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Commodities Briefing 03.Dec 2014

Posted on 03 December 2014 by VRS |  Email |Print

Leading meteorologists are on the verge of declaring the emergence of the El Niño weather phenomenon after chances of its occurrence were downgraded earlier this year. Agricultural experts and farmers keep a close watch on the development of the weather phenomenon, caused by a warming of Pacific sea surface temperatures.
El Niño, which means “little boy” in Spanish, can trigger extreme weather in various parts of the world. In the past, it has caused droughts in south and southeast Asia and Australia and floods in parts of Latin America. It also warms the waters of the Pacific Ocean, affecting fishing off the coast of Peru………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

New Zealand commodity prices declined for the ninth consecutive month in November, to the lowest level since February last year, as milk powder prices fell to five-year lows. The ANZ Commodity Price Index dropped 1.6 per cent to 286.3 last month, 12.4 per cent lower than its reading the same month a year ago and the lowest for a November month since 2012. Skim milk powder fell 7 per cent, while whole milk powder dropped 6 per cent, with both series at their lowest since 2009.
Today’s data comes ahead of the GlobalDairyTrade auction overnight. Since the start of the year dairy prices have halved at the GDT auctions as over-supply and weaker demand in China, the biggest destination for New Zealand’s largest export, weighs on prices………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

Put simply, global oil supplies are exceeding demand and driving down prices in the process. A major factor has been the explosion in U.S. oil production, which is up to almost 9 million barrels per day and expected to hit the highest levels in four decades next year.
Another factor is the struggling economies in Asia and Europe leading to a decrease in oil consumption. China, one of the world’s largest oil consumers, has seen its economic struggles result in its demand for oil being outpaced in Asia by India, a country that has also struggled financially of late. Saudi Arabia also cut the price of its own crude to the U.S. earlier this month, which has further propelled the sell-off………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

International Monetary Fund chief Christine Lagarde on Monday said falling oil prices will help boost economies in the U.S. and across much of the globe, a net positive for a world struggling with slowing growth. “It is good news for the global economy,” Ms. Lagarde said at The Wall Street Journal CEO Council annual meeting.
Oil prices tumbled to multiyear lows last week after the Organization of the Petroleum Exporting Countries decided to maintain its production quotas, rather than lowering its output target. Lower oil prices are good for most consumers, who pay less for gasoline, but could squeeze energy companies and the economies of some major producers like Russia and Venezuela………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

Russia’s Economic Development Ministry has downgraded its 2015 oil price forecast to 80 dollars per barrel and this year’s average — to 99 dollars per barrel, Deputy Economic Development Minister Aleksey Vedev told the media on Tuesday.
“The expected average price of oil next year has been down to 80 dollars per barrel from 100 dollars,” he said. “Since the oil prices are on the decline now, the 2014 price of the Urals blend should be lowered to 99 dollars from the originally expected average of 104 dollars.”……………………………………….Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

America’s energy industry is battling OPEC with a ferocity not seen since the 1980s. So far, it’s not backing down. The oil cartel’s decision last week not scale back on production was widely seen as an attempt to choke off the U.S. shale boom. OPEC figures that by driving down oil prices, North American producers will collapse.
Both sides are feeling the heat as oil prices stay below $70. Oil rich nations are losing out on much-needed revenue to bankroll their budgets, and many domestic energy players are feeling the pressure as well………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

Saudi Arabia’s former spy chief Prince Turki said world’s biggest oil exporter won’t surrender market share to anyone. Saudi Arabia’s influential royal Prince Turki al-Faisal al-Saud has said the kingdom would only consider cutting oil production if Iran, Russia and the US agreed to match those cuts because it wants to protect its market share.
Speaking in London, the Prince who is a senior Saudi royal and the former head of the country’s spy agency, said that the kingdom would not repeat previous mistakes of surrendering its share of the global market for crude to its rivals………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

The gold price will end next year at $1,250, with the negative impact of the US interest-rate rises in the second half of the year likely to keep prices above $1,100, Commerzbank said. “We expect the gold price to remain under pressure initially in the first half of next year on the back of growing speculation about increasingly imminent interest rate hikes in the US,” the bank said.
“The gold price is likely to bottom out at the onset of the cycle of rate hikes in the second quarter,” it added. Spot gold was last around $1,200 per ounce, down significantly from a 2014 peak of $1,388 in March and up from four-year lows at $1,131.60 in November………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

Citi Research forecasts 2015 gold prices to average $1,220 an ounce and silver prices to average $16.50 an ounce, saying they are neutral on the prices for those precious metals. The bank says it is bullish on platinum and palladium prices, forecasting average 2015 prices of $1,350 an ounce and $870 an ounce, respectively.
All of these price forecasts are above current price levels. Gold prices fell under a host of bearish influences, from negative investor sentiment, a stronger U.S. dollar and low inflation expectations, Citi said. The metal may continue to see weaker prices, but “there are increasing reasons to think that further downside moves will be limited,” they said………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

London property and gold — the two safest places to put your money, or so the saying goes in recent years. For the past several years, owners of London property have watched with delight as the values of their homes have spiked annually well into double digits.
With gold, as has been the case for thousands of years, it has provided a tradable commodity which investors have turned to in uncertain times. It’s a safe haven, the asset of last resort. But with quality gold ore becoming increasingly hard to find, a Canadian company has ventured 125 kilometers (78 miles) into the Arctic circle to build Europe’s largest gold mine………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

The final month of the year is upon us and many ETF investors are likely considering making changes to their holdings as a result of annual rebalancing, required minimum distributions, or a change in their investment profile. These rituals can be an important step in ensuring you stay within your asset allocation targets and give you the ability to objectively analyze your underlying positions to see if any strategic changes should be made.
However, there are also several important factors to take into consideration before you make any drastic changes to your investment portfolio. Namely you should analyze the impact of taxes, transaction costs, and redistribution of capital to various asset classes in accordance with your outlook for 2015………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

The message from last week’s emergency-session meeting in Vienna of the Organization of Petroleum Exporting Countries was unequivocal: We are ready to live in a world of lower-priced oil.
The decision within OPEC was not unanimous, but it was indisputable. OPEC is divided into three categories: the Saudis, the low-price producers, and everyone else. The Saudis hold a special place within the organization and are viewed as “first among equals;” this is for several reasons………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

The dollar rebounded on Tuesday, supported by a retreat in oil prices that has helped to lift it against commodity-linked currencies. In afternoon New York trade, the dollar index reached a 4-1/2 year high, while gaining 1.30 percent against the Norwegian crown and hitting a fresh seven-year high against the yen.
Upbeat comments from two influential U.S. Federal Reserve officials stressing the positive impact on the U.S. economy of the drop in energy prices contributed to the greenback’s strength………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

Nigeria’s currency tumbled to record lows on Tuesday, hammered by falling oil prices that have weighed on Africa’s top economy as it heads toward an election.
Nigeria overestimated oil prices this year by a wide margin—and is now suffering. Economists fear weak oil prices may prevent Africa’s most populous nation from hitting the 7% growth the International Monetary Fund has forecast for this year………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

The recent decision by the Bank of Japan to increase the scope of its quantitative easing is a signal that another round of currency wars may be under way. The BOJ’s effort to weaken the yen is a beggar-thy-neighbor approach that is inducing policy reactions throughout Asia and around the world.
Central banks in China, South Korea, Taiwan, Singapore, and Thailand, fearful of losing competitiveness relative to Japan, are easing their own monetary policies – or will soon ease more. The European Central Bank and the central banks of Switzerland, Sweden, Norway, and a few Central European countries are likely to embrace quantitative easing or use other unconventional policies to prevent their currencies from appreciating………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

United Nations carbon credits for December fell to a record as holders of the offsets seek to sell them before they expire in March. Front-year Certified Emission Reductions dropped 20 percent to 0.04 euros ($0.05) a metric ton today on London’s ICE Futures Europe, the lowest since the contract began trading in 2008.
Prices for the credits that rich nations from Germany to Australia use to offset domestic emissions by investing in green projects elsewhere have lost more than 99 percent from a 2008 peak as slowing global growth cut demand. CERs for emission cuts before Dec. 31, 2012, can’t be used after March 31 in the EU’s emissions trading system nor by nations with climate targets under the 1997 Kyoto Protocol………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

The Bank of England is to conduct an enquiry into the risk of fossil fuel companies causing a major economic crash if future climate change rules render their coal, oil and gas assets worthless.
The concept of a “carbon bubble” has gained rapid recognition since 2013, and is being taken increasingly seriously by some major financial companies including Citi bank, HSBC and Moody’s, but the Bank’s enquiry is the most significant endorsement yet from a regulator………………………………………..Full Article: Source

Posted on 03 December 2014 by VRS |  Email |Print

CEOs from major U.S. companies do not expect strong economic growth in 2015. The Business Roundtable’s fourth-quarter CEO Economic Outlook Index, a composite index of CEO expectations, fell slightly from the third quarter with declines concentrated in capital spending.
The index declined to 85.1 for the fourth quarter, compared with 86.4 in the third quarter. A reading of 50 or above indicates economic expansion and below 50, an economic contraction. The long-term forecast is at 80.3. Gross domestic product in 2015 is expected to grow 2.4 percent, consistent with the CEOs’ 2014 forecast………………………………………..Full Article: Source

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