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Commodities Briefing 02.Apr 2015

Posted on 02 April 2015 by VRS |  Email |Print

It’s been a tough first quarter in the commodities markets. Oversupply, a stronger dollar and crude weakness weighed on the price of many raw materials. Iron ore led the decliners, closing the quarter at $51 a tonne, a post financial crisis low.
Nevertheless, money flowed into energy exchange traded funds supporting overall investment inflows. Here is a look at some other issues which came under the spotlight. Is the world running out of crude storage? Concerns have mounted that the current supply glut would overwhelm storage tanks from Oklahoma to Xinjiang and depress prices further………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

You may not have much of a taste for commodities right now, and who could blame you? At a time when Wall Street has seen healthy run-ups, many commodities stocks have taken a beating. But as equities experts put it, you can’t keep a good stock down, especially when it trades in an area where there’s a proven need or demand that’s bound to increase.
“The [Thomson Reuters CoreCommodity CRB Index] has been in a bear market since its peak in 2011, making commodities seem like a questionable investment,” says John O’Donnell, chief knowledge officer of Online Trading Academy, based in Irvine, California. “But just like it’s proven contrarian wisdom that the best time to buy is when there’s ‘blood in the street,’ courageous and patient investors now have the opportunity to buy when there’s gold in the street.”……………………………………….Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Looser credit conditions or fiscal stimulus may temporarily boost China’s demand for coal, copper and iron ore, but the bounce would be fleeting. Mined commodity prices are unlikely to recover from recent lows, as China’s structural economic transition diminishes the main source of global demand growth.
Falling input costs and global overcapacity have reshaped the global steel industry: Prices will be lower for longer Weak crop prices and low farmer incomes are a significant headwind for fertiliser and seed companies, but we don’t expect the breeze will be too strong……………………………………….Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

As concerns about the glut of oil in the world continues to weigh, questions have been raised over why the price of the crucial commodity hasn’t fallen even further. For one analyst, the answer comes down to “phenomenal” demand.
Oil was trading slightly higher Wednesday, with Brent crude around $55.60 a barrel and U.S. West Texas Intermediate at $47.80. Both are some way off their year-to-date lows of around $46 and $42 respectively in March………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

The benchmark U.S. oil price jumped to its largest one-day gain in nearly two months as traders seized on a sign that U.S. crude production could be nearing a peak. The rate of U.S. crude-oil output fell last week for the first time since January, based on preliminary data, the U.S. Energy Information Administration said Wednesday.
Oil for May delivery soared after the morning report, closing at $50.09 a barrel on the New York Mercantile Exchange. That was up $2.49, or 5.2%, on the day, the biggest percentage and dollar gain since Feb. 3. Brent, the global benchmark, rose $1.99, or 3.6%, to $57.10 a barrel on ICE Futures Europe………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Here’s a piece of legislation the Republican Congress should pass pronto: end the decades old, misbegotten ban on the export of crude oil, as well as the stifling bureaucratic restrictions on the export of natural gas. Astounding advances in technology and new discoveries of oil and natural gas reserves have skyrocketed U.S. energy production.
America is drilling and refining more oil than it has in decades. Gas is so abundant that electric utilities can’t build or retrofit plants fast enough to absorb it all. These barriers were put in place to help American businesses and consumers by keeping the stuff at home rather than letting foreigners get their hands on it………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Hydraulic fracturing has unleashed vast new quantities of crude oil and natural gas. The percentage of fuel flowing from shale-rock compared with traditional oil and gas fields has been steadily rising. But lackluster energy demand and low prices are expected to curb growth later this year. Here’s a graphic that helps explain fracking:……………………………………….Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

America is the world’s biggest oil customer, and OPEC is losing its business—fast. U.S. imports of oil and petroleum products from OPEC have fallen to a 28-year low, according to data from the Energy Information Administration. The U.S. is pumping more of its own oil, and relying less on OPEC imports than any time since April 1987.
In the past six years, U.S. production has increased dramatically, catching global markets off-guard and contributing to the crash in oil prices. Last year, the U.S. surpassed Saudi Arabia to become the world’s biggest oil producer………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

The sharp decline in gold prices during February and Early March has forced JP Morgan to lower its gold price forecast for the entire year 2015. According to them, prices of the yellow metal are likely to drop further during the second and third quarters of the year. However, strong physical buying may offer some support during Q4 2015. JP Morgan has also lowered the average silver price forecast for the year.
The gold price forecast for the full year has been lowered by 3.6% to $1,188 per ounce. The U.S. interest rate hikes may drag gold prices, despite temporary boosts from geopolitical events. The escalating tensions in Yemen and deadlock over Iran nuclear deal may provide temporary support to gold prices………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Goldman warns that peak gold may happen in 2015. New report says there are only “20 years of known mineable reserves of gold”. Discoveries of new sources of gold production peaked in 1995 despite major bull market .
Production lags new finds in 20 year cycle – Indicates 2015 may be year of peak gold production. Production in major gold mining countries has dropped in recent years. This will provide support and should lead to higher prices in long term. For many years, we have written about ‘peak gold’ and the ramifications of the underappreciated peak gold phenomenon for the gold market………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Gold should hammer out a base this year and next, providing good buying opportunities for the long-term investor, Barclays Capital said on Wednesday. The broker sees gold averaging $1,183 per ounce this year. Spot metal was last at $1,185.40/1,186.20, up a $2.50 increase on Tuesday’s close.
With the relationship between gold and US interest rates crucial to prices, the timing and extent of the Federal Reserve’s raising of US interest rates from near-zero levels will be closely watched. BarCap expects the increases to be gradual, with the first increase to come later in the year. “A June rate hike would have exposed a weak gold price floor, whereas in September, physical demand tends to strengthen in light of seasonal buying in India. Thus, although a rate hike is likely to lead to disinvestment, physical demand should buffer prices, limiting the downward pressure,” it said………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Iron ore has fallen below $US50 a tonne, extending a run of losses that began a week ago. Iron ore for immediate delivery to the port of Tianjin in China fell to $US49 a tonne, from $US51, while iron ore at the port of Qingdao was $US49.53.
The world’s fourth-largest iron ore miner, Australia’s Fortescue Metals Group, could be losing money at those prices, with its iron ore earning less than that benchmark figure. Losses for smaller junior miners will also increase. It is the lowest price in nearly a decade and compares to the record $US185-plus reached by the steelmaking commodity - Australia’s most valuable export - during 2011………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Nickel has bounced off its lowest level in nearly six years as some investors, betting on price falls, lock in profits, but concerns about Chinese economic growth weigh on other base metals. Nickel has spiralled lower on worries about lacklustre consumption from the stainless steel sector, the dominant source of global demand, as well as a record high inventories on the London Metal Exchange (LME).
Heavy selling by hedge funds has been behind the recent slide in nickel which brought the decline so far this year to about 16 per cent. But some investors were buying on Wednesday to lock in some profits……………………………………….Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

The copper price is likely to rebound in 2015 as “critical” producers struggle to ramp up production, Barclays said in a weekly note to clients late Tuesday. The bank says it believes copper prices will increase to a $6,313/mt average for the year.
Three-month copper closed the Tuesday London Metal Exchange kerb session at $6,040/mt. There has been much talk in the market of the copper price heading toward $5,000/mt in 2015………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Is copper the next crude oil? The answer is “no,” according to Suki Cooper, a commodity analyst at Barclays. In a recent note, Copper and her team today laid out case for the metal’s rebound in 2015, forecasting a price of $6,313 per ton for the year.
Because the industrial and consumer sectors make wide use of the metal, investors closely watch movements in the world’s copper price, using it as a barometer of global economic activity. It is often called “Dr. Copper – the metal with a PhD. in economics. At TK, the metal has fallen 9% over the past six months………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Precious metals and agriculture-based exchange-traded products remain in favour among investors, research from provider ETF Securities has found. ETF Securities carried out a poll of 446 investment professionals at its investment conferences, which took place in Frankfurt, London, Paris, Milan and Zurich during January and February.
Polled attendees indicated that commodities remained a favoured asset class this year, with nearly 40 per cent of London-based investors believing that precious metals would be the best-performing sector. Meanwhile, Italian and Swiss investors favoured agriculture with 47 per cent and 30 per cent of the votes respectively………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

UGAZ, UNG, and DGAZ all have average volume over 10m shares traded per day, while the other funds have under 100k trades per day. UNG has the lowest fees, 0.60%, and no leverage.
UNG and UNL provide the best long investment options, as UNG tracks the prompt month and UNL tracks the 12 month rolling strip. UNG has underperformed the slide in natural gas over the last 6 months by -5.02%, while UNL has outperformed natural gas futures by 4.86%………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

The price of a bushel of corn for May delivery tumbled during the last day of the quarter by almost 5 percent to $3.756. The move was caused by the corn supply in the Unites States coming in much higher than expected, even after the government pegged its inventory in June at its highest level in 28 years.
The 7.75 billion bushels’ stockpile, as of March 1, is 11 percent higher than a year ago, according to the U.S. Department of Agriculture. The reading outpaced economists’ estimates of an 8.6 percent increase and is the highest on record at this date since 1987………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Goldman Sachs now leads global banks in commodity trading revenues, overtaking JP Morgan in 2014. A report by Coalition, a financial analytics company, found that while rival banks backed out of the commodity business due to volatility and an increasingly restrictive regulatory environment, Goldman Sachs’ decision to remain in the game has reaped dividend.
Collectively, banks enjoyed a 9% increase in commodity revenue in 2014, despite the chronically low prices of some key commodities. Total revenue was US$4.9bn in 2014 and while it was the first upward tick since 2011, it still represents a fraction of the combined US$14.1bn banks were taking in before the crisis in 2008………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

A strong dollar sent global commodity prices plunging in the past year. And one currency trader is setting himself up to profit from further declines. “We expect the uptrend in the U.S. dollar to continue,” said TradingAnalysis.com founder Todd Gordon on Wednesday’s “Trading Nation.” The dollar has already surged more than 22 percent in the last 52 weeks.
So, in order to play for further upside in the greenback, and downside in commodities, Gordon looked to the land Down Under: Australia. Specifically Gordon targeted, the FXA, the Australian dollar ETF, which is down more than 17 percent in the past 12 months………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

The Transatlantic Trade and Investment Partnership (TTIP), which the European Union and the United States currently are negotiating, would, studies say, boost welfare and reduce unemployment in both economies, as well as in other countries. At the same time, the TTIP could help to restore confidence in Europe and the transatlantic community. But there is one major barrier to realizing these benefits: the euro.
The problem stems from currency manipulation. Over the past three decades, the US has de facto tolerated currency manipulation by its major Asian trading partners, which built up large trade and current-account surpluses by suppressing the value of their currencies………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

Carbon dioxide emissions in the European Union’s cap-and-trade program, the world’s largest, fell by the most in five years as warmer-than-average weather curbed demand for gas and power. Emissions from companies covered by the program dropped 4.9% in 2014 compared with a 5.8% decrease forecast by analysts in a Bloomberg survey.
The preliminary EU data implies pollution in the emissions trading system fell to 1.816 billion metric tons, the lowest since the bloc’s carbon market started in 2005, according to Bloomberg New Energy Finance. Last year was Europe’s warmest on record, according to MDA Information Systems LLC in Gaithersburg, Maryland, whose data goes back to 1981………………………………………..Full Article: Source

Posted on 02 April 2015 by VRS |  Email |Print

As promised, the U.S. turned in its emissions goals, but China and other large countries missed the UN’s suggested deadline. Clap your hands if you believe in Intended Nationally Determined Contributions.
After all, it’s faith in those documents, known as INDCs—detailed country-by-country pledges to reduce climate change—that are supposed to keep alive the glimmering hopes of a universal, binding treaty on climate change that the United Nations wants to conclude in Paris at the end of the year………………………………………..Full Article: Source

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