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Commodities Briefing 16.Dec 2014

Posted on 16 December 2014 by VRS |  Email |Print

Agricultural commodities are likely to remain volatile globally in 2015, with strong buying support on lows to keep prices elevated in the first half. However, global oversupply could pull these down in the second half.
A Rabobank study says the fundamentals in agri commodities appear more balanced through 2015, resulting in narrower trading ranges for many commodities versus 2014. On the demand side, growth has slowed in recent years. However, lower price levels should now encourage consumption growth, which will support prices. However, a strengthening dollar, uncertain Chinese demand growth, slowing biofuel demand and weakness in crude oil prices might spoil the party………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

Hedge funds returned to a net long position in Chicago wheat for the first time in six months as they made a sharp rise in bullish positioning on ags – an increase potentially spurred by the weakness in other commodities.
Managed money, a proxy for speculators, lifted its net long position in futures and options in the top 13 US-traded agricultural commodities, from cotton to sugar, by more than 55,000 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

The most powerful nations in Opec are willing to push prices as low as $40 a barrel in their bid to take on Russia and US shale, according to a high-profile Gulf oil minister.
Suhail al-Mazrouei, energy minister of the United Arab Emirates, said that the organisation will let prices fall by more than $20 per barrel before they consider an emergency meeting to cut production. “We are not going to change our minds because the prices went to $60, or to $40,” he said………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

The head of Opec has reiterated that it will not try to shore up plunging oil prices by reducing production. “The decision has been made. Things will be left as is,” said Abdallah Salem el-Badri, secretary general of the oil producers’ cartel, speaking in Dubai. On Friday Brent crude dropped below $62 a barrel, its lowest price since 2009.
“The fundamentals should not lead to this dramatic reduction [in price],” Mr el-Badri added. Mr el-Badri said Opec was “assessing the situation to determine what the real reasons behind the decrease in oil prices are”. The comments are Mr el-Badri’s first since Opec’s meeting in Vienna last month, where it decided to leave production levels unchanged………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

Crude oil prices are poised to fall below half where they were six months ago, before producers begin dealing with a global glut. Brent, the global benchmark, will slide to as low as $50 a barrel in 2015, according to the median in a Bloomberg survey yesterday of 17 analysts, down from the $115.71 a barrel high for the year on June 19.
The grade has already collapsed 47 percent since then and needs to fall further before producers clear the current glut, said five out of six respondents who gave a reason………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

The world’s big banks would like to draw a line under their recent troubles. The losses from the financial crisis, the costs of regulatory change and the fines from mis-selling and market manipulation scandals appear largely in the past.
For once, another sector is suffering a series of blows. Within a matter of months, the falling oil price has wiped as much as 25 per cent off the market values of the oil majors. But might the bankers be smiling too soon? Could the oil market turmoil become the banks’ next nightmare?……………………………………..Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

Paul Krugman made the point recently that the only stock market forecasters who correctly predicted a market drop were those who always predicted falling markets. This is known as the ‘stopped watch’ approach to forecasting: constantly make one prediction and eventually the market will move in that direction.
Especially for oil prices, which are highly variable, this works wonders to the point where the great Adam Sieminski often joked that you should predict the price or the date, but not both………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

Natural gas climbed the most in almost two weeks as traders braced for a colder end of the month than previously forecast. Futures rose as much as 3.7 percent, the most since Dec. 2, making the fuel the best performer among 22 raw materials in the Bloomberg Commodity Index. Colder-than-normal temperatures are expected for the upper Midwest by Dec. 26, for Texas by Dec. 27 and the east coast by Dec. 28, forecaster Commodity Weather Group LLC in Bethesda, Maryland, said in an e-mailed report.
“The market is reacting to new forecasts pointing to a colder end to December,” Moses Rahnama, an analyst at London-based consultants Energy Aspects Ltd., said by e-mail today. “We don’t know how cold it will get, but definitely colder than previously forecast. Models are also pointing to possibly a colder January.”……………………………………..Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

A stronger dollar and fresh five-year lows for oil saw bears return to the gold market on Monday with the metal sinking through the psychologically important $1,200 an ounce level in relatively quiet trade.
On the Comex division of the New York Mercantile Exchange gold for February delivery was changing hands for $1,193.30 an ounce in afternoon trade, down $29.20 or 2.4% from Friday’s close and near the bottom of its trading range. The oil price, which usually move in tandem with gold, tanked again on Monday to trade at $55.28 a barrel on Thursday, hitting the lowest level since May 2009………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

The US Federal Reserve will hold 2014’s last policy meeting on 17-18 Dec. How the meeting will impact the gold market? “The gold market will point upward in the short term if the Fed announces to leave its rate unchanged at lows for a considerable period at its final policy meeting of 2014,” an analyst from Jinyou Futures said.
The recent rally in gold price was due mainly to weakness in global equities markets, growing risk aversion sentiment, and short covering, the analyst added. “The gold price, however, will fall in the medium and long term due to pressures from market expectations towards the hike in US’s interest rate,” the analyst predicted………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

A glance at any gold price chart reveals the severity of the bear mauling it has endured over the last three years, writes Jeff Clark at Casey Research’s Big Gold letter. More alarming, even for die-hard gold investors, is that some of the fundamental drivers that would normally push gold higher, like a weak US Dollar, have reversed.
Throw in a correction-defying Wall Street stock market and the never-ending rain of disdain for gold from the mainstream and it may seem that there’s no reason to buy gold; the bear is here to stay. If so, then I have a question. Actually, a whole bunch of questions. To start, if we’re in a bear market, then…Why Is China Accumulating Record Amounts of Gold?……………………………………..Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

Silver broke out of its 5-month downtrend last week as expected, but, as with gold, the move was unfortunately not confirmed by action in stocks, which have continued to drift lower. When this fact is combined with the ramping of Commercial short and Large Spec long positions over the past couple of weeks, it starts to look like this breakout was false. Certainly a reaction is looking a lot more likely now.
On its 6-month chart we can see the breakout move last Tuesday, and how there has been no follow through, increasing the risk of it turning lower again. However, the high volume bull hammer at the start of the month continues to have bullish implications, so what may happen here is that silver backs off to do more base building work before a sustained advance can get underway………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

That’s what everyone always wants to know. But no one will ever find out. Let’s say a patient who smokes a pack of cigarettes a day enters a medical office and asks the doctor, “When will I get cancer?” The doctor’s response is likely to include recommendations to schedule regular office visits and to alter the patient’s habits – because, of course, the answer to the patient’s question is simply unknowable.
In that vein, if you’re about to download our latest report – “2015 Metal Buying Outlook” – in the hopes of gaining an exact price forecast for the metals you buy 6 months or even 1 year from now, you may be disappointed. However, what we can give you is even more valuable………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

China Tibet online reported that in the most recent developments regarding consolidation of the rare earths industry in China, Baogang Rare Earth Group announced it would change its name to China North Rare Earth Group Co. Ltd after making “significant progress” merging with five smaller companies in north China’s Inner Mongolia Autonomous Region and Gansu Province.
As quoted in the publication: Boasting a mine with the world’s biggest reserve of rare earth, BREG dominates the Chinese market of light rare earth products, and is a leading rare earth producer and processor globally………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

Most commodity-related exchange traded funds track a basket of futures securities. Consequently, investors should understand how the underlying futures markets work and the effects they will have on ETFs.
In a paper titled The Strategic and Tactical Value of Commodity Futures, Claude Erb and Campbell Harvey argue that returns on commodity futures can be broken down into four parts: the risk-free rate, the spot-price return, the roll yield and the diversification return, writes Morningstar strategist Samuel Lee………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

The ruble collapsed by 10 percent against the U.S. dollar Monday earning the Russian currency the dubious laurels of the world’s worst-performing currency this year. The Russian currency has now fallen 49.3 percent against the greenback since January, according to data from the Moscow Exchange. The drop takes it below the Ukrainian hryvna, which has weakened 47.9 percent in 2014.
Monday’s plunge was the largest single-day fall for the ruble since the financial crisis of 1998 when Russia was forced to default on its debt after exhausting its reserves in a fruitless bid to prop up the currency………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

The Russian rouble is among the worst-performing currencies this year, shedding nearly 40 percent of its value against the U.S. dollar year to date. The recent slump in energy markets could signal more losses ahead, following central bank governor Elvira Nabiullina’s decision last month to tie the rouble’s fortunes to the price of oil.
Fuel prices have been in a downtrend since June, losing nearly 50 percent of their value, on the back of a price war waged by OPEC (the Organization of Petroleum Exporting Countries) against the U.S. shale producers and as demand from China decreased amid slowing growth………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

China’s top economic planning agency has released basic rules for a nationwide emissions trading scheme, expected to be launched in 2016. The regulations published by the National Development and Reform Commission (NDRC) make formal China’s plans to launch an emissions trading scheme, set to be the world’s biggest.
China, the world’s largest emitter of climate-changing greenhouse gases, aims to use the market as a key tool to halt the growth of its emissions by the end of next decade………………………………………Full Article: Source

Posted on 16 December 2014 by VRS |  Email |Print

The BRICS grouping of emerging market nations is leading the flight of illicit capital from the developing world, according to data in a new report released this week. In its annual estimate of illegal capital flows, Washington-based think-tank Global Financial Integrity (GFI) said it a record $991 billion was siphoned in 2012 from the world’s developing economies, an increase of almost 5 percent from 2011.
Illicit capital incorporates such things as misinvoicing of trade whereby exports and imports are booked at different values to avoid taxes or to hide large transfers of money……………………………………..Full Article: Source

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