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Commodities Briefing 26.Jan 2016

Posted on 26 January 2016 by VRS |  Email |Print

Something’s not right… Crude oil didn’t crash into the mid-twenties for no reason. World leaders and academics are to blame. They think higher taxes, more regulation, printing money and lower interest rates will solve their problems. Yet, this has crashed the world economy before our eyes.
Commodity prices don’t lie — they’re telling the real story. When politicians hunt down every spare cent, businesses won’t invest and consumers won’t spend. They’ll save for a rainy day. It’s why industrial commodities (i.e. iron ore, nickel, copper, zinc, lead…) are crashing. There’s less demand for goods in an oversaturated market………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Hedge funds betting on raw materials had the worst performance since the global financial crisis of 2008 as everything went wrong for commodities. The funds lost 5.2 percent in 2015 and recorded losses in 10 out of 12 months, based on an index compiled by Societe Generale SA that tracks the performance of commodity trading strategies including equities and physical products.
Managers lost money and commodity funds from Trafigura Pte Ltd. to Cargill Inc. closed last year as China’s slowing economy added to the global glut in most raw materials. Losses from poor performance and investor withdrawals left assets at the top 10 commodities hedge funds at less than $10 billion, compared with more than $50 billion in 2008, Trafigura said last month………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Oil prices are sinking again, fast, and miners and commodities stocks are once again finding themselves in that all-too familiar position at the bottom of the FTSE 100. As fastFT reported earlier, oil prices are once again heading south after a short-lived rally last week.
Brent crude is falling 3.7 per cent at publication time to $30.99 a barrel while WTI, the US benchmark, is down 3.91 per cent at $30.93 a barrel. There had been hopes that the worst may be over for oil prices but clearly the market didn’t get the memo today………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Oil prices plumbed new lows last week, dropping below $28 per barrel. But oil also closed out the week on a positive note, with huge gains on Thursday and Friday, rallying back above $30 per barrel. The price increase could be a sign that the markets think that oil has been far oversold, that trading this low has been “irrational,” as the head of Saudi Aramco put it last week.
Adding to the upsurge was growing speculation that central banks around the world will take additional action to provide some monetary stimulus amid worrying signs of faltering growth. EU central bank chief Mario Draghi provided the clearest indication yet that his institution may act as soon as March………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Friday’s oil price rally recommenced overnight in Asia, buoying hopes of a more sustained recovery. International benchmark Brent crude had risen strongly to above $30 a barrel at the end of last week, amid a broader-based market rally prompted by hopes of European Central Bank stimulus.
The worsening cold weather in the US, which saw violent blizzards across the east coast, added to the upward momentum, fuelling the sense that demand for heating oil would increase and pushing the price towards $33………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

An Iranian oil tanker, moored at the port of Assaluyeh for more than a year, set sail for South Korea last week, heralding a new period of uncertainty for world crude prices.
The global oil market, already suffering a supply glut, has been anticipating the arrival of Iranian crude for months, and now that sanctions against its nuclear program have been lifted, Iran is free to sell more of its oil into a market already oversupplied by 1.5 million barrels or more a day………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

OPEC officials said on Monday the oil market was poised to start rebalancing itself after prices sank to their lowest since 2003, a sign the exporter group will stick to its policy of not cutting supplies without help from rival producers. Oil prices have collapsed to below $28 a barrel this month from $100 in mid-2014 on a supply glut.
The drop gained impetus after the Organization of the Petroleum Exporting Countries in late 2014 shifted strategy to defend market share, not prices. The price drop has started to slow the development of relatively expensive supply sources such as U.S. shale oil and forced companies to delay or cancel billions of dollars worth of projects, putting some future supplies at risk………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Gold is tipped to fall for a fourth straight year in 2016, a Reuters poll showed on Monday, extending 2015’s 10 percent slide, although some lost ground may be recovered next year.
The poll of 41 analysts and traders carried out by Reuters over the last two weeks returned an average gold price forecast for this year of $1,118 an ounce, the lowest annual average since 2009. ……………………………………….Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Gold prices edged higher on Monday morning in London, writes Steffen Grosshauser at BullionVault, holding close to a 7-session high at $1107 per ounce as a rebound in Asian stockmarkets faded in European and pre-US trade ahead of this week’s decision on Dollar interest rates from the Federal Reserve.
“If gold can stay above $1100 in the coming days,” reckons Mark To, head of research at Hong Kong’s Wing Fung Financial Group, “it may signal a further rebound, maybe even to $1200 in the coming months.” “We believe the key reason for gold’s weakness is the near-record short [speculative] position in paper markets,” says a note from London bullion bank HSBC, “overriding robust physical demand and an outlook for declining supply………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

The $US15 trillion rout in global equity markets since May is reawakening the lure of gold for investors seeking safety. Hedge funds more than doubled their net-long position in bullion last week, just three weeks after they were the most- bearish ever.
Investor holdings of gold through exchange-traded products are expanding at the fastest pace in a year, and the value of the ETPs has jumped by $US3 billion in 2016. Bullion has seen a revival of its appeal as a haven after being mainly ignored last year in the face of the Paris terror attacks in November and the Greek bailout negotiations in July………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

When gold prices rise, silver normally does too – and it tends to outperform the yellow metal. Some commodities specialists think silver prices could stage a recovery this year. “There’s an inherent link between the two. Silver is gold’s little sister and when gold moves higher, silver does too,” says Clive Burstow, manager of Barings Global Mining fund.
Silver is notoriously volatile, and is down 2.27 per cent in the last month. But silver has something gold hasn’t – its use in industry. While the prices of most metals fell last year amid broad negativity towards commodities in general, silver also suffered from weak demand for electronics and other goods………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Copper prices are expected to see their lowest average in more than a decade this year due to weak demand growth in top consumer China and a supply overhang, a Reuters survey of metal analysts showed.
But 2016 is also likely to see losses come to an end as cuts in mine supply help balance the market. The survey of 32 metal analysts showed the median forecast for prices of the metal used in power and construction at $4,858 a ton this year, the lowest since 2005 when the number was around $3,600 and the commodities “super-cycle” was in its ascendancy………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Citi’s Aakash Doshi and team take a look at commodity flows in hedge funds, ETFs, and indexes Monday, writing that asset under management estimates for the end of 2015 suggest a “sharp” 18% year over year drop, well below their 2011 highs.
Doshi writes that oil’s big losses in the fourth quarter were behind an $11 billion loss in passive index valuations, a trend he sees continuing this month. “The passive index market, valued at c$125Bn, is now c$100Bn below levels seen during the height of the commodity super cycle.” Meanwhile, market caps of commodity ETFs slid 8% in the fourth quarter, in large part thanks to gold’s decline in the face of an interest rate hike from the Federal Reserve………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Count cocoa exchange traded notes (ETNs) among the commodities exchange traded products that are struggling in the early stages of 2016. The iPath DJ-UBS Cocoa TR Sub-Index ETN is off nearly 13% over the past month and some market observers are forecasting increased volatility for the cocoa market.
Last year, cocoa was supported by supply concerns out of west Africa where three-quarters of the world’s cocoa is produced, and the potentially negative impact of the El Niño weather pattern, which typically brings dry conditions across the region, reports Emiko Terazono for the Financial Times………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Investors pulled more than $1 billion out of U.S. exchange-traded funds that invest in emerging-markets as a third week of outflows left the ETFs down $3.9 billion this month.
Redemptions from emerging-market ETFs that invest across developing nations as well as those that target specific countries totaled $1.17 billion in the week ended Jan. 22, according to data compiled by Bloomberg. While losses narrowed from $2.12 billion the previous week, the outflows so far this month are the most since August, when they reached $6.1 billion………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Hedge funds turned less downbeat in bets on agricultural commodities for the first time since before Christmas – but wheat largely missed out on the move, raising ideas of the potential for some price support.
Managed money, a proxy for speculators, cut its net short position in futures and options in the top 13 US-traded agricultural commodities, from soybeans to cocoa, by 87,632 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

First it was the accounting firms and financial companies, and now even Hong Kong Exchanges and Clearing is going north, seeking to open a platform on the mainland to expand its commodities business. But the local bourse may find the challenges bigger than expected.
A trend that first emerged in the 1990s has seen the Big Four accounting firms, banks and insurance companies set up joint ventures or subsidiaries in mainland markets to capture the many business opportunities on offer there. The odd one out was the Stock Exchange of Hong Kong, now part of HKEx, which lured mainland companies to issue H shares in Hong Kong, starting in 1993, but never had any trading platform on the mainland………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

The Securities and Exchange Board of India, now also the regulator for commodity derivatives, has set up an advisory committee for the commodity market. It will be chaired by Ramesh Chand, member, NITI Aayog. On it are Sameer Shah, managing director, National Commodity & Derivatives Exchange and P K Singhal, joint MD at Multi Commodity Exchange of India.
Two senior officials of Sebi are on it, as are Vijay Sardana, a commodity expert, Gopal Krishna Nayak from the Indian Institute of Management at Bengaluru, and one G Chandrashekhar, said a source. The role of the committee is to discuss issues relating to regulations and development of commodity markets and suggest required measures to the Sebi………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

The currencies of commodity-exporting countries resumed their slide against the dollar Monday as oil prices halted a recent sharp rally and plunged again on renewed concerns about oversupply.
Currencies including the Colombian peso, the Russian ruble and the Canadian dollar all depreciated against the dollar after China reported on Monday that its diesel usage in 2015 fell from the prior year. On the same day, the chairman of the Saudi Arabian Oil Co. said that the state-run oil company can withstand low oil prices for “a long, long time,” reiterating the kingdom’s commitment to oil production………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Commodity currencies are making a comeback as increasing speculation central banks will step up stimulus revived demand for risk, upending this year’s favorite trades. The dollars of Australia and New Zealand climbed Monday, adding to gains from last week when they rose along with the currencies of Canada and Norway in anticipation of further stimulus from the European Central Bank.
Hedge funds added to bearish bets on commodity currencies in the week through Jan. 19, while building the most bullish yen position in almost four years. ECB President Mario Draghi is scheduled to speak Monday in a week when the Federal Reserve and Bank of Japan meet, with markets also speculating on monetary easing in China………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Food wholesaler Chioma Oluwaseun was sorting through the inventory in her warehouse to hike prices for imports, in line with a Nigerian currency that has lost a third of its value on unofficial “parallel markets” since last month.
Even though the naira is plunging on the street, a result of the collapse of global prices for oil exports, which Nigeria depends on for state revenue, the official exchange rate has yet to budge. But few think that situation can last much longer………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

Putting a price on carbon. It’s not a particularly novel idea, but it’s one that people in powerful positions are talking about again in the wake of the Paris climate talks and the annual meeting of the World Economic Forum in Davos.
Granted, high-level talk about the social, environmental and economic risks associated with climate change isn’t the same as taking concrete action to curb the carbon emissions contributing to hotter average temperatures………………………………………..Full Article: Source

Posted on 26 January 2016 by VRS |  Email |Print

EU carbon prices dropped back below €6 on Monday to hit a 20-month low, wiping out late last week’s ‘relief rally’ that had given brief respite to this month’s steep losses. The Dec-16 EUA futures on ICE fell to a session low of €5.72 before climbing back to settle at €5.91, a 45-cent or 7.1% daily loss.
Volume on the benchmark contract was very heavy at 29.3 million units including a rare 5 million gone EFP, in what was one of the busiest trading days seen so far this year. The loss reversed the recovery posted late last week, when prices climbed back from their previous low of €6.87 touched on Thursday to hit an intraday high of €6.55 on Friday, before settling at €6.36 – a weekly loss of 5.4%………………………………………..Full Article: Source

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