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Commodities Briefing 01.Mar 2016

Posted on 01 March 2016 by VRS |  Email |Print

Another month in which commodity markets were caught in a blundering haste of the well-established yet narrow theology of talking heads, technician charts, and textual variants. Investors spent the month fretfully drawn to ambiguous pseudo-pictures including the breathless commentary of cheap gasoline, negative rates, Brexit, recession, and a flattening yield curve.
In February investors were preoccupied by those exercising great delight in pushing the limits of quantitative finance, mixing varied esoteric mathematical models, and producing a vortex of “doom and gloom” as an apotheosis for the masses. ……………………………………….Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

There were many announcements in the Budget that were favourable for the commodity market. The Finance Minister also announced a common e-platform for farmers for 585 wholesale markets. For commodity traders, the icing on the cake came in the form of the proposal to announce new commodity derivatives by SEBI.
The Indian commodity market is currently in shambles. The National Spot Exchange fiasco, the slow developments after the SEBI-FMC merger and the continued distress of farmers due to poor supply chain infrastructure have all added to the problems. The clean-up in the commodity market is finally happening. With the regulator SEBI being asked to introduce new instruments soon, the market will see its liquidity improve………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

The US economic recovery placed pressure on metals prices as investors continued to unwind commodities-based positions taken during the resource supercycle, according to Export Development Canada VP and chief economist Peter Hall.
It had not been an orderly event, particularly for commodities-focussed nations that experienced pain on the lower prices caused, he told an audience at a recent meeting of the Canadian Institute of Mining’s Management and Economic Society in Toronto………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

For leading U.S. shale oil producers, $40 is the new $70. Less than a year ago major shale firms were saying they needed oil above $60 a barrel to produce more; now some say they will settle for far less in deciding whether to crank up output after the worst oil price crash in a generation.
Their latest comments highlight the industry’s remarkable resilience, but also serve as a warning to rivals and traders: a retreat in U.S. oil production that would help ease global oversupply and let prices recover may prove shorter than some may have expected………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Crude closed at the highest in seven weeks as Saudi Arabia said it would work with other producers to curb market fluctuations and China’s central bank stepped up efforts to support the economy.
West Texas Intermediate oil increased 3 percent. Saudi Arabia wants a stable oil market, according to state-run Saudi Press Agency. China reduced the amount of cash the nation’s lenders must lock away. The Organization of Petroleum Exporting Countries reduced production by 79,000 barrels a day this month, according to a Bloomberg survey………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

World oil prices are controlled by the amount of crude oil stored at Cushing, Oklahoma. That’s because Cushing is the pricing point for WTI (West Texas Intermediate) oil prices, the most-traded oil futures contract in the world.
Cushing Storage Rules World Oil Prices: WTI and Brent oil prices have good negative correlation with the volume of crude oil stored at Cushing. Comparative inventory, the present volume of oil compared with the 5-year average, and oil-price volatility, the rate at which the price of oil moves up and down……………………………………….Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Saudi Arabia is standing firm - and idle - as the oil rout chokes its OPEC partners and other producers like Canada. Saudi oil policies aren’t the cause of the slump, of course. At the heart of it all is an oil glut.
But Saudi Arabia’s refusal to cut production, and simply suffer the collapse in prices without taking at least some action, is seen as aggravating an already bad situation among producers. We’ll get fresh evidence tomorrow of how the oil rout is hitting home when Statistics Canada is expected to report that the economy just about stalled in the fourth quarter of last year………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Rare stamps, Chinese ceramics, racing cars — such quixotic assets are a leap of faith for investors seeking refuge in difficult times. This, though, is no time for fripperies. Sustained market turmoil demands investment in big, dependable haven assets, such as the yen and government debt.
Nothing, however, shines brighter than gold and as other commodities flounder, the yellow metal has already gained 16 per cent this year, with buying having accelerated during February………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Gold remains a buy even though it has it has rallied over 16 per cent since the start of the year, according to a note from Deutsche Bank, with global central bank misfires making a strong case for bullion’s safe-haven status.
And in Australian dollars, gold has come within shooting distance of all-time highs, prompting Macquarie Bank to call Western Australia’s gold fields the “golden west”, whose operators were in a “purple patch”. However, while Macquarie predicts Australian dollar gold will break those record highs later this year, it is too late to be buying most gold shares, the bank warned………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

China is wobbling, oil is plummeting, Britain is threatening to quit Europe. And the gold bugs couldn’t be happier. With a 15% gain in 2016, gold’s rally has its diehard fans excited. But for how long?
This is the metal’s best start since 1980, when gold prices rallied about 270% to then all-time highs of $850 an ounce on an oil-supply shock crisis and raging inflation. This year gold prices are higher on worries over economic weakness in China and Europe, and the Bank of Japan’s surprise move to negative interest rates………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Gold has had a barnstorming start to the year, rising 17% since January 1st to its peak of around $1,260. The dynamic behind the rise in prices has been a heightened risk aversion and panic over… well, just about everything really.
Without fear to drive demand, gold suffers from the cost disadvantage of storage and finance costs but without the corresponding income stream of dividends. With Japan becoming the latest country to offer negative interest rates, investors sitting on cash are figuring out the sums on gold carry costs………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

With gold prices soaring this year after three years of losses, the world’s best performing bullion company is looking to add to its hedge book as a growing number of producers move to lock in profits.
St Barbara Ltd., the biggest gainer on the 44-member Bloomberg Intelligence Gold Mining Competitive Peers Index in the past year, Evolution Mining Ltd., Australia’s second-biggest producer, and South Africa’s Harmony Gold Mining Co. are among companies who’ve put in hedges this month spurred by prices hitting highs in some local currencies………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Gold’s comeback is dominating 2016. The precious metal is the year’s best-performing major asset. Its 16 per cent gain is topping gauges of high-yield and investment grade bonds, Treasuries, all currencies and major stock indexes in developing and emerging countries.
Turmoil across global equity and currency markets has sparked demand for a haven. Speculators raised their net-long position in gold to the highest in a year. SPDR Gold Shares, the world’s largest bullion exchange-traded fund, attracted $4.5 billion of new money in 2016, the most among all US-listed ETFs, according to Bloomberg data as of Feb. 25………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

What will the price of silver be in 2021? You can find articles suggesting the price of silver will be over $1,000 and under $10. Perhaps this is the wrong question. A better approach: The global financial system is increasingly unstable and fragile, more so than in 2008. The important question is: How will governments, central banks and financial systems respond to the ongoing crisis?
Future prices for silver are dependent upon the answer to that question. I suggest three possible scenarios. Scenario One – status quo: The next five years could look much like the last 20 years………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Sustained growth in mining production and export levels has managed to buoy Australia’s economy, protecting it from a potential recession, new BIS Shrapnel data states. Despite falls in trade and low commodity prices, Australia’s ability to fill the gap made by supply exiting the market has supported the country, while its multi-commodity base has inured it from the devastating effect of the oil slump.
“Canada slipped into recession in the first half of 2015 but has since recovered – although growth for this year is projected at a meagre 1.4 per cent,” BIS Shrapnel Chief Economist, Dr Frank Gelber said………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

There are at least two things that are clear this year regarding the commodities complex and its relevant exchange traded products. First, energy commodities are still in the dumps. Second, some other commodities and the corresponding ETFs, think precious metals, are rebounding in impressive fashion.
“As February comes to an end, so might be the commodity catastrophe. Although the S&P GSCI Total Return lost another 3.2% in the month (through Feb. 26, 2015,) bringing the year-to-date performance down to -8.2%, half of the 24 commodities in the index were positive for the month. Further, at least one commodity from each sector gained in February, and the majority of sectors, 3 of 5, were positive for the month,” said S&P Dow Jones Indices Global Head of Commodities and Real Assets Jodie Gunzberg………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

While the FM did not specify products likely to be introduced, market participants expect the introduction of option contracts in commodity derivatives, similar to those available in equities. Finance minister Arun Jaitley on Monday indicated that the government plans to allow the launch of new commodity derivative products to help deepen the markets.
While the finance minister did not specify the products likely to be introduced, market participants expect the introduction of option contracts in the commodity derivatives market, similar to those available in the equities market. They also expect a wider range of indices to be introduced………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Managing your money in one currency is tricky enough for most people. Imagine having to keep track of nine. That’s a hard fact of life for many of Zimbabwe’s businesses, who have been forced into the role of foreign exchange dealers after the country’s dollar collapsed and was withdrawn from circulation.
They’ll trade in the U.S. dollar, Australian dollar, South African rand, Botswana pula, euro, British pound, Japanese yen, Chinese yuan and Indian rupee. “Most currencies are for trading purposes,” Reserve Bank Governor John Mangudya told CNNMoney. “50% of our trade is with China and South Africa so we need to allow trading in many currencies.”……………………………………….Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

Finance ministers have vowed not to engage in currency wars to boost exports, but the scars from the financial crisis are still apparent. World finance ministers meeting at the G-20 summit in Shanghai this past weekend vowed not to engage in currency wars to boost exports.
But a look at emerging markets’ currencies shows plenty of battle scars since the global financial crisis that began in 2007. The Korean won is already approaching levels not seen since the financial crisis, while the Indian rupee has weakened against the U.S. dollar beyond levels set during a panic in emerging market assets during 2013………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

The EU is set to emit 2bn tonnes more CO2 than it promised at the Paris climate talks, threatening an agreement to cap global warming at 2C, a note from the European commission has revealed.
Carbon prices will rise too slowly to cut industrial emissions as much as needed, says a confidential note prepared for MEPs on the environment committee, which the Guardian has seen. Lawmakers say that the shortfall could spur criticism from other countries that signed up to the Paris agreement, which aims for net zero emissions later this century………………………………………..Full Article: Source

Posted on 01 March 2016 by VRS |  Email |Print

The World Bank will hold a $20 million auction for carbon credits from projects designed to cut methane emissions, offering up to 10 times the current market value, the bank said on Monday. The auction, to be held on May 12, comes at a time when investment in carbon-cutting projects under U.N. programmes has slowed as countries debate the design of a new global climate pact to come into force in 2020.
Methane is regarded as a highly potent greenhouse gas with a global warming potential 25 times that of carbon dioxide. The so-called Pilot Auction Facility will offer tradable price guarantees, or a strike price, of $3.50 per ton for carbon dioxide emission reductions, compared with current traded prices around 0.35 euros ($0.38)………………………………………..Full Article: Source

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