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Commodities Briefing 08.Mar 2016

Posted on 08 March 2016 by VRS |  Email |Print

Some traders have been ringing the bell for the bottom of the commodities collapse, just as markets are sniffing out the earliest signs of inflation. That’s important since a turn in commodities prices could mean a pickup in inflation, which is already starting to materialize, and that could get the Fed moving faster on interest rate hikes.
Fed funds futures on Monday began to price in a full rate increase for December, for the first time since late January. Futures had been pointing to the first rate hike in March 2017. “Services inflation has remained steady for a while. All you needed was commodities prices to stop going down and that changed the inflation calculation here,” said Peter Boockvar, chief market analyst at The Lindsey Group………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Iron ore prices soared the most ever Monday after China voiced willingness to stimulate the economy. The commodities rebound is being driven by speculation that investments in China’s housing market is recovering, Hao Hong, chief China strategist at Bocom International Holdings Co. in Hong Kong said in a report.
That means Chinese real-estate investments should also register a bounce when figures for January and February are released this month. Hong is not so sure: While housing inventories in bigger cities have fallen, it will “take years to clear” backlogs in smaller towns that account for 60 percent of China’s property investments, he said………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

The oil price has gone above $40 a barrel for the first time this year as commodities continue to rally. Brent crude, used as an international benchmark, rose more than 5% to trade at $40.83 a barrel. Oil dropped below $28 in January, but has since risen as part of a wider recovery in energy and metal prices.
The price of iron also shot up, rising 20% amid greater optimism about Chinese economic growth and demand for the metal in the country’s refineries. The price of Brent crude has now gone up more than 40% from the low it reached in January, although it remains 70% below its peak in the summer of 2014………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Last month’s agreement for major suppliers to freeze levels of oil output has given the price of crude a boost but the rally is unlikely to be sustained because the state of the global economy cannot easily be reconciled with higher energy prices.
A global mismatch between supply and demand remains, geopolitical differences between some major oil producers are unresolved and, arguably, the world may not actually be able to afford much more for a barrel………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Oil prices should fall, possibly hard, in coming weeks. That is because fundamentals do not support the present price. Prices should fall to around $30 once the empty nature of an OPEC-plus-Russia production freeze is understood. A return to the grim reality of over-supply and the weakness of the world economy could push prices well into the $20s.
An OPEC-plus-Russia production cut would be a great step toward re-establishing oil-market balance. I believe that will happen later in 2016 but is not on the table today………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Major Opec producers are privately starting to talk about a new oil price equilibrium of US$50 a barrel, adding to signs that the market’s long, deep rout is officially over, says one of the industry’s leading prognosticators.
Gary Ross, the founder, executive chairman and chief oil soothsayer at New York-based consultancy PIRA, told clients 2-1/2 weeks ago that he reckoned the “lows are in” for crude, which was then about US$30 a barrel. U.S. futures have rallied since then to close at nearly US$36 on Friday, with a handful of analysts also cautiously calling a bottom………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

The gold price continued its 2016 rally and hit a 52-high of $1,281 a troy ounce this month. The new high was recorded on Friday as investors lowered expectations on how fast and how far the Federal Reserve might hike interest rates this year following U.S. employment data that indicated strong jobs growth, but low wages.
Gold for April delivery on the Comex division of the New York Mercantile Exchange settled reached $1,280.7 a troy ounce before finishing at $1,270.70 a troy ounce on Friday………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Gold has been hailed as the “new black” in 2016. But after the precious metal’s best start to a year since 1980, signs are emerging that a newfound love for base metals could overrun the gold rush, says Citigroup.
Gold is up almost 20% this year so far, easily outperforming copper and aluminum as well as other asset classes, including equities. That’s largely because concerns over a serious economic slowdown in China and plummeting oil prices triggered a flight to safety away from riskier choices………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Gold prices are still on the rise, up over 19% year to date, with some investors now questioning whether or not they have missed their chance to get in on the action. However, according to one veteran gold investor, the ‘real move’ in gold is yet to come.
‘If this rally falters a little bit, some people will say it’s over and miss the real move, which I believe is to come,’ Rick Rule, president & CEO of Sprott U.S. Holdings, told Kitco News at the Prospectors & Developers Association of Canada in Toronto on Sunday………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

After a small Technical Pullback from $1,240 per ounce, Gold price will likely move up to test $1,500 per ounce through Dec 2016. The commentator is sure that the gold price is $1,500 per ounce in 2016.
Well, I will estimate the price of gold through 2016, 2017 and 2018. I will follow a traditional way to analyze time series of gold prices with an additive model. The model is formalized by a mathematical equation with 3 components……………………………………….Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Iron ore prices surged by a fifth on Monday, the biggest gain on record, as Chinese mills scrambled to replenish supplies of the steelmaking ingredient ahead of the summer construction season. If the move is sustained, it could add billions of dollars to the bottom line of the world’s largest miners.
Iron ore is critical to the profitability of companies such as BHP Billiton, Rio Tinto and Brazil’s Vale. Iron ore had been widely expected to remain in the doldrums amid excess supply and slowing Chinese demand………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Copper and zinc pulled back from their highest levels in more than four months on Monday, dampened by a firmer US dollar and as misgivings surfaced over China’s ability to stimulate underlying demand for base metals.
Three-month copper on the London Metal Exchange slipped 0.8 per cent to $US4987 a tonne by 1454 GMT to hand back some of the previous week’s 3.5 per cent rally. Chinese authorities gave assurances at the weekend that the top metals-consuming country would not experience a hard landing………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Lead prices have had huge up and down swings lately, but lead has managed to hold its value well this year. Last week, the metal hit an 8-month high. All base metals are up since the year started. Metals such as tin and zinc have made significant gains so far this year while aluminum, copper and nickel are also making some progress.
Although lead nose-dived at the beginning of January, prices have made a nice comeback since. But price rallies like this have been usual in previous years only to then be erased as prices trend lower. It will be interesting to see if lead prices can hold above these levels………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Copper and zinc pulled back from their highest levels in more than four months on Monday, weighed down by a firmer dollar and as misgivings surfaced over China’s ability to shore up economic growth.
Three-month copper on the London Metal Exchange slipped 0.5 percent to close at $5,000 a tonne, handing back some of last week’s rally, but off an earlier low of $4,940. Chinese authorities gave assurances at the weekend that the top metals-consuming country would not experience a hard landing………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Both oil benchmarks along with most metals have been posting positive returns for at least the third consecutive week, the company noted. Brent and WTI rose 5% and 4.5% respectively, with both benchmarks trading around their two-month highs for most of the week.
According to ETF securities this seems to indicate that the reduction of oil production in the US combined with key OPEC members’ decision to freeze production at January levels could be sufficient to reduce the global oversupply. A similar picture is emerging in precious metals, with all of them including gold have reached multi-year lows at times within the past six months and recovering since, posting an average return of 17% from their lows. ……………………………………….Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Self-managed superannuation funds and ETFs (exchange traded funds) are a marriage made in heaven, or so the experts keep telling us. Yet uptake of hugely popular ETFs in Australia has so far lagged the global explosion in these products.
Instead, self-managed super fund investors are notoriously weighted towards local equities and cash, with 60 per cent of assets allocated to these two assets, according to the latest figures from the Australian Taxation Office. Australian bank stocks are the most popular choice, making up almost 30 per cent of SMSF holdings, CommSec calculates, followed by resource firms at about 10 per cent, and telecommunications at 7 per cent………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

For unhedged investors, 2015 saw FX volatility savaging returns on a slew of assets – particularly in emerging markets – offsetting capital appreciation and coupon income, and fundamentally altering their risk-return profile.
As a result, demand for currency hedged passive exposure to foreign assets rose dramatically, with net inflows into currency hedged exchange-traded products (ETPs) in Europe totalling almost $4 billion and assets under management growing year-on-year by 28%, according to Deutsche Bank research………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Hedge funds and other currency speculators are adding to bets that the dollar will rise against its main rivals, suggesting that the U.S. currency’s renewed bout of strength may continue.
After five weeks of consecutive declines, speculators added $1.6 billion to long-dollar positions via currency futures during the week ended last Tuesday, according to the Commodity Futures Trading Commission’s latest commitments-of-traders report released Friday afternoon………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

A surge in commodity prices, from oil to iron to copper, boosted the Australian and Canadian dollars against the US greenback on Monday but other major currencies were stable. A surge in commodity prices, from oil to iron to copper, boosted the Australian and Canadian dollars against the US greenback on Monday (Mar 7) but other major currencies were stable.
Australia’s dollar jumped 0.7 per cent to 74.7 US cents while the Canadian currency traded up 0.4 per cent at CAN$1.3284 per one US dollar. But with markets already having prepared for more stimulus from the European Central Bank this week, and lack of any clear policy signal from two senior federal Reserve officials in speeches on Monday, the US dollar-euro rate was little-changed from Friday at US$1.1013………………………………………..Full Article: Source

Posted on 08 March 2016 by VRS |  Email |Print

Shanghai’s CO2 allowance price fell to a record low 8.50 yuan ($1.30) on Monday, with other Chinese carbon prices remaining depressed across the board amid uncertainty surrounding how the pilot schemes will cope with falling emissions and the looming transition to a national ETS.
The Shanghai spot contract fell 5.6% from 9 yuan to close at the lowest price ever seen in any of the Chinese pilots, although it was on light volume of 5,901 allowances changing hands. “I think it is a mix of thin demand, no support due to there being no auctions, and a lot of allowances borrowed by institutional investors,” one observer told Carbon Pulse………………………………………..Full Article: Source

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