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Commodities Briefing 03.Sep 2014

Posted on 03 September 2014 by VRS |  Email |Print

Financial institutions could remain active in commodities markets following the dismissal of antitrust litigation that accused major banks and the London Metal Exchange of conspiring to artificially inflate aluminum prices, according to several U.S.-based aluminum traders.
A U.S. court recently dismissed the remaining claims against Hong Kong Exchanges & Clearing Ltd. (HKEx) and its subsidiaries, the LME and LME Holdings Ltd. (LMEH), in the class-action lawsuits. Other defendants included Baar, Switzerland-based Glencore Plc, New York-based Goldman Sachs Group Inc., New York-based JPMorgan Chase & Co. and their respective warehouse subsidiaries………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Global commodity prices fell in August, with declines across a broad range of commodity types. Our indicator suggests the IMF commodity price index is likely to have fallen by -4.0% in August, to be -4.2% lower than a year earlier. For the second month in a row, oil prices fell noticeably despite on-going geopolitical tensions.
Meanwhile, the prospect of a good harvest in the northern hemisphere continued to weigh on a broad range of agricultural commodity prices, particularly grains and vegetable oils. Metals prices were more mixed, with aluminium continuing its recent price gains, while copper and nickel prices fell. (Press Release)

Posted on 03 September 2014 by VRS |  Email |Print

It’s quite the strange duality when you think about it. Undoubtedly, water is the single most important thing on earth….ok, so maybe it’s the second most important thing (sorry, oxygen) - but you get the idea. If I go to the store and there’s no bread, I would be shocked, and certainly annoyed, and that would be about it.
But if I turn on my faucet and nothing comes out, I’m about 15 hours away from turning into Mad Max - and so are you. So why is water so underappreciated? Why, when I live in a state that’s experiencing a once-in-a-generation drought that could become economically catastrophic in a heartbeat, can my home water bill be just 75 bucks a month?……………………………………….Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

As an oil cartel, the Organization of Petroleum Exporting Countries is a fixture of the world’s energy system – not particularly liked, but begrudgingly accepted. The national oil companies within the sphere of OPEC, with their opaque accounting practices and byzantine corporate structures, monopolize vast reserves of easy oil and repatriate to their home treasuries gargantuan stores of western currency.
In an increasingly global, transparent and unconventional energy age, OPEC goes against the grain. The untold mineral riches of its member nations, most of which are Middle Eastern, has given them a sense of confidence – some might say arrogance – that lets them, by and large, ignore energy developments elsewhere in the world and continue on with business as usual………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Oil prices dropped more than $3 a barrel Tuesday as disappointing Chinese and European economic data and a stronger dollar weighed on demand expectations. Oil prices have tumbled in recent weeks as weak demand from European and Asian refineries forced sellers to cut prices and global supplies remained ample despite violence in some regions. Recent data indicates that tepid demand could continue in the coming months.
U.S. oil prices rose last week for the first time in five weeks as traders who had bet on lower prices closed out their wagers, in case unrest in any geopolitical hot spots worsened during the long holiday weekend. The Nymex market was closed Monday for Labor Day and reopened Tuesday………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Oil supplies from the Middle East have been savaged by violence, sanctions and instability. Libya, home to Africa’s largest oil reserves, has cut exports by 80% since its ports fell into the control of militias last year. Sanctions have cut 1.5m barrels of oil a day from Iranian exports while strife in Iraq, Venezuela and Nigeria has cost hundreds of thousands of barrels a day in production.
All up, about 3.5m barrels of oil from these regions has been stricken from global supply. Yet oil prices have fallen. In fact, the past four years have seen the most stable prices in recent history. How is that possible with so much conflict and strife? There is a new force in global oil: North America………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Gold prices fell to a two-month low and palladium posted its steepest decline in two months overnight, as pressure from a stronger US dollar snuffed out investor appetite for the haven assets. Gold for December delivery, the most actively traded contract, fell $US22.40, or 1.7 per cent, to $US1265 an ounce, the lowest closing price since June 11 on the Comex division of the New York Mercantile Exchange.
The US dollar gained on investors’ expectations of stimulus efforts by the European Central Bank after its chief Mario Draghi signalled that further accommodative steps are necessary to revive the region’s economy. The ICE dollar index, which tracks the greenback against a basket of currencies, rose to 83.03, its highest level in more than a year………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

HSBC said Tuesday it sees gold trading in a range of $1,150 to $1,350 an ounce during the remainder of 2014 in a market “searching for a new equilibrium” with a number of offsetting factors. The bank left its 2014 average price forecast at $1,292 an ounce and listed 2015 and 2016 forecasts of $1,310 and $1,345.
“Gold is searching for a new equilibrium after last year’s price plunge, which ended the more than decade-long bull run,” HSBC said. “The massive gold-exchange-traded funds (ETFs) outflows of 2013 –which were instrumental in driving prices lower – have largely abated. Another positive is that net long positions on the Comex are rebuilding. Other factors supporting prices are that mine production gains are plateauing, scrap supplies are down and central bank demand is steady.”……………………………………….Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Gold and silver are at a critical juncture - either they break down to new lows soon or a major new uptrend is about to start. Which is it? - while we cannot be 100% sure either way, we can certainly attempt to figure which way they are likely to break.
Many have been tempted to conclude, because of the dismal response to date by the Precious Metals to the growing geopolitical tensions in various regions of the world, that this is an indication of intrinsic weakness, and that they are therefore destined to break down soon, but there is another way of looking at it………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

September is the hottest month of the year for gold prices, rising on average 3% over the past 20 years. As the yellow metal tests hovers off 2-month-lows, Bloomberg notes that “Indian jewelers and dealers will be stocking up in the coming weeks,” ahead of the festival period, which runs from late August to October (andis followed by the wedding season) when bullion is bought for part of the bridal trousseau or in jewelry form as gifts from relatives.
As GoldCore’s Mark O’Byrne notes, “a lot of traders are aware of this trend towards seasonal strength… They tend to buy and that creates momentum.” The pattern of trading in precious metals changed for the better this week. After London’s bank holiday on Monday, for the first time in a long time the market opened in London’s pre-market with higher prices………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Exchange traded products tracking commodities ranging from palladium to wheat have been in focus due to geopolitical tensions this year with the ETFS Physical Palladium Shares residing as this year’s top-performing physically-backed precious metals ETF due to Russia’s status as the world’s largest palladium producer.
Another commodities ETF, though of the equity-based variety, could be the next to get a lift from the goings on in Russia: The Market Vectors-Coal ETF. Somewhat quietly, KOL gained 2.7% last month and the ETF’s run may not be over………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Solar stocks were victims of growth and momentum meltdown this year but roared higher last month. This was primarily thanks to improving industry fundamentals including a high level of panel installations, a surge in demand for solar power, supply shortfall expectation, falling equipment and financing costs as well as stable incentives.
Though uninspiring earnings from most of the solar companies and increased regulatory policy took a toll on the stock prices last week, this could be viewed as a solid entry point given the bright outlook for the industry……………………………………….Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

Investors plowed about another $15 billion into exchange-traded funds so far this month and, together with the S&P 500 Index rising to the 2,000 milestone, total assets in U.S.-listed ETFs rose 3 percent in August to a record of nearly $1.913 trillion.
Still, the pace of asset gathering for the 21-year-old ETF industry is lagging 2013. A total of about $106 billion has been hauled in year-to-date, compared with more than $131 billion in the first eight months of 2013. Indeed, it looks unlikely, but not impossible, for asset gathering this year to top last year’s record level of $188 billion………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

The investment binge in U.S. agriculture funds has ended as record crops and the promise of improving meat supplies send prices plunging. After taking in more money than precious metals or energy funds during the first five months of 2014, exchange-traded products backed by agriculture had a net outflow for the year of $57.7 million as of Aug. 29, down 2.9 percent, data compiled by Bloomberg show.
Energy, precious-metal, industrial-metal and broad-based funds saw net inflows over the period, boosting total raw-material investment by $341 million, or 0.5 percent………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

In 2014/15, the world cotton industry is expected to enter its fifth consecutive season in which production exceeds consumption. World production is forecast to decline by 400,000 tons to 26.05 million tons while consumption could grow by 4% to 24.4 million tons, resulting in a surplus of 1.7 million tons, according to a report by International Cotton Advisory Committee (ICAC).
Since 2010/11, world production will have exceeded consumption by a cumulative 12.3 million tons and by the end of 2014/15, would reach nearly 14 million tons. Much of the surplus is held by the Chinese government, but this season, more of the surplus will shift to the private sector in China and other producing countries………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

The end of the U.S. labor market holiday on Monday ushered in important developments in currency and commodities markets worldwide. In the currency market the Euro hit a one-year low of $1.3117. Some have linked the Euro’s drop to policy decisions that will be made by the European Central Bank this coming Thursday. Market participants are not expecting the ECB to make major easing steps Thursday.
The common currency is expected to remain under pressure until the meeting. The meeting comes at a time where Europe has seen a steady decline in headline inflation rates, the collapse of German bond yields, and calls by the president of the ECB to encourage growth friendly fiscal policy………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

While the Ruble is breaching government mandated price controls; Russian Central Bank heads are still keen to proceed with plans to remove currency controls which analysts say in the long run with be net positive for the Russian economy.
Russia’s currency has hit its lowest level ever against the U.S. dollar as the risk of new Western sanctions threatens more economic hits. The European Union said Saturday it was preparing to issue new sanctions as soon as this week in response to signs that Russia had sent troops into Ukraine. The ruble has declined by about 13 percent this year. One dollar will now buy you about 37.5 rubles………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

South Korea has delayed a proposed tax on vehicle carbon emissions by over five years to the end of 2020, but confirmed it would push ahead with plans to begin its carbon emissions trading scheme from the start of 2015, finance minister Choi Kyung-hwan said on Tuesday.
The finance ministry said in a meeting with other ministers that the so-called smog tax, which has already been postponed by more than two years, would place too much of a burden on industry if it was launched at the same time as the carbon trading scheme………………………………………..Full Article: Source

Posted on 03 September 2014 by VRS |  Email |Print

China is the world’s largest emitter of greenhouse gases. Historically, it has been reluctant to cut emissions, fearing that doing so could impede its economic growth. But there are signs that position is shifting. Late last year, the government banned the building of new coal power plants in particular areas due to air pollution concerns. Now it has announced it will seek to implement a national carbon market by 2016.
The announcement wasn’t much of a surprise. Since 2011, China has been developing seven pilot carbon markets with the aim of one day creating a national scheme. The National Development and Reform Commission – the department responsible for the schemes – has long said it wants to include plans for a national market in China’s next five year plan………………………………………..Full Article: Source

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