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Commodities Briefing 17.Sep 2015

Posted on 17 September 2015 by VRS |  Email |Print

Olam International Ltd., one of the world’s largest food commodities traders, expects grain and oilseed prices to weaken further because the El Nino weather phenomenon will be less harmful to harvests than feared. “We are bearish,” Olam Chief Executive Officer Sunny Verghese said in an interview in London on Tuesday. “El Nino will not be as severe” as many in the agricultural commodities market expect, he added.
Meteorologists from Australia to the U.S., who have predicted the current El Nino may become one of the strongest ever recorded, matching the 1997-98 event that ruined crops with droughts and floods. El Nino can affect weather worldwide — and hence, crops — by baking Asia, altering rainfall across South America and bringing cooler summers to North America………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

OPEC’s new medium-term forecasts point to higher demand for the group’s oil, OPEC delegates said, a sign that its strategy of letting prices fall is discouraging supplies from competing producers. The forecasts, to be published in OPEC’s World Oil Outlook later this year, are expected to be discussed on Thursday during the second day of a meeting of OPEC’s national representatives taking place at its Vienna headquarters.
“The new medium-term numbers show a higher demand for OPEC crude,” said one OPEC delegate, who added that oil prices are assumed to be lower than previously. “There is an impact on higher-cost producers.” ……………………………………….Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

North American capital markets are replacing Opec as the “central banker” of oil, bearing the responsibility for balancing oil markets. With Opec no longer setting the marginal supply, capital markets are providing or withdrawing liquidity, and shaping oil supply in the process.
Following the Opec meeting last November, market observers searching for a production response to lower prices were focused on marginal output in places such as Russia, Colombia, Mexico, the North Sea and the US. But production has not capitulated as many expected………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

It’s hard for any of us to stick our nose in King Salman’s business, but let’s be fair here — it really is his fault. After all, it was the Saudis that ignited a price war in the hopes of bringing U.S. tight oil producers to their knees. By throwing their weight around in OPEC, the Saudis prevented the oil cartel from slashing output in late November 2014 in response to oil prices plummeting more than 50% last fall.
The rally cry over preserving market share echoed in the halls of the House of Saud. At first, this is how the Saudi royal family must have felt as crude prices tumbled, causing an immense amount of pain and frustration to independent oil and natural gas companies in North America:……………………………………….Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

The price of North America’s crude oil benchmark gained more than four per cent to trade above $47 US on Wednesday as a report from the Energy Information Administration showed crude inventories fell by 2.1 million barrels in the last week.
A barrel of West Texas Intermediate was trading at $47.05 US at close of trading on Wednesday, up $2.47 on the day. The catalyst for oil’s surge was EIA data showing that American oil stockpiles are finally starting to go down, falling by 2.1 million barrels to 455.89 million barrels in storage………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

Lower prices have had a mixed effect on commodities production. Metals like gold and iron ore have seen output stay stubbornly high — with Platts reporting this week that iron ore exports from key producers Australia and Brazil are running near record levels, despite a plunge in prices.
Other metals like copper and platinum are starting to show production slowdowns. But news this week suggests that one commodity appears to be responding fastest to lower prices. Thermal coal. On Monday, the world’s top coal-exporting nation, Indonesia, said that its production is in major decline. Having already fallen by double-digit percentages this year………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

Gold dipped again on Wednesday, marking its 12th decline in the past 15 trading days, as the US dollar continued to advance and equities optimists came to the fore amid apparent ‘Fed fatigue’ ahead of a crucial rates decision this week.
The metal slipped below $1,102 an ounce on the Comex division of the New York Stock Exchange and continues to drift lower and towards support levels that have been holding prices steady in recent weeks. This coincided with a two per cent rise in the dollar index, which tracks the greenback against other currencies, the Financial Times reports………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

We have touched on gold before in Kamich’s Korner, but a follow-up is warranted at this time. Gold is up nicely today and the charts show improvement. The news that has moved gold in the past — inflation fears, international tensions and turmoil, etc. — doesn’t seem to be the driver for the precious metal at this time. The gold market is kind of outside the normal credit system in that the Federal Reserve doesn’t use gold to accomplish its goals.
Nevertheless, everyone still watches the price of gold, much like everyone watches the price of oil. Gold can move independently higher, but traders like to see silver or what some call the “poor man’s gold” also move higher ……………………………………….Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

The best part of the Modi government’s new gold policy is there will be tax relief on capital gains if you invest in the proposed bond scheme for the yellow metal.
Finance Minister Arun Jaitley, who had initiated the new policy in his budget speech in February 28, is in the process of giving final touches to what could well turn out be a game-changer for the government in terms of tackling the country’s massive current account deficit. But it may be another two months before the notification for the schemes is made………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

There’s a bit of cheer ahead for gold, according to Capital Economics Ltd. While a U.S. rate rise, possibly this week, will hurt bullion near term, once liftoff is out of the way improving fundamentals for gold will propel prices to about $1,200 an ounce by year-end and $1,400 in 2016, commodities economist Simona Gambarini said.
Spot prices traded little changed at $1,105.31 at 11:38 a.m. in Singapore after ending 0.3 percent lower on Tuesday, the fourth day prices moved less than 0.5 percent at the close. “There’s going to be a negative reaction in the very short term, in the month or weeks following the rate hike,” London- based Gambarini said in an interview. “Once that has been digested and it’s gone, then investors will get back into the gold market.”……………………………………….Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

Despite the multiple threats to the global mining industry, base metals—such as gold, silver, platinum, aluminum, copper, lead, nickel, tin and zinc—and metals prices in the world market will recover in 2019, according to international mining and metals market expert Julia Ralph.
“Zinc, tin, nickel, in particular, will recover very strongly in terms of market prices,” she told participants of the Mining Philippines 2015 Conference and Exhibition at the Solaire Resort and Casino in Manila on Tuesday. “Lead and copper global market prices will have a mild improvement,” she said………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

Bets on higher stock-market volatility are at a record high, signaling increasing concern about the outlook for U.S. shares. Wagers by hedge funds and other speculative investors that futures tied to the CBOE Volatility Index will rise outstripped the number of bets on a falling VIX by 37,925 contracts as of Sept. 8.
That’s the biggest net bullish position on record, according to Schaeffer’s Investment Research’s analysis of data from the U.S. Commodity Futures Trading Commission going back to 2005. A bullish bet on VIX futures signifies a belief that investors will be rushing for protection against market downdrafts. The VIX, the market’s “fear gauge,” is based on the prices of S&P 500 options, which tend to rise as stock prices decline………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

Any way you slice it, a combination of Anheuser-Busch InBev NV and SABMiller Plc would mean the big get bigger. The two companies are by far the largest players in the industry by almost every metric. Market share is the first one that jumps to mind for many merger arbitrageurs who wonder how such a deal would fare with antitrust regulators.
Combined, the two companies would control almost 30 percent of the global beer market. To put that in perspective, OPEC controls about 41 percent of the world oil market………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

Nigerian President Muhammadu Buhari said he opposed a weakening of the currency of Africa’s biggest oil producer and endorsed the central bank’s policy of restricting foreign-exchange trading.
“I don’t think it is healthy for us to get the naira devalued,” Buhari said in an interview in Paris with France 24 broadcast on Wednesday. The central bank is providing ample foreign exchange to “essential services, industries,” he said………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

Enough, surely. The currencies of emerging markets cannot go any lower, can they? Day after day they have hit record lows against the dollar, forcing hasty downward revisions to analysts’ forecasts. Last week Turkey’s lira broke through the TL3 mark and it has fallen 15 per cent in the past four months. South Africa’s rand fell below R13 last month. Its drop since mid-May is 12.5 per cent.
And the real, the Brazilian currency, is tipped by some analysts to be heading for R$4.40 after last week flirting with R$4 to the dollar. But some market participants are tempted to wonder about the EM currency decline bottoming………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

China is extending its control of onshore markets to commodities exchanges, spooked by signs that speculators have shifted from China’s volatile stock markets to commodities futures.
The country’s top commodities exchanges - the Dalian Commodity Exchange (DCE), Shanghai Futures Exchange (SHFE) and Zhengzhou Commodity Exchange (ZCE) - were asked recently by China’s exchange regulator to draft rules designed to “regulate the behaviour of program trading” in futures markets, according to people familiar with the matter………………………………………..Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

A British Conservative was picked on Wednesday to steer a major piece of climate law through the European Parliament, after deputies steered clear of Polish candidates opposed to carbon trading reforms that would penalize their coal-reliant country. Carbon market analysts said Ian Duncan was preferable to rivals from Poland’s Law and Justice party, which has threatened to pull Poland from the EU Emissions Trading System (ETS) if it wins an October election.
Poland has been at the vanguard of those seeking to prevent reforms that would strengthen carbon prices and increase the cost of burning coal, the most polluting of the fossil fuels. Interim reforms have pushed carbon prices on the EU Emissions Trading System (ETS) to around 8 euros ($9) per tonne, up from a record low of less than three euros in April 2013……………………………………….Full Article: Source

Posted on 17 September 2015 by VRS |  Email |Print

European companies have journeyed across the Atlantic to participate in US carbon markets, with Norwegian state-owned utility Statkraft one of the latest joiners – and more firms considering taking the plunge.
ICIS examines what opportunities and barriers exist for European companies in North America. The EU currently has the most established emissions trading system (ETS) in the world, but companies there are looking to expand their horizons to US systems such as California and the Regional Greenhouse Gas Initiative (RGGI)………………………………………..Full Article: Source

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