waiting to start taking on the crude that’s been piling up in storage in Libya.
With another large Libyan port already having reopened this week, hopes will be rising of a return of significant amounts of Libyan oil to international markets………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Global gold demand declined sharply in the second quarter as prices steadied following exceptional circumstances in the same period of last year, according to the latest World Gold Council (WGC) report.
Bullion demand stood at 964 tons in the second quarter, down 16 percent on year, when demand totaled 1,148.3 tons, the report published Thursday found. However, the decline came as no surprise given the contrast in market conditions between the periods………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

The latest World Gold Council (WGC) quarterly Gold Demand Trends analysis as usual makes for some interesting reading. With stats prepared by Thomson Reuters GFMS it at least brings us a regular consistent snapshot of what is happening in global demand for the precious metal and this time around it sees the demand as ‘recalibrating’ towards the previous long term trend.
Gold demand in 2013 was exceptionally strong – despite, or perhaps because of, the gold price crash - with an enormous surge, initially mostly at end Q1 and in Q2 from China and levels continued at a high rate for the remainder of the year too. Indian demand early on was also high ahead of the anticipated, and subsequently applied, import restrictions……………………………………….Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

India regained its position as the world’s leading gold buyer in the second quarter as Chinese demand for jewellery, gold coins and bars dropped sharply from record levels amid a government crackdown on corruption. Soaring purchases by retail customers in 2013 helped China overtake India as the world largest gold consumer for the first time.
The buying frenzy, which led to a temporary shortage of physical gold stocks, was sparked by the 28 per cent fall in the precious metal’s price last year, the worst performance in more than three decades………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

With the unveiling of London’s shiny, new silver benchmark Friday, metal producers and traders are hoping to head off lingering concerns about the credibility of the market. But as the price-setting process undergoes the first major overhaul in more than a century, there are signs the revamped process isn’t quite ready.
“The overall impression I get from this is that everyone is a little unsure of how it’s all going to work—just because it’s something new,” said David Govett, head of precious metals at brokerage firm Marex Spectron. “The bullion market is quite a staid market, shall we say, and a lot of the people in it, especially the traders, have been around for a long old time.”……………………………………….Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

The much-maligned London silver price fix ended (Thursday) after 117 years, and market observers are hoping the new pricing mechanism will herald an era of true and transparent silver price discovery.
Silver pricing could definitely use more transparency, following a century-old mechanism that involved three banks negotiating prices in secret. The three member banks were facing lawsuits after accusations arose that they were manipulating prices, so it’s no wonder that some are expecting a free market transition………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Northam Platinum Ltd. plans to position itself as one of the world’s largest producers as it forecasts an increase in prices of the metal by 2018. Northam, owner of the deepest platinum mine, targets production of more than 1 million ounces of platinum-group metals by 2020 through acquisitions and expansion, the Johannesburg-based company said in a statement today. It sold 396,417 ounces in the year through June.
The average basket price Northam received for platinum-group metals, which include palladium and rhodium, declined 6.1% to $1,198 an ounce from a year earlier, it said………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

US sheet producers are enjoying relatively high, stable pricing compared with the rest of the world, but their position is far from guaranteed, market sources said Thursday.
“I think we’re in the beginning of a good expansion of metal use, but I don’t buy into the argument that prices need to go up,” said one trader. “Prices have been high for non-supply and demand reasons for a long time. If these guys aren’t careful, they’re going to kill that goose.”……………………………………….Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Since January, precious metal mining stocks have seen prices soar. Exchange traded funds (ETFs) provide the best way for investors to profit from the new bull market. Reasons to be bullish include: undervaluation, future currency instability, and geopolitical unrest.
“There’s gold here,” exclaimed the grizzled fishing camp owner as he handed me the small core sample. He then went on to explain how people fly into central Ontario, drill a few holes, get the cores assayed (small amounts of gold are common throughout the area) and then fabricate an enticing story on the amount of gold the (usually new) company controls in order to promote shares to gullible investors………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Bosera Funds has raised $50 million for China’s fourth gold backed exchange-traded fund that it aims to launch soon, at a time when investment demand for the precious metal has been sluggish in the world’s biggest bullion consumer.
The fund, called Bo Gold ETF, raised 292.2 million yuan ($47.5 million), in line with internal expectations, according to an emailed statement sent by Bosera to Reuters. An exact launch date is yet to be finalised but the ETF could start trading as soon as next month………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

The majority of ETF income investors focus their portfolios on dividend-paying stocks and bonds to generate yield. However, those traditional asset classes have now risen to the point where their income streams have fallen significantly.
One strategy to overcome that deficit is to move down the credit spectrum or select speculative equity plays to supplement your core holdings. While that decision may result in short-term relief, it also introduces a significantly higher level of risk………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Fifty years ago the first United Nations Conference on Trade and Development launched a debate about how much money rich countries should give to poor ones to reduce poverty and bolster growth. In the end, the UN settled on a figure of 0.7% of national income—a target subsequently reaffirmed by endless international powwows.
Although few countries have met it, aid spending in real terms has nonetheless increased steadily ever since, to $134.8 billion in 2013. Yet economists are still arguing about how much the aid helps—if it helps at all………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Alex Salmond’s Plan A for a currency union is doomed to failure and will bust up within a year costing the Scottish economy £100 billion, one of the world’s leading economists has claimed. Unemployment and a seven year slump would be the inevitable result of Mr Salmond’s plans for a formal currency union with the rest of the UK.
Professor Ronnie MacDonald, an adviser to central banks and the IMF, believes that a reliance on North Sea oil would unbalance Scotland’s economy making the non-oil sector uncompetitive………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

Virtual currencies are definitely trending. You know that’s true when even the politicians are jumping on the bandwagon. It won’t be long until Ed and Dave are asking if they can pay for their Cornish pasties with Bitcoins.
Maybe we’re not quite there yet, but the fact that in the run-up to a general election, the Treasury is looking at measures to make the UK a centre for virtual currency trade shows how much interest there is in digital/virtual/crypto currencies………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

The Korea Exchange’s emissions trading system development has come to a halt, due to strong opposition from the business and industrial community. The government is planning to deal with it by reexamining the implementation date and raising the emissions cap.
Previously, the Emissions Trading Scheme was planned to be launched in January next year. However, an increasing number of local manufacturers have been opposed to the plan over concerns about the possibility of deteriorating competitiveness………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

More than a year after the EU was forced to rein in its scheme for charging airlines for emissions, some foreign carriers are still balking at paying. The EU’s unilateral push in 2012 to charge airlines for carbon emissions set off a diplomatic row with China, India and others and eventually Brussels backed down, confining its scheme to flights within the EU. Most airlines — those responsible for 98 per cent of the regulated emissions — paid up by a May 2013 deadline to submit a carbon permit for every tonne of carbon emitted on EU flights in 2012.
But some airlines, including Chinese and Indian carriers operating a tiny number of internal EU flights, have been holding out. Both have all along opposed the scheme, arguing their inclusion in the EU’s Emissions Trading System breached sovereignty rules………………………………………..Full Article: Source

Posted on 15 August 2014 by VRS |  Email |Print

The 18th Ministerial meeting of the BASIC countries– Brazil, South Africa, India and China– has just concluded in New Delhi. It was attended by the environment ministers of the four countries, ahead of the forthcoming UN Climate Summit meeting on 23rd of September. It will be hosted by the UN Secretary General Ban ki moon in New York and will seek to create a political momentum for the climate negotiation talks to be held in Lima, Peru in December.
The meeting emphasized once again that it was time for the developed world to work in close cooperation with the four BASIC countries to resolve the issues pertaining to climate change. It said that the rich nations must in fact take a lead in dealing with pollution- induced climate change and take suitable action keeping in mind the ‘historical responsibilities ’……………………………………….Full Article: Source

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