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Commodities Briefing 02.Jan 2015

Posted on 02 January 2015 by VRS |  Email |Print

Global commodity prices marked a fourth straight annual decline in 2014 in their longest losing streak in 23 years, as lingering concerns about global economic growth battered appetite for raw materials, while producers didn’t hold back supplies and worsened a glut.
Brent crude oil led the broader fall in demand by hitting last year its lowest since 2008, gold dropped for a second straight year for the first time since 1998, copper capped the worst losses in three years, iron ore hit a five-year trough and some farm items were hovering around their meanest since 2009, as any credible sign of a demand recovery remained elusive. Despite rock-bottom interest rates in the US, the dollar stayed strong last year, making imports of raw materials less attractive to users of other currencies and further weighing on demand………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Commodities have had a bad run last year and their losing streak could linger on into 2015, Credit Suisse Private Banking said in a report. Commodity prices fell this year and markets are still facing oversupply, commodity strategy analyst Stefan Graber noted.
He said that the oversuppy was due to “excessive” capital expenditure over the past few years. Since demand for commodities does not seem to be picking up, prices will have to fall further until production declines, he said, adding: “As commodity projects have long lead times, this process will take time.”……………………………………….Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

It might seem counterintuitive, but the start of a new year is the perfect time to reflect on lessons learned in commodity marketing. Analysts say several fundamental messages become apparent for crop and livestock producers during 2014.
For row-crop producers, lessons stem from basic principles of risk management. “Watch your volatility,” advises Bill Biedermann, Allendale, Inc. “Try to manage around that.” Referencing the dramatic downturn in crop prices, Angie Maguire of Citizens LLC says 2014 proved to be “the same as ’12, just the opposite” from a price perspective………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

In the third quarter of 2014, commodity price weakness was one of the most dominant themes in financial markets. Most commodities we track were not able to withstand this strong down trend. Oil prices dropped because of ample supply, political factors, concerns about the demand outlook and a higher US dollar. Precious metals were also hit hard. Silver was the worst performing precious metal, while gold was the best performing one, while still losing 8%.
Base metals, except nickel, did relatively well, because of a lower sensitivity to the US dollar and a less substantial supply overhang. Commodity supply, the global growth outlook and the US dollar, will continue to play dominant roles in the first quarter of 2015. Oversupply will remain a challenge for energy markets. This will continue to depress oil prices in 2015, in our view………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The coming Year of the Sheep will no doubt be an interesting one, filled with a lot of uncertainties. Collapsing oil prices are a new wild card that has just been introduced into an already weak global economy — a development that likely will shape what happens in 2015.
Looking back, oil prices for much of the past decade have been high — at about US$100 per barrel since 2010 — largely because of rising oil consumption in countries such as China and geopolitical conflicts in major oil nations. As oil production was tight compared to high demand, prices increased………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Some predictions are easy to make because they are simply acknowledgment of reality. Best example: The sun will come up, but solar power will remain unreliable, unpredictable, expensive, and the darling of environmentalists. On a more serious note, Libya can be expected to remain unstable, given that the opposing forces are too balanced for one to become dominant quickly. Production will fluctuate.
Similarly, expect uncertainty about the Middle East political situation, including Abadi’s attempt to establish a stable government in Iraq and the ongoing negotiations with Iran over its nuclear research program. Both will have some impact on the market, causing minor price fluctuations, but where nothing but time can convince observers that Iraq is stable, an agreement with Iran could send prices plummeting………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The oil price is expected to “bounce back” from five and a half year lows this year – but North Sea activity will continue to decline, energy policy experts have predicted. Energy economics consultancy CEBR Energy said that the recent fall in oil prices “overshot” last year as Opec maintained production in the face of increasing US shale supplies.
On New Year’s Eve, oil prices fell below $56 a barrel to reach its lowest level since May 2009. Howard Archer, Chief UK Economist at IHS Global Insight, has predicted that oil will average $66 per barrel over 2015………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Falling world oil prices will hurt countries across the Middle East unless Saudi Arabia, the world’s biggest crude exporter, takes action to reverse the slump, Iran’s deputy foreign minister told Reuters. Hossein Amir Abdollahian described Saudi Arabia’s inaction in the face of a six-month slide in oil prices as a strategic mistake and said he still hoped the kingdom, Tehran’s main rival in the Gulf, would respond.
Oil prices closed on Wednesday at a 5-1/2 year low, registering their second-biggest ever annual decline after OPEC oil exporters, led by Saudi Arabia, chose to maintain oil output despite a global glut and calls from some of the cartel’s members - including Iran and Venezuela - to cut production………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The oil price decline of 2014 upended the geopolitical chessboard. Worth watching in 2015 will be who can recover and dominate play — OPEC, Vladimir Putin or U.S. shale drillers.
Oil’s international benchmark price dropped as much as 49 percent in 2014. Those looking for a quick rebound may be disappointed, as world consumption growth slowed to the least since 2009, U.S. companies pumped more than they have since the 1980s and a price war broke out among members of the Organization of Petroleum Exporting Countries………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The metal is the only store of wealth that has a proven track record over thousands of years, and experts predict prices to remain at $1,200 in the year ahead. Gold has retained its place as a safe-haven investment in 2014, despite the rising strength of the US dollar and turmoil elsewhere in commodity markets.
The price has remained stable and what’s more, experts believe that the long- term outlook for the precious metal is well supported over the coming year.. The price of gold looks set to end the year almost unchanged on 12 months, closing last week at around $1,175 (£755) an ounce after starting the year at $1,205. Fears of a crash in the price were overblown………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Gold prices could be set for a strong breakout in the second half of 2015, according to a commodities analyst. Ole Hansen, head of commodity strategy at Saxo Bank, is slightly more optimistic on the gold market for 2015 compared with other analysts.
Hansen told Kitco News that the precious metal could end 2015 around $1,250 an ounce. But prices could struggle in the short term and could even break below the 2014 lows in the coming months, he said. Hansen urged investors not to rule out gold’s safe-haven investment appeal. Safe-haven demand could help the gold market in early 2015 as both the Russian and European economies are in dire straits………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Gold has only fallen 3% on the year as the metal has spent much of 2014 consolidating between $1,200 per ounce and $1,400 per ounce. That consolidation is precisely what investors should continue to expect in 2015, says Eric Zuccarelli, an independent metals trader. Investors should also expect more volatility for the metal in the new year.
Interest rates, which are expected to climb in 2015, will likely put pressure on gold prices, especially with inflation as low as it is, he explained………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Chinese demand for physical gold is expected to remain consistent in 2015, but prices need to move higher to attract new buyers to the market place, according to a commodity analyst from ANZ Bank. Although volatility has been high in the last few months, gold prices are hovering near unchanged levels from where they started in 2014.
After a year of stabilization, investors need to be confident that prices are on the rise before they jump back into the marketplace, said Victor Thianpiriya, commodity strategist at the Australian bank. He added that the fundamental picture of the gold market could point to modestly higher prices in 2015………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Silver prices tend to move in tandem with gold’s prices. However, the price movements of Gold and Silver in 2014 proved that the correlation between them does not hold any more. Silver has clearly underperformed Gold in recent times. During 2014 alone, Silver plunged by nearly 12% as against gold’s 1% drop. Also, Silver is down nearly 67% from its peak reached in 2011.
On the other hand, gold has dropped only by 37% from its highs touched during the same year. Industry participants expect major rebound in silver prices in 2015. According to them, two key factors are likely to drive Silver prices higher………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

It’s hard out there being a commodities king this year. Oil got crushed. Copper was obliterated. And soybeans got mashed. But Dennis Gartman has his eye on one commodity that met a particularly cruel fate in 2014: Gold
Despite bullion being just pennies away from posting its first back-to-back yearly loss since 1997, the self-proclaimed commodities king and author of the eponymous Gartman Letter told CNBC.com’s “Futures Now” on Tuesday that he sees gold enjoying a solid 2015. “My better trade for the year will be the same trade that has been the better one for this year and the better one for the previous year, which is to be an owner of gold,” said Gartman………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The prices of base metals were highly volatile in 2014, nickel the most so, due to rapid change in their fundamentals. Analysts believe these prices will continue declining in 2015, with narrow volatility.
The markets would watch the two–day meeting of the US Federal Reserve’s open market committee on January 27-28, for a direction on the anticipated interest rate rise. While Fed chair Janet Yellen has indicated “no hurry” to do so, analysts think this would begin by June–July………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

China’s uncertain economic situation is likely to hang heavy over the non-ferrous metals sector in 2015. The country is one of the largest consumers and producers of non-ferrous metals and its decision to re-balance economic growth from an investment-focused one to a consumption-oriented one has upset demand-supply balances.
It has not helped that the other emerging markets, too, are seeing slower growth, while Europe’s growth continues to disappoint. Moreover, capacities that were planned in the years when the prices were high are coming on line at a time when demand is flagging. Despite all these factors, non-ferrous metals such as zinc and aluminium were better off in 2014………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Commodities have been in a bear market since the start of 2011 (See Diagram 1) and amongst the worst performing metals are Gold, Silver, Copper and Iron Ore. Gold saw a low of 1142 $/oz in November 2014 and a high of 1895 $/oz in September 2011. The peak to trough was 39.7% and it’s currently (26Dec14) at 1195.8 $/oz.
Silver saw a low of 15.28 $/oz in November 2014 and a high of 48.70 $/oz in April 2011. The peak to trough was 68.6% and it’s currently (26Dec14) at 15.77 $/oz. Copper saw a low of 2.81 $/lb in December 2014 and a high of approx. 4.6 $/lb in Feb 2011. The peak to trough was 38.8% and it’s current (26Dec14) at 2.81 $/lb………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Nickel for our thoughts? Sure! An exact nickel price forecast isn’t necessary to make the most effective purchasing decisions – in fact, it may be dangerous. By analyzing and understanding these price drivers, buyers will be ready to react when the market gives clear signs that a new uptrend is developing and stay hedged as long as the trend is in place – until there is evidence that the trend is over.
Nickel was the first base metal to turn up this year. We recommended that our members start hedging nickel in the first quarter when prices were rising rapidly………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

When it comes to forecasting metal prices, one of MetalMiner’s core beliefs rests on the need to analyze metal markets within the broader context of commodities markets - not in a vacuum. That’s why we put a category sourcing guide together for a number of base metals and steel; since many purchasing organizations are sourcing a diverse metal mix, shouldn’t you have a resource (and strategies) to match? However, if you buy a significant volume of copper, read on.
Copper is the worst performer among the industrial metals in 2014. Since the start of the year, we’ve continued to say that there is no reason to go long on copper unless prices managed to break above $7,500/mt, which they haven’t………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

If you’re looking for a 2015 aluminum price forecast, and landing on MetalMiner for the first time, we must warn you: we don’t forecast prices. But we do something so much more valuable. When it comes to forecasting metal prices, one of MetalMiner’s core beliefs rests on the need to analyze metals markets within the broader context of commodities markets - not in a vacuum.
Aluminum could be called the “MVP” of industrial metals this year. We recommended that our members start hedging aluminum in June when LME 3-month prices were at $1,950/mt………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Stocks are on their way to close this year on a strong note–with the S&P 500 index up 15% year to date-the third consecutive year of double-digit growth for the index. With the economy growing at the fastest clip in more than a decade, stocks are expected to continue their upward move, as companies will be able to boost their profits. Plunging energy prices and low interest rates will further benefit stocks.
At the same time, after a bull run of almost six years, stocks are not cheap. And with the Fed expected to start raising rates sometime next year, many wonder how long the stock market party can go on. As we head into 2015, it may be a good time to look at the investment landscape and reposition your investment portfolio for the new year………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The exchange-traded fund industry heads into the New year having notched a fresh milestone: $2 trillion in assets under management, achieved just last week. This caps asset growth of 18% in 2014.
While the most complex and quirky ETFs tend to garner disproportionate attention in a field of nearly 1,700 funds, it is the low-cost, tax-efficient bread-and-butter ETFs that are fueling the industry’s growth. The top three recipients of new investor cash this year each tracked the S&P 500 index of U.S. stocks, according to ETF.com………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Wealthy investors are poised to put at least $90 billion into hedge funds next year, even after returns have largely been lackluster this year, research firm eVestment said on Tuesday. Fresh demand from pension funds, endowments, and insurers looking for alternatives to traditional stock and bond holdings will fuel next year’s flows, the researchers wrote in a report.
“Will institutional investors maintain their investments and continue to allocate more to hedge funds in 2015 … The short answer is yes,” they wrote, adding “We expect asset flows into hedge funds of at least between $90 billion and $110 billion in 2015.” Hedge funds manage roughly $3 trillion in assets………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Gold’s year-end rebound is taking investors by surprise. With Greece facing another political crisis and equities giving up some gains, bullion is headed for the biggest monthly advance since June. Hedge funds lowered their wagers on a rally for a second straight week, and holdings in exchange-traded products backed by the metal are near the lowest since 2009.
The money managers aren’t the only ones being caught off guard, with the rebound undercutting bearish forecasts from Goldman Sachs Group Inc. and Societe Generale SA. The metal has climbed 5.9 percent since reaching a four-year low in November. Slowing economies are prompting central banks in Europe and Asia to add to monetary stimulus, while gold’s volatility is picking up after spending most of 2014 in the doldrums………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

2015 is setting up to be another interesting year in the agriculture industry, following a fairly profitable year in 2014 for many livestock producers, but a far less profitable year for most crop producers in the upper Midwest. 2014 ended with may farm operators and land owners focusing on the choices associated with the various farm program options that are part of the new Farm Bill that was passed in 2014.
Following are some items that are likely to be on the forefront in the agriculture industry for 2015. New farm program sign-up. Sign-up for the new farm program, which part of the new Farm Bill, is now underway at local USDA Farm Service Agency (FSA) offices. The new farm program will be in place for the 2014 to 2018 crop years for all eligible crops under the Commodity Title of the Farm Bill, including corn, soybeans, wheat, and other crops………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Commodities capped the biggest annual loss since the global financial crisis in 2008, retreating for a record fourth year, as a global glut spurred a rout in oil prices and a stronger dollar cut the allure of raw materials.
The Bloomberg Commodity Index, which tracks 22 products from crude to copper, ended 1.7% lower at 104.3285 points on Wednesday, after dropping as much as 1.8% to the lowest since March 2009 earlier. It lost 17% last year, with crude, gasoline and heating oil the biggest decliners. The fourth year of losses was the longest run since at least 1991………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The euro started the new year at 29-month lows in Asia after the head of the head of the European Central Bank fanned expectations it would take bolder steps on stimulus this month, so underlining the U.S. dollar’s rate advantage.
In an interview with German financial daily Handelsblatt, Mario Draghi said the central bank stood ready to respond to the risk of deflation. Consumer price data for the euro zone due on Jan. 7 are widely expected to show a fall in annual terms………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

The year 2015 is burned into climate watchers’ brains, and internal satnavs set to Paris. In December, this is where negotiators from around the world are set to strike a global deal to tackle climate change.
What happens in the next 12 months politically, economically and environmentally could make or break that deal. Parallel efforts on disaster risk reduction and sustainable development will be critical to protect vulnerable communities and grow green industries………………………………………..Full Article: Source

Posted on 02 January 2015 by VRS |  Email |Print

Although difficult to accept the reality of the situation - that ‘the United Nations High Commissioner for Refugees and the Intergovernmental Panel on Climate Change, reported the best estimates suggest climate change could force hundreds of millions on the move in coming decades’ - it was good to read it in a newspaper that is syndicated across Canada.
Not only does Canada need to prepare for climate refugees, we must cut our carbon emissions to avoid the worse impacts of human-caused climate disruption. Despite stark warnings from many international organizations, on Oct. 7, 2014 Canada’s Environment Commissioner, Julie Gelfand, reported that Canada is only 7% towards meeting our Copenhagen targets………………………………………..Full Article: Source

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