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Commodities Briefing 23.Jun 2014

Posted on 23 June 2014 by VRS |  Email |Print

A meeting on commodities regulation held in Washington this week at times felt like an argument among lexicographers. The words “hedger” and “speculator” have long had agreed definitions in commodities markets, so much so that the Commodity Futures Trading Commission publishes them in its online glossary.
But as the agency, prodded by the US Congress, attempts to impose a new rule constraining speculators, the yin-yang nature of these two types of traders is blurring into grey………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Energy security is once again high on the political agenda. The recent events in Iraq and Eastern Europe force us to think about how we obtain the commodities that light our homes, keep us warm and fuel our transport.
European energy policy is struggling to reconcile conflicting objectives — cheaper energy, more infrastructure investment, lower carbon emissions. Into that tangle, we can add the prediction of the International Energy Agency that the European Union’s dependency on energy imports will increase from 60pc to 80pc by 2035………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

The second half of the year could prove quite interesting for commodities markets. Disruptions have plagued the market at times over the first six months of 2014, most notably dry weather in Brazil and the US, the Indonesian export ban and the recent insurgence in Iraq. The big question that is waiting to be answered in coming months is whether these events have been a taste of what lies ahead or whether commodities markets will return to a stable trajectory.
The focal point in the energy market over the coming six months will be negotiations on Iran’s nuclear programme. A permanent deal that credibly constrains the country’s nuclear ambitions in return for a lifting of sanctions on Iran could prove a major turning point for the oil market. In the midst of this, the insurgence in Iraq and Syria is a cause for concern………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Iraq will be foremost in investors’ minds in the coming week as oil price risk has returned to markets, complicating the task for central banks, whose policies are beginning to diverge for the first time since the global financial crisis.
Oil prices neared nine-month highs late last week, touching $115 a barrel, and the advance of militants in Iraq – the second-largest OPEC producer – is destabilizing oil markets. That has implications for inflation in the United States and Europe, as well as Asia’s export-oriented economies that are large net importers of oil………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

War in Iraq has lifted the oil price a little. Its long-term impact will be bigger. Before Islamist fighters seized much of northern Iraq, hopes that the recent era of stable oil prices would last rested heavily on the country. Its exports were expected to go on rising, providing lots of low-cost oil at a time when the depletion of mature fields elsewhere is beginning to bite into supplies.
The International Energy Agency has projected that Iraq’s production will jump from 2.5m barrels a day (b/d) now to 4.4m in 2015 and nearly 6m by 2020. Other forecasts have been even rosier. But as on so many occasions since 1980, war, sanctions and domestic upheaval have constrained the huge potential of OPEC’s second-biggest producer. The chances of restarting exports from northern Iraq (via a pipeline crippled by sabotage in March), and of investment and modernisation in the country’s south, are looking slimmer by the day………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

The record levels reached by the stock market this week have been tainted by just how marginal the gains have been. The S&P 500 closed at all-time highs three times in a row this week, gaining just over 1% by Friday. The weekly gains now resemble daily gains of yesteryear. In fact, the benchmark index has not had a daily move of more than 1% for more than two months. Still, the stock market is on track for solid monthly and quarterly gains barring a catalyst that may result in a long-awaited pullback.
Several such catalysts, such as sectarian war erupting in Iraq and consequently a sharp rise in oil prices, continued tensions between Ukraine and Russia and the Federal Reserve policy meeting were brushed off by investors in equity markets in the past week………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Hedge funds increased bets on rising crude prices to a record as fighting in Iraq threatened to disrupt supply from OPEC’s second-biggest member. Speculators raised their net-long position in benchmark West Texas Intermediate by 4.3 percent in the week ended June 17, U.S. Commodity Futures Trading Commission data show.
Futures reached a nine-month high on June 13 after fighters from the Islamic State in Iraq and the Levant, or ISIL, seized the northern city of Mosul and advanced toward Baghdad………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

The lightning-fast econo/political changes impacting the world’s oil alliances have critically undermined the solidarity of OPEC, while strengthening the new Russo/Chinese/Iranian block against the U.S./Canada/Mexico (NAFTA Alliance) and a weakening Saudi Arabia.
While the Saudis and Russia still represent the world’s only potential exporters of near 10 million barrels of oil per day, most OPEC members are in varying stages of disarray, preventing their adequate supply of the world’s oil needs. In fact, the runnerup OPEC suppliers, counted on to deliver one-third of the world’s energy requirements are on the verge of internal collapse………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Gold prices rose to their highest level since mid-April this week and market participants are keeping a close eye on $1,300 an ounce to see if the metal can stay above this psychologically important level.
August gold futures rose Friday, settling at $1,316.60 an ounce on the Comex division of the New York Mercantile Exchange, up 3.3% on the week. July silver rose Friday, settling at $20.949 an ounce, up 6.6% on the week………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Futures market speculators added to their overall bullish bets in the gold futures market last week for the second straight week as the weekly increase was the most since March, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.
The non-commercial futures contracts of Comex gold futures, traded by large speculators and hedge funds, totaled a net position of +78,295 contracts in the data reported through June 17th. This was a weekly change of +17,168 contracts from the previous week’s total of +61,127 net contracts that was registered on June 10th………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Almost a month after a rout in the price of gold sent mining stocks tumbling, a rally in the precious metal had them surging as doubts about the viability of the so-called economic recovery has investors thinking the Federal Reserve will continue to maintain its easy money policies.
The best performer was El Dorado Gold , which jumped 9% on the day, while Yamana Gold and Kinross Gold each closed the day about 6% higher. The veneer of better jobless claims and regional manufacturing data was not enough to convince Fed directors they shouldn’t keep their foot on the gas pedal for keeping interest rates near 0%, even if it meant igniting inflation later on……………………………………….Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Analysts and commodity traders continue to keep an eye on gold’s psychologically important $1,300-an-ounce level and prices start the week on a relatively softer note. To start the week, electronic trading of Comex August gold futures opened the Sunday North American evening/Monday Asian session at $1,314.90 an ounce, down from Friday’s pit close of $1,316.60 an ounce.
Although activity has been light, gold prices have been under fairly consistent selling pressure since the opening of Asian markets. As of 8:00 p.m. EDT, August gold was trading at $1,314.20 an ounce, down $2.40 or 0.18% on the day……………………………………….Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

They say the third time’s a charm - and if the narrowed range that has confined silver over the past two years is any indication, those participants patient enough should be rewarded handsomely for their extended stay on the long side of the field. Going into this month, silver was presenting a third iteration of the patterned reversal - with all of the positive momentum trappings that had defined the previous two.
Adding fuel to the fire and despite the fact that silver had maintained a bid above last years low, those late to the short-side of the tracks or holding more dogmatic persuasions had built up a dangerously large short position almost 50% above last years record congregation………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Hedge funds and other money managers are increasing their bets against copper, according to U.S. data, amplifying pressure on prices following allegations of fraudulent metal-backed financing in China.
The wagers are likely to further weigh on the outlook for one of the world’s most heavily traded metals, as the effects of an official probe on stockpiles in the eastern Chinese port of Qingdao continue to ripple across global markets. The port’s operator has confirmed that Chinese authorities are investigating allegations of fraud relating to stockpiles of metals, though the government hasn’t commented publicly……………………………………….Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Hopes of a recovery in the iron ore price could be dashed by reports that a financing scandal has put the brakes on imports of iron ore and copper at key Chinese ports. Just days after iron ore minnow Termite Resources shuttered its Cairn Hill iron ore mine in South Australia, reports in the Wall Street Journal suggest that banks are examining allegations that a Chinese trading company pledged metal as collateral to more than one lender.
Chinese traders have long used commodities such as iron ore and copper as collateral to borrow from overseas, thus avoiding both China’s capital controls and its higher interest rates………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Exchange traded funds can charge as little as 0.1% in fees – and allow you to follow indices from Azerbaijan to Vietnam. They sound like an obscure financial instrument for City traders only. But exchange traded funds (ETFs), which track a huge range of markets and commodities, are exploding in popularity among small investors in Britain and across the globe.
There was a record £268bn invested in ETFs by the end of April in Europe, while in the US, the figure is now more than a trillion pounds. Investors have been lured by ultra-low costs and the extraordinary range of indices they can follow………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

When managing your own portfolios, an exchange traded fund investor should have a plan in place to act as a guiding North Star in navigating the changing markets. Investors who plan on managing their own investment portfolios should stick to a plan that would help them stay the course as a way to limit trades based off capricious, emotional responses.
Gary M. Stern for Bankrate outlines five simple tips self-directed investors can use as a guide. Have a plan. Many do-it-yourself investors hop from one investment to another, often buying high and selling low, as they chase hot money………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Gold ETFs started 2014 on a positive note after a dismal 2013 as net ETF outflows in gold were zero in contrast to the 177 tons of outflows witnessed in the year-ago quarter. Last year, gold ETFs had suffered massive outflows as the slump in prices tarnished its image as a gold haven, thereby affecting demand for gold ETFs.
In the first quarter, tensions in Ukraine and concerns over the global economy made investors flock to gold as a risk diversifier, which resulted in positive monthly inflows to ETFs in February, for the first time in over a year. This was repeated in March. Extreme low valuation also opened up buying opportunities for gold ETFs………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

The combination of fundamental underlying demand, low valuations, relatively high yields and a renewed management focus on shareholder returns is poised to send commodity shares surging. That claim could have been made at just about any point over the past two years, as indeed it has been repeatedly. But if the sector is primed for a bull run, investors may as well own anything – active or passive.
The prolonged bear phase has revealed those managers who have been able not only to protect but actually to add value during the slump………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Hedge funds got more bullish on sugar before prices climbed to the highest since October as dry weather threatened supply from India to Brazil.
Money managers raised their net-long position for the first time in four weeks. A lack of rain in Brazil is compounding damage from the first-quarter drought and will cut yields, says Job Economia & Planejamento, a researcher in Sao Paulo………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

Buzz about the rise of China’s currency has run far ahead of sedate reality. If headlines translated into trading volumes, the yuan would be well on its way to dominating the world’s currency markets. It once again graced front pages this week after moves to lift its status in London, the world’s biggest foreign-exchange market.
This was the latest instalment of a five-year-long public-relations campaign. Since 2009, when China first declared its intention to promote the yuan internationally, a string of announcements and milestones has cast the Chinese currency as a putative rival to the dollar………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

The Sudanese pound (SDG) appeared to be on the verge of hitting a new low milestone against the United States dollar (USD) which is likely to further aggravate the country’s economic woes. Currency dealers on the black market said that 1 USD is now trading for 9.6 SDG, up from 9.4 last week. Sudan’s Central Bank indicative exchange rate for the USD stood at approximately 5.7 SDG.
According to traders, the USD being in extremely short supply relative to the high demand pushed the SDG further down. Individuals and businesses alike monitor the informal market’s exchange rate to gauge the state of the economy and make plans accordingly………………………………………..Full Article: Source

Posted on 23 June 2014 by VRS |  Email |Print

The tortuous debate over climate change policy has uncanny echoes of the debate over a universal healthcare system in Australia. With tremendous popularity at the time, the government of the day overcame the entrenched opposition of medical lobby groups to introduce Medibank in the second half of the 1970s, only to have the next federal government do what it could to reverse key elements of it.
It was not until after the next change of government in Canberra that a renamed Medicare universal healthcare policy was put back in place, again with some changes to the original plan. Despite tinkering by successive governments since, it has remained broadly intact………………………………………..Full Article: Source

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