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Commodities Briefing 28.Aug 2014

Posted on 28 August 2014 by VRS |  Email |Print

Scotiabank’s Commodity Price Index edged down by 0.3% month-over-month (m/m) in July, as oil prices lost momentum, partly due to an easing of concern over geopolitical supply risks in Libya and Iraq. “On a more positive note, a cyclical recovery in base metal prices is getting underway, with dramatically higher zinc and nickel prices expected in 2015,” said Patricia Mohr, Scotiabank’s Vice President of Economics and Commodity Market Specialist.
“Zinc led a strong rally in base metals in July, climbing from US$0.96 per pound to almost US$1.05 — an increase of 17% since late 2013. Commodity funds and investors have bid up zinc prices, anticipating tightening supplies over the next three to four years — with mine supplies not keeping pace with demand growth. In our view, zinc prices will climb to US$1.25 in 2015 and a very lucrative US$1.60-1.70 in 2016………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

The data center is changing. We have new methods of cooling, optimizing the data center and even the utilization of green energy through next-generation geothermal technologies. The insides of the data center and what goes into the rack has been changing as well. New platforms around consolidation, server technology and cloud computing are all impacting how we process and utilize resources.
The conversation around custom-build servers, networking components and now storage has been heating up. The concept of a commodity data center is no longer locked away for mega-data centers or large organizations. Looking at Google as an example, you’ve got an organization which builds its own server platform by the thousands………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

The rate of oil discoveries continues to disappoint after a record low last year and firms could even cut their exploration budgets to save on costs, a risk to long-term supplies and prices, industry executives said.
Explorers are finding so little oil, many are retreating from high-risk frontier areas to safer bets like North American shale, executives at a major Norway oil conference said. This will likely force them to buy expensive discoveries once investor sentiment shifts focus to reserves from cash flow………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

These are really changing times. It is no longer enough to have a coup a plane hijack or violence erupting in one oil producing country to have prices skyrocketing.
The hotspots are all over the map of the Middle East from key producers such as Iraq and Libya to marginal ones like Yemen and the two Sudans to ongoing tightened sanctions against Iran. Brent crude prices that briefly rose in midJune above 115 following the take-over of Iraq’s city of Mosul by IS radicals dropped to 14-month low a few days ago………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

The controversial practice of “fracking” helped keep North American fuel prices from soaring this summer even as supply disruptions in the Middle East and North Africa hit a 23-year high.
The surge in United States oil production – made possible through horizontal drilling and hydraulic fracturing – has more than offset unplanned supply outages in embattled Organization of the Petroleum Exporting Countries (OPEC) member nations, the U.S. Energy Information Administration (EIA) said Wednesday………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Gold-backed funds that heralded record prices in 2011 and last year’s biggest sell-off in three decades are becoming less useful as market predictors. After a decade of changing mostly in tandem, gold prices and holdings in exchange-traded products backed by bullion have the most-negative correlation since 2004.
Investment in ETPs are headed for a fifth straight week of moving in the opposite direction of New York futures, data compiled by Bloomberg show. That would be the longest stretch since 2012, before investors began dumping gold………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Investors should ignore the ‘myths’ that surround gold as an investment and not buy at the current level, despite the fact that the asset class is trading at 33 per cent below its peak valuation of just three years ago, according to Brian Dennehy, managing director of FundExpert.co.uk.
Dennehy remarked, ‘Usually, there is a negative correlation between the performance of the dollar and the price of gold. Many people expect the dollar to start performing better now that tapering is coming to an end, and indeed it already has started to perform better, and generally speaking if the dollar is performing better then the price of gold will usually perform poorly.’ ……………………………………….Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

For a lot of business-minded people and investors, establishing and owning of solid gold bullion stores is considered as one of the best ways to secure finances for future use. With today’s unpredictable and mostly unstable economy, currency has often dealt with weak and vulnerable hand pushing investors alike to invest in gold coins hoping to gain a more stable strength as well as market independence from the currency that is holding their assets.
US Mint, for example, has found a reliable indicator of gold, silver as well as platinum demand in the country. However, sales in here have recently shown diminishing interest from present as well as potential business owners………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Gold investors are hurting from prices within 1% of a two-month low can find solace from the historical record and research and showing gold performs best in September.
Our Bloomberg chart of the day shows bullion averaged gains of 3% each September over the past 20 years, beating next best month November, when prices rose an average 1.8% according to Bloomberg based on a market update by GoldCore. We covered gold’s seasonality and gold’s best performing months here………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Those REE deposits in development that have the greatest chances of success (i.e. being developed into a mine, and thus, offering the highest share price appreciation potential no matter if REE prices remain low) are those that host a REE mineralization out of which a >30% TREO mineral concentrate can be produced with an industry standard process that makes economic sense.
Unfortunately for REE investors, today there exist not many undeveloped REE deposits hosting a mineralization out of which a high enough grade mineral concentrate can be produced, and easily processed, which would be saleable to global REE processors (also known as separation or refining facilities), and from which the numerous REE end-products, which are saleable to the industry, could be produced………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Benefiting from a USD 20 billion Chinese mining project, Peru will be the world second largest copper producer just after Chile , according to Peruvian governmental officials. A Chinese consortium lead by China Minmetals Corporation won bid for Glencore Xstrata’s Las Bambas copper mine in Peru in July. The Chinese side will acquire the USD 20 billion mine with nearly USD 7 billion . This has been China’s biggest overseas mining acquisition.
The Las Bambas project is one of the largest copper mines under construction worldwide; its annual output capacity is predicted to reach 450,000 tons after completion, representing 13% of China’s total copper imports last year. The mine is predicted to come into production in the second half of 2015………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

It has been a rough year for some soft commodities exchange traded products. Strip out the stellar performances offered by the iPath Dow Jones-UBS Coffee Total Return Sub-Index ETN and the iPath Pure Beta Coffee ETN, and the agricultural/soft commodities complex looks even more glum.
Despite drought conditions in some parts of the U.S., high crop yields have forced the Teucrium Corn Fund down 19.5% on the year while theTeucrium Soybean Fund is off more than 11%. The government has already predicted record crops and believes exports will drop – Russian counter sanctions against Western countries will diminish overseas demand………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Precious metals like gold and silver started off the year with much promise after staging a counter trend rally that defied their tremendous fall last year. However, the sellers have re-established downward momentum and are focusing their efforts specifically in the silver market.
According to Bloomberg Businessweek, short bets in silver futures contracts reached a 14-month high last week as prices fell to new August lows. Investors are clearly increasing their net short exposure on the expectation that this hard asset will re-test its June lows………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Zinc and nickel prices could move dramatically higher over the next two years as a cyclical recovery takes hold in the base metal sector, says a new report from Scotiabank. Prices for zinc and nickel have been steadily rising this year as global growth continues to rebound, fuelling stronger prices for base metals.
Patricia Mohr, commodity market specialist at Scotiabank, said zinc and nickel are in a good position because they are either in or nearing supply deficit positions………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

South African farmers may produce 4.8 percent less wheat this season than a year earlier, making it the smallest harvest since 2010, the Crop Estimates Committee said as it lowered the area prediction for the cereal to the lowest on record. Growers may reap 1.78 million metric tons in the 2014 season compared with 1.87 million tons last year, Marda Scheepers, a spokeswoman for the committee, said.
It is less than the 1.87 million-ton median prediction by three analysts in a Bloomberg survey. While South Africa is the sub-Saharan region’s biggest producer of the grain after Ethiopia, it’s still a net importer of wheat, according to US Department of Agriculture data………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Ukraine’s troubled hryvnia continued its free fall, even as the prime minister called for swift measures to stabilize the national currency. The hryvnia lost 1.7% Wednesday, trading at the weakest level ever of just below 14 against the U.S. dollar after talks between the presidents of Russia and Ukraine failed to offer significant progress on the monthslong crisis in the region.
“We need swift and effective economic steps to stabilize the situation at the foreign-exchange market,” said Prime Minister Arseniy Yatsenyuk at the cabinet meeting, adding that the national economy won’t sustain an exchange rate weaker than 12 hryvnia to the dollar………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Ethiopia says it’s considering the World Bank’s suggestion to devalue its currency, the Birr, but government says it want to minimise the impact on the wider economy. In July, the World Bank released its third economic report on Ethiopia and advised the country to devalue its currency.
The global lender argues that Ethiopia’s Birr is overvalued and that the country would benefit from making the move, but it wouldn’t be the first time for Ethiopia………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Britain will hand its airlines 6.6 million free carbon allowances a year to help reduce the cost of meeting their obligations under Europe’s Emissions Trading Scheme (ETS) from 2013-2016, the government said on Wednesday.
The European Union’s ETS caps the emissions of over 12,000 power plants, factories and airlines, requiring them to surrender one carbon permit for every tonne of CO2 emitted annually by April of the following year………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

Burning Europe’s lignite reserves would wipe out carbon budget from 2020 until the end of the century, says Greenpeace. New coal power stations designed to burn Europe’s massive deposits of lignite pose a serious threat to the continent’s decarbonisation efforts, according to figures released on Wednesday.
Analysts from Greenpeace’s Energydesk compiled data from the German government that shows burning Europe’s reserves of lignite would wipe out the EU’s entire carbon budget from 2020 until the end of the century………………………………………..Full Article: Source

Posted on 28 August 2014 by VRS |  Email |Print

The Mayor of Warsaw has complained to the Polish government that 2030 clean energy goals which Poland believed too radical were in fact unambitious, undemocratically decided, and risk spiking EU decarbonisation moves, in a letter seen by EurActiv.
The letter, which was sent to the deputy Prime Minister, Elizabeth Bieńkowska, on 14 August, will flush faces in the Polish government, not least because Warsaw’s mayor, Hanna Gronkiewicz–Waltz, is a senior member of Prime Minister Donald Tusk’s right-wing Civic Platform party………………………………………..Full Article: Source

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