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Commodities Briefing 25.Aug 2015

Posted on 25 August 2015 by VRS |  Email |Print

Commodity prices hit their post-crisis peak in early 2011, and have generally been sliding since then. They are now down to where they were in 1999, before the 2000s commodities boom began. The Bloomberg Commodity Index of 22 raw materials from oil to metals lost as much as 2.2% to 85.8 points, the lowest level since August 1999.
Crude oil, aluminium, iron ore, copper, zinc, coal and other industrial commodities looked at a rout due to weaker demand from China, one of the world’s largest consumers of raw materials. China accounts for over 40% of global consumption of such commodities. Brent for October settlement declined as much as 5% to $43.28 a barrel on the ICE Futures Europe exchange, the lowest price since March 2009………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Commodity prices have fallen to their lowest level since the financial crisis and — by at least one measure — to the lowest this century. While the natural resources sector has been caught up in fears about China’s growth slowdown, each commodity still has its own market dynamics. Here is a quick guide to what is happening.
Growing signs that the oil glut will persist has unnerved traders and investors. But it is China that is spreading real fear. The country has been a bigger contributor to oil demand growth than any other in the past decade, so any slowdown in the Chinese economy may spell bad news for crude consumption………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

The metal index may have corrected 50% in the past one year and metal stocks may appear good value-buys, but given the structural negatives of a slowing China and a strong dollar, it may not be too long before the long-term bearish trend reasserts itself.
According to a recent Barclays report, this is a much more severe commodity price downturn than any the market has experienced in recent history. The Chinese demand across metal commodities is likely to drop to 2-3% from double digits for the next 5 years and China consumes 40-50% of most of these commodities produced globally. The Bloomberg commodity index is back at 2002 levels, eroding almost all the gains of the commodity super cycle………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Iron ore’s period of relative price stability has come to an abrupt end as China fears rattle commodity markets. The price of iron ore at the Port of Qingdao slumped 5 per cent to $US53.28 per cent on Monday as a savage sell-off gripped Asian markets.
It’s the first significant fall in commodity’s price since early July, when it traded as low as $US44.59. Since then, iron ore has traded in a relatively narrow range compared to the volatility it has experienced through the year. Expectations remain for iron ore’s price to regain its downward march and Australian miners were hit hard overnight as selling swept through European markets………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Oil futures led a dramatic fall in commodity prices on Monday, with US crude trading below $40 a barrel as fears over China’s economy sent investors fleeing to safe havens such as gold. The Bloomberg Commodity Index, which tracks 22 raw materials, lost as much as 1.7 per cent to 86.3542 points to its lowest level since August 1999.
Raw materials have slumped this year as concerns have mounted of weakening demand from China, the world’s second-largest economy and top user of everything from industrial metals and energy to food. Fears were piqued when China devalued the yuan two weeks ago, a move that many took as a signal the economy is in worse shape than thought, and which could hurt the Asian giant’s purchasing power for dollar-denominated commodities………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Oil plummeted more than 6 per cent to levels last seen during the financial crisis and a broad index of commodity prices slid to the lowest point of this century as economic doubts gathered over China, the engine room of demand growth over the past decade.
China is the world’s largest importer of raw materials and the biggest energy consumer globally. Mounting signs of a sputtering economy, including a plunge in the Shanghai equity market Monday, have raised the prospect of softer demand for oil and other commodities, removing another support for prices laid low by plentiful supply………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Opec is powerless to arrest the slide in oil prices unless producers outside the group such as Russia match any cuts in output, according to a former president of the group. With oil prices plummeting due to global oversupply, the Organisation of the Petroleum Exporting Countries (Opec) would be unable to stabilise the market on its own, Abdullah bin Hamad Al-Attiyah said.
The group - which is mainly comprised of Middle Eastern and South American oil producers - would need agreement from other oil-producing nations. “I don’t see any light at the end of the tunnel,” said Mr al-Attiyah. “Opec and non-Opec need to agree to support the market.” Brent crude is down 57pc over the last year to $43 per barrel with pressure mounting within Opec for an emergency meeting of oil ministers to discuss the price slide………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

As the selloff in global markets converge with growth concerns to drive down oil prices, analysts are weighing the odds that OPEC could be forced into a production cut. In the middle of mounting speculation that major oil producing countries could cut output to put a floor under falling prices, crude tumbled to fresh six and half year lows on Monday.
The moves followed last week’s losses that drove U.S. light crude below the $40 mark on Friday, with the international Brent contract following a similar path downward. The next scheduled meeting for OPEC is not until December 4th 2015. Yet with oil getting walloped daily, some think it could come much sooner—and that the oil cartel may be forced to send a message to stanch the bloodbath in crude markets………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Saudi Arabia’s strategy for rebalancing the oil market through a period of lower prices shows few signs of working so far - with rival producers claiming they will raise output even as prices slide to new lows.
Saudi policymakers insist the kingdom will maintain its market share and let low prices take care of the surplus by forcing cuts from higher cost producers and stimulating fuel demand. With prices down by more than half compared with the same point in 2014, oil consumption is growing at some of the fastest rates for a decade………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Gold prices have slipped as sharp declines in stocks forced some investors to sell profitable gold wagers to meet loan losses. The most actively traded contract, for December delivery, fell $US6, or 0.5 per cent, to settle at $US1,153.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
Gold rallied to a seven-week high on Friday as some investors wagered that the Federal Reserve will delay raising interest rates in response to deteriorating economic conditions in China. Fed officials have said that despite progress in labor and property markets, the US economic rebound doesn’t yet warrant higher rates………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Gold hovered near its highest level in almost seven weeks on Monday as worries over a slowing Chinese economy pushed investors away from risky assets and into those deemed as safe haven.
Asian equities tumbled, the US dollar retreated and industrial commodities from copper to oil slid to their weakest since 2009. Spot gold was little changed at $1,160.80 an ounce by 0236 GMT (6.36am UAE time), after touching a high of $1,165.11 in early deals………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Precious metal has advanced amid a plunge in commodity prices to 16-year lows, with RBC saying seasonal buying may offer a near-term boost. We have made significant changes to both our short and long term gold and silver price assumptions pulling back our average H2/15 gold price from US$1,288/oz to US$1,125/oz and have reduced our 2016 to 2017 gold price by 7% to 8%.
We have also pulled back our long term gold price by 7% from US$1,400/oz to US$1,300/oz from 2018 onward and we expect a combination of persistent US$ strength and weaker investment to limit the upside prices well below prior high trading ranges………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

You hear it again and again. When markets get volatile or uncertainties spike, buy gold. It’s traditionally considered one of the safer assets because it acts as a store of value. But the precious metal pays neither a dividend, coupon nor rent.
So we crunched the numbers using data analytics platform Kensho to find out whether gold’s safe haven status really holds up. According to statistics going back to 2005, a bet on gold in times of market turbulence is often no better than a coin toss………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Copper and aluminum futures closed at more-than-six-year lows in London on Monday, as a sharp decline in Chinese equities triggered a broad-based commodities rout over fears that the world’s biggest consumer of base metals is heading into a steeper-than-expected economic slowdown.
The London Metal Exchange’s three-month copper contract was down 2% at $4,953 a metric ton at the PM kerb close, having tumbled to its lowest level since 2009 earlier in trading at $4,855 a ton. It fell below the key $5,000 level for the fifth-straight session. Aluminum, meanwhile, closed down 1.7% at $1,521.50 a ton, after hitting a six-year low during trading at $1,506 a ton………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Copper, aluminum, nickel and other commodities plunged to new lows on fears that China’s faltering economy will exacerbate a market awash in metal. The latest event to spook investors was the steep decline in Chinese stocks earlier on Monday. Copper and aluminum hit six-year lows. Nickel plunged 10 per cent. Zinc and lead dropped to five-year lows. Gold, usually a safe haven in times of turmoil, barely rose.
“All bad news is bad news and good news is no news. That’s the environment we are in,” said Jessica Fung, commodity strategist with BMO Nesbitt Burns………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

A good chunk of the stock market’s rewards, with less risk. That’s the promise of low-volatility exchange-traded funds. And if there were a time when the funds should prove their worth, it’s now. The goal of low-volatility ETFs is simple: Provide a smoother ride when investing in equity markets.
The ETFs have taken in more than $1 billion in the past month, the most in seven months and the ETFs’ second-biggest month since they launched in 2011. So far it’s paying off for investors: The ETFs are down significantly less than the market—half as much, to be exact. So while these investors may still need some Rolaids, they can hold off on busting out the Xanax………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

It’s a flight to safety for investors. Here’s how to trade the market’s moves. The yield on the U.S. Treasury 30-year bond is tracking its 200-week simple moving average lower, while the 20+ Year Treasury Bond ETF (TLT) tracks its 200-week simple moving average higher.
The bond exchange-traded fund represents a basket of U.S. Treasury bonds with maturities of 20+ years to 30 years, and is a flight to safety alternative for investors. Comex gold ended last week with a positive weekly chart. Investors trading gold like a stock are doing so using the SPDR Gold Shares ETF (GLD), which is backed by gold bullion………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Hedge funds betting on commodities lost the most in almost three years in July as the price-rout deepened. Funds lost money for a third month, according to the Newedge Commodity Trading Index, which was released to investors Friday and tracks the performance of raw-material trading strategies including equities and physical products.
The 1.3 percent decline was the most since October 2012 and the index is down 2.4 percent this year. A slide in everything from oil to metals pushed commodity prices down the most since 2011 in July. Managers are losing money and commodity funds at Cargill Inc. to Armajaro Asset Management LLP closed this year as China’s slowing economy adds to the global glut in most raw materials. Glencore Plc shares are at a record low, and oil and copper prices dropped to the lowest in six years………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Cotton’s status as one of the only two raw materials with gains this year in the Bloomberg Commodity Index is under threat after the fiber fell on Monday by the most in two years. On ICE Futures U.S. in New York, cotton for December delivery dropped 4.3 percent to close at 64.05 cents a pound at 2:26 p.m., the largest decline for a most-active contract since Aug. 21, 2013.
The only other market in the Bloomberg index of 22 raw materials that’s still higher this year is gasoline. On Aug. 12, cotton surged 4.6 percent, the most in three years, after the U.S. government unexpectedly reduced its forecast for domestic production………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Setting September 28 as the date for merger of Forward Markets Commission (FMC) with itself, Sebi on Monday announced new norms for commodities derivatives market under which exchanges and brokers in this segment will need to comply with rules applicable to their stock market peers.
The new regulations will also come into force on September 28, the date from which Sebi would begin regulating the commodity derivatives market as a unified regulator. These norms, approved by Sebi’s board here on Monday, will enable functioning of the commodities derivatives market and its brokers under Sebi norms and integration of commodities derivatives and securities trading in an orderly manner………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Currencies were not exempt from the global market rout Monday. Emerging market currencies, especially those linked to economies heavily dependent on commodities, were caught in the market downdraft.
Australia’s dollar slid more than 2% against the U.S. dollar to levels last seen in 2009. Russia’s ruble slumped 3% to trade at around 71 against the dollar. South Africa’s rand was down nearly 2%, as U.S. markets opened, briefly hitting a record low of 14.48 against the dollar. The Canadian dollar and the Norwegian krone also weakened against the dollar………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

The prospects of rising interest rates in the United States, coupled with a downturn in the Chinese economy contributed to the South African currency’s record drop on Monday, said economists. The South African rand plunged to 14 rand to the dollar before recovering slightly to 13 rand as trade closed on the Johannesburg Stock Exchange.
The rand was the worst affected among 25 other emerging market currencies, buckling under China’s currency devaluation, reported Business Day, a financial newspaper. In the United States, the Dow Jones industrial average lost more than 1,000 points as trade began on Wall Street………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

The prospects of rising interest rates in the United States, coupled with a downturn in the Chinese economy contributed to the South African currency’s record drop on Monday, said economists. The South African rand plunged to 14 rand to the dollar before recovering slightly to 13 rand as trade closed on the Johannesburg Stock Exchange.
The rand was the worst affected among 25 other emerging market currencies, buckling under China’s currency devaluation, reported Business Day, a financial newspaper. In the United States, the Dow Jones industrial average lost more than 1,000 points as trade began on Wall Street………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

The Finance Secretary of the Philippines has a message for Asian policy makers tempted to follow China’s lead by devaluing their currencies: Don’t do it. “We must be mindful of the trade-offs involved in using the exchange rate as a trade tool to boost competitiveness,” Cesar Purisima said Sunday.
Chinese exchange-rate officials probably have a thing or two to say about trade-offs. Since its surprise devaluation on Aug. 11, Beijing has been struggling to keep the yuan from outright freefall. Yesterday, Shanghai stocks tumbled a further 8.5 percent. China perfectly encapsulates Purisima’s point: The short term benefits of a weaker currency pale in comparison to the costs………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

The vast majority of carbon credits generated by Russia and Ukraine did not represent cuts in emissions, according to a new study. The authors say that offsets created under a UN scheme “significantly undermined” efforts to tackle climate change.
The credits may have increased emissions by 600 million tonnes. In some projects, chemicals known to warm the climate were created and then destroyed to claim cash………………………………………..Full Article: Source

Posted on 25 August 2015 by VRS |  Email |Print

Factories in Russia increased their production of industrial waste products and then claimed millions of carbon credits for destroying them after an international trading scheme went into effect. Evidence published in Nature Climate Change reveals that several Russian chemical plants increased production of highly potent greenhouse-gas waste to “unprecedented levels” after they could reap financial benefits from their disposal.
Carbon credits grant nations the right to emit gases that contribute to global warming. They are traded internationally on carbon markets such as the European Union’s Emissions Trading Scheme, and their monetary value is determined by how much buyers are willing to pay for them………………………………………..Full Article: Source

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