Etikett: SUGA

Profit taking multiplies as commodity prices rebound

ETF Securities Profit taking multiplies as commodity prices reboundProfit taking multiplies as commodity prices rebound

Commodity ETP Weekly – Profit taking multiplies as commodity prices rebound

•    Rising uncertainty benefits gold.
•    Net inflows into natural gas ETPs continue.
•    Copper rose on revised supply/demand balance.
•    Production drop boosted sugar price.
•    We will be hosting a webinar that will provide key insights into the fast emerging developments in robotics and the opportunities it represents for investors. Register here to attend

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Non-farm payrolls in the US surprisingly missed expectations by a large 53k, reviving market uncertainty about the timing of rate increases in the US. Weaker-than-expected trade balance data in the US added pressure to the USD. Commodities rose 3% on average as a result. Continued declines in global supply of many commodities combined with further corporate adjustments in production and capital expenditure should continue to lend support to the asset class. The FOMC minutes suggest that a rate rise is still likely to happen late 2015. However, downside risks remain elevated leaving investors in a wait-and-see mode, with October and November payroll figures likely to settle the matter.

Rising uncertainty benefits gold. Gold ETPs recorded net inflows of US$18.4mn for the fourth consecutive week as US non-farm payroll released the previous Friday came out extremely weak at 53k below market expectations. Investors are now looking for signs that the Federal Reserve will still increase interest rates this year. Combined with weaker-than-expected US trade balance, the USD slid 1% over the past week to Thursday while gold price rose 1.9%. Silver ETPs on the other hand, saw net outflows of US$11.8mn, likely on profit taking as silver price surged 7.3% during the same period. Increased volatility in the financial market lent buoyancy to silver, a commodity commonly considered as a leverage of gold.

Net inflows into natural gas ETPs continue. Natural gas ETPs recorded another week of net inflows last week ahead of the winter heating season in the US. While the Energy Information Administration (EIA) expects natural gas demand from heating to be 10% lower than last year, the agency forecasts natural gas price to average US$2.81/MMBtu this year. Prices have averaged US$2.75/MMBtu so far this year suggesting that there is still scope for gains in the coming months. Meanwhile oil was the best performer of the week. Brent and WTI soared 11.2% and 10.5% respectively on the back of declining production in the US according to the EIA latest data. In addition, EIA expects global consumption growth to rise by 1.3mb/d in 2015 and 1.4mb/d in 2016, an upward revision of 100,000 barrels per day compared to September figures. Positive sentiment should remain supportive of prices and eventually translate into flows.

Copper rose on revised supply/demand balance. Copper ETPs saw net outflows of US$8.1mn last week as the International Copper Study Group (ICSG) revised down their forecast for 2015 surplus from 364k tonnes to 41k tonnes in their October report released last week, taking into account larger production cuts as a result of recent corporate announcements. The ICSG also expects copper to be in a 127k tonnes deficit in 2016 as opposed to the 228k tonnes surplus previously forecast.

Production drop boosted sugar price. Lower-than-average rainfall in India combined with excessive rain in Brazil and a production cut in China have reduced sugar global supply, sending the price of sugar to its 7-month high. Sugar spiked 35% since its lowest level in August. As a result, sugar ETPs recorded net outflows of US$5.2mn for the second week in a row on profit taking mainly from ETFS Sugar (SUGA) and ETFS Leveraged Sugar (LSUG).

Key events to watch this week. Chinese trade data will give an indication of demand from the world’s largest commodity consumer. The Consumer Price Index (CPI) and market confidence for the US and Europe will also be in focus.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

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This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

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Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Price-Dips Attract Commodity Inflows

Price-Dips Attract Commodity Inflows

Commodity ETP Weekly Price-Dips Attract Commodity Inflows

ETFS Platinum (PHPT) received its highest weekly inflow since November 2014.
ETFS Sugar (SUGA) sees its highest ever inflow.
Long oil ETPs continue to see inflows.
ETFS Corn (CORN) sees highest inflows since February 2014.
ETFS Physical Gold (PHAU) saw the highest outflows since June 2014.

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The Federal Reserve Open Market Committee sent a mixed message, acknowledging the softness in prices while pointing to strength in economic expansion and jobs. US Dollar appreciated, focusing on the implications of economic strengthening on the likelihood of a rate rise. Most US Dollar priced commodities fell. The optimism in economic activity may sit at odds with the slightly disappointing GDP figures released later last week and this week’s jobs numbers could drive a reversal in Dollar strength (and hence commodity price weakness) if they prove to be disappointing.

ETFS Platinum (PHPT) received its highest weekly inflow since November 2014. US$32.8mn flowed into PHPT last week. Platinum had rallied 6.6% since the beginning of the year before last week’s 3.6% correction trimmed the gains down to 2.2%. Investors appear to be buying into price dips. Global car sales have continued to rise, supporting demand for the metal that is used in autocatalysts.

ETFS Sugar (SUGA) sees its highest ever inflow. In a week of plummeting prices, SUGA saw US$42.9mn of inflows, more than double the next highest weekly inflow into the product in 2008. Sugar prices fell on the back of rain in Brazil providing relief to stressed land. Brazil is the world’s largest producer of raw sugar. India, the second largest producer, is currently deciding on how much export subsidies to award its cash-strapped sugar industry. Some of the recent volatility in prices has been driven by speculation on the size of this subsidy.

Long oil ETPs continue to see inflows. WTI and Brent ETPs have respectively seen 18 and 7 consecutive weeks of inflows. Despite price declines over most of that period, investors appear convinced that prices will increase. We believe that supply will tighten as loss-making non-OPEC oil rigs are progressively switched off. Last week a 7% fall in rig counts in the US drove a late-week price rally. OPEC will also likely cut production in the second half of the year once the rest of the world has demonstrated their willingness to pull back.

ETFS Corn (CORN) sees highest inflows since February 2014. Bargain-hunting drove US11.0mn of inflows into CORN. Corn price fell 3.2% last week, 10.0% over the past month. With bumper production last year, many expect reduced planting this year to help stabilise the market.

ETFS Physical Gold (PHAU) saw the highest outflows since June 2014. Reversing part of the US$163.8mn inflows from the previous week, US$108.5mn of outflows last week tracked the 2.1% decline in gold price. While there was no immediate fallout from the change in Greek government, the risk of surprises in the bail-out renegotiation process could drive haven demand for gold higher in coming months.

Key events to watch this week. After last week’s disappointing US Q4 GDP figures, the market will focus on the US jobs market data this week for signs of further economic stress. A weak payrolls reading will be seen as a cue for the Federal Reserve to delay rate rises that are expected in September this year. The market is currently looking for 233,000 new jobs added in January. The Bank of England and Reserve Bank of Australia are due to have their respective policy rate meetings this week. While no rate changes are expected, commodity price weakness could tip the balance for the RBA as it had done for the Bank of Canadian two weeks ago.

Video Presentation

Nitesh Shah, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.