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Commodities Briefing 15.Apr 2016

Posted on 15 April 2016 by VRS |  Email |Print

The U.S. Senate Agriculture Committee on Thursday approved a reauthorization of the Commodity Futures Trading Commission, nearly three years after the legislative authority for the country’s commodities and swaps regulator expired. The head of the CFTC, Timothy Massad, praised the committee for clearing the way for the full Senate to vote on authorization.
“I am committed to continuing to work with Congress throughout this process, particularly on making sure end-users like agricultural producers can continue to safely and affordably use the derivatives markets, while ensuring these markets do not generate excessive risk to our financial system,” he said in a statement………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Commodity markets have begun to feel the heat this week as the greenback has continued to edge higher against currencies such as the yen and the euro even though the US central bank continues to sound a very dovish tone on interest rates.
The US dollar’s rise comes as foreign currency traders are becoming anxious that central banks in Europe and Japan will adopt yet more monetary stimulus – including boosting their bond buying programs and cutting interest rates even deeper into negative territory………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Only a few years ago people were queuing up to invest in Africa. As recently as 2012 Zambia paid less than Spain to borrow dollars. Private-equity funds dedicated to Africa raised record sums to invest in shopping malls and firms making everything from nappies to fruit juice.
Businessfolk salivated at the prospect of selling to the fast-growing African middle class, which by one measure numbered 350m people. Miners sank billions into African soil to feed China’s appetite for minerals. Now investors are glum. In the short run, they are right to worry. ……………………………………….Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

What is far more worrying is that several countries increased fiscal spending in response to the 2009 recession and then failed to reverse the increases as the recession receded. A vast majority of Latin American countries need to trim fiscal spending and undertake fundamental reforms while urging its borrowers not to cut capital investments, according to the Inter-American Development Bank.
The regional economies will remain weak until 2020 unless the countries reform their fiscal policies immediately, the bank said in an annual report released in Bahamas. Weak global growth, a fading demographic boom, lower commodity prices, and deteriorating fiscal positions have hit Latin America hard, plunging countries like Brazil and Venezuela into deep crisis………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Oil prices have increased 60% since late January. Is this an oil-price recovery? Two previous price rallies ended badly because they had little basis in market-balance fundamentals. The current rally will probably fail for the same reason.
Although oil prices reached the highest levels so far in 2016 during the past few days, the global over-supply of oil worsened in March. EIA data released this week shows that the net surplus (supply minus consumption) increased to 1.45 million barrels per day. Compared to February, the surplus increased 270,000 barrels per day. That’s a bad sign for the durable price recovery that some believe is already underway………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

The sharp rise in oil prices doesn’t necessarily reflect market fundamentals, BP’s chief financial officer said Thursday. Speaking on the sidelines of the company’s annual meeting in London, Brian Gilvary said that expectations surrounding a large oil producers’ meeting in Doha, Qatar this weekend to discuss a possible output freeze are driving prices.
“I think maybe the price is getting a little bit ahead of the fundamentals,” Mr. Gilvary said. “When it comes down to about $28, that is probably now the bottom for this year. We could easily see the price coming off from where it is at the moment,” he added………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

A prospective deal to freeze oil output at a meeting of producers in Doha on Sunday won’t change oil markets which have already started to rebalance anyway, a top energy watchdog said Thursday.
Russia and Saudi Arabia–the world’s top oil exporters–are set to meet with other oil nations in Doha, Qatar, hoping to reach an agreement to cap their supply level in order to revive oil prices. But in its closely watched oil-market report, the International Energy Agency said “any deal struck will not materially impact the global supply-demand balance” during the first half of 2016………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

India could soon overtake China as the country with the biggest thirst for crude oil. The South Asian nation is on track to replace China as the world’s top driver of demand growth for oil, the International Energy Agency (IEA) said Thursday in its monthly oil market report. As its population swells and economy expands, India could see growth of around 300,000 barrels of oil per day in 2016, the strongest volume increase for the country.
Those gains will help offset some of the sluggish demand for oil in China, the United States and much of Europe, the Paris-based watchdog group said. Growth in global oil demand is expected to ease to around 1.2 million barrels a day in 2016, about one-third less than 2015’s expansion of 1.8 million barrels a day………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Perception is reality. That is how Qatar’s Minister of Energy could have kicked off the letter inviting his Norwegian counterpart to the upcoming freeze-fest in Doha, which Bloomberg published on Thursday. In the letter, the minister claimed that mere talk of a freeze had “changed the sentiment of the oil market.”
He’s right. Brent crude has rallied by almost 40 percent since the idea of an output freeze first surfaced in February. Despite very mixed signals about it from Saudi Arabia, Iran and others, this has been enough to scare the short-sellers straight………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

OPEC and non-OPEC oil producers meet in Doha this Sunday to decide on what to do about the still depressed oil price. On the agenda is a proposal to freeze production at January or February levels, with a view to possibly cutting it at the following meeting in June.
Time was when such machinations would be front page news. Journalists would hang on the every word of OPEC’s vainglorious overlords, and their pronouncements would be major market moving events, with sometimes profound repercussions for the global economy………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

It is amazing how quickly markets can change. Just look at the gold. In three months, the yellow metal has managed to shake off its bear market and is now in at the start of a new bull trend, this according to one known gold expert.
Although gold prices have seen a pullback in the last two sessions — with June Comex gold futures settling Thursday $21.8 lower at 1,226.5 an ounce — the market is still holding on almost 16% gains since the start of the year………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

HSBC looks for the gold /silver ratio to narrow further, which would mean silver is outperforming. The ratio measures how many ounces of silver it takes to buy an ounce of gold. Comex May silver rose Tuesday even as June gold eased slightly, and silver has posted a smaller percentage decline so far Wednesday.
“We believe that retail demand for coins and small bars and light institutional buying in the paper markets has boosted silver,” HSBC says in a late-Tuesday research note. “Some near-term players are focusing on the gold-silver ratio, which is back below 1:78. We think the ratio will narrow further as price sensitive buyers, who want to participate in precious metals , turn more to silver.” ……………………………………….Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Investment demand for gold is more than offsetting weakness in the physical market, thereby driving prices higher so far this year, says UBS. “Many are becoming increasingly convinced about gold’s strength and believe that the market has entered a new phase,” UBS says, noting it has a “constructive” view on the metal.
“Those who are looking for higher gold prices argue that low/negative interest rate environments, deteriorating confidence (in) central banks and the effectiveness of monetary policy, currency depreciation and downside risks to equities markets should all make a case for more upside.”……………………………………….Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

After falling short of gold’s performance every year since 2012, silver is finally pushing ahead to post the biggest rally among precious metals this year.
While both benefit from mounting speculation that the Federal Reserve will be slow to increase interest rates, the white metal, which also has industrial uses, is gaining an added boost from signs of stabilization in China’s economy and the resilience of the U.S. expansion. In the spot market, an ounce of gold buys 75.96 ounces of silver, the least since December………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Private equity firm Waterton Global Resource Management is finding the best investment opportunities are in industrial metals as surging gold prices give precious metal companies some “breathing room.”
The Canadian firm, whose billion-dollar investment fund focuses on North American mines, expects to do half a dozen base-metal deals this year as producers continue debt-reduction efforts after prices slumped, Chief Investment Officer Isser Elishis said. In contrast, gold’s 16 percent rally this year is taking pressure off miners to sell assets, at least for now………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

A combination of positive signals on the Chinese economy and the fall in the dollar explain rising copper prices over recent days, the head of the Chilean Copper Commission said Thursday. Copper prices have risen almost 4% this week to around $2.19/lb.
Speaking in Santiago, Sergio Hernandez, executive vice-president of the commission, or Cochilco, said a key factor were most positive numbers on the performance of the Chinese economy, which consumes approximately half of the world’s copper………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

The first quarter of 2016 was a rollercoaster for investors. But despite the volatile market conditions the European ETF industry attracted €9.94 billion of new money. The European exchange-traded-fund (ETF) industry attracted €10 billion of net new money in the first quarter of 2016.
Expectations for this corner of the passive fund world were particularly high in the wake of a record-high 2015 when investors placed €72 billion in these investment vehicles. Given this backdrop, it would be tempting to class the quarterly outcome as somewhat disappointing. However, this would be harsh judgment given the rather volatile market conditions experienced during the period………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

ETFs are becoming increasingly popular with investors due to their low costs, transparency and ease of investing. However some investors do not know that ETFs are also very tax efficient specially compared with similar mutual funds.
Since most ETFs track well-known market indexes, that rebalance quarterly, they usually experience lower turnover compared with actively managed funds and thus create fewer “taxable events” that result in tax liabilities. For example, the most popular ETF- SPDR S&P 500 -has an annual turnover rate of less than 3%. ……………………………………….Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

The European Energy Exchange (EEX), the leading energy exchange in Europe, part of Deutsche Börse Group, will acquire the remaining shares in the Singapore-based Cleartrade Exchange (CLTX) from Freight Investor Holdings. The transaction will take effect as of 15th April 2016.
With this transaction, EEX further strengthens its commitment to become a global commodity exchange developing new asset classes and geographies, whilst continuing growth of its core markets. “With this transaction we are taking a further important step towards the expansion of EEX Group beyond Europe and beyond the energy sector”, explains Peter Reitz, Chief Executive Officer of EEX………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

The market’s version of the naughty step was a crowded place at the start of the year. Areas behaving badly and causing investors no end of worry included the oil price, China, the US economy and Brexit fears.
Three months on, Brexit has been abandoned by its fellow troublemakers, now that their behaviour has improved of late. China jitters and volatile oil may yet return to keep it company, but for now the second quarter looks like being all about the UK referendum on EU membership………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Yuan’s depreciation is largest since January; Singapore central bank eases policy to spur growth. Currencies across Asia including the Chinese yuan dropped sharply against the U.S. dollar Thursday, with markets caught off-guard as the Singapore central bank restrained the appreciation of its currency to stoke growth.
The yuan saw its biggest one-day depreciation since January, and the Singapore dollar fell by the most within a day this year. Meanwhile, the South Korean won weakened after the ruling party lost its parliamentary majority………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

Regarding climate change, the global community has excelled in procrastination. But time is running out. The scientific evidence is mounting, and the impact of severe climate changes is more tangible than ever. It is time for the global community to take responsibility and lead the way forward to implement a price on carbon.
The COP21 Paris Agreement brought us closer to a future of low-fossil-carbon prosperity. A future, in which those who emitted the least greenhouse gasses won’t have to face droughts, floods, and other devastating effects, resulting in poverty, migration and conflicts………………………………………..Full Article: Source

Posted on 15 April 2016 by VRS |  Email |Print

The European Union should change its rules on handing out permits to emit carbon dioxide after 2020 to better protect businesses at risk of relocating to regions without pollution curbs, according to a proposal by European Parliament member Fredrick Federley.
Federley, the lead lawmaker on EU carbon-market reform in the Parliament’s industry committee, seeks to modify a draft law by the European Commission through introducing varying levels of free permit allocation to companies………………………………………..Full Article: Source

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