4 Current Commodity Tips You Need to Know About

 

Commodities are an incredibly strong investment choice. A great way to build a diverse portfolio, they lack the volatility of stocks while providing great room for financial growth.

But investing in commodities without knowing what you’re doing is a bad idea.

If you want to make this investment, you’ll need to develop an intelligent strategy. Here are some commodity tips to help you make that move.

Commodities Explained

Before you read any other commodity tips, you need to understand the concept. Commodities are structured trades around the delivery, sale, import, and export of a particular good. Popular commodities include oil, gold, and soybeans.

The most popular strategy for investing in commodities is signing a futures contract. These ensure that you will own the commodity for a set amount of time before selling it on a certain date at a specific price.

Here are a few tips for making the most out of your commodity trades in 2017.

Why ETFs Are A Good Choice

If you’re looking for an effective way to invest in commodities, one of the best ways to do it is through ETFs. ETFs, or Exchange-traded funds, can either monitor a commodity or a specific market index.

ETFs can be a great way for beginners to invest in commodities. They are easy to manage and involve a lot less red tape than a futures index. While investing in ETFs is not the only way to make a profit off of a commodity investment, it is the best way to get acquainted.

How To Use a Short Position

Many have a strong preference for the simple game of going long on their commodities. But this can be a mistake. There’s a lot of money to be made off of the short sell, and it also isn’t particularly difficult.

If you detect a market depreciation, you should sell shares in a commodity. Let the commodity depreciate in value: when you feel it has bottomed out and will experience a resurgence in value, you should buy shares.

This will allow you to minimize the cost of purchasing valuable commodities while profiting off of purchases of a commodity at a low value. Every trader should stop worrying and love the short.

Read The News (Financial and Otherwise)

Commodities are very complex. But in a way, they can also be relatively simple to understand. As a matter of fact, indexes for every commodity from corn to currency will appear in the newspaper. And not just in the business section.

Staying on top of everything from policy to boardroom rumors can help you make the right decision. So devote at least an hour to the news each day.

Be An Oil Skeptic

Oil is one of the most popular commodities. And while it can perform well or poorly in various technical analyses, an essential part of risk mitigation involves taking a look at the international political environment.

Whether it’s through long-term transformations in the energy market or instability in OPEC nations, the future for oil is questionable. In the name of risk mitigation, we would advise approaching oil with caution.

Beyond Commodity Tips: Work With Us

Tips can take you far. But you can go even further by working with seasoned financial professionals.

We’re experts in various areas of trading. One of these areas is commodities trading. But whether you’re looking to succeed at the trading of commodity ETFs or to continue boosting an already thriving portfolio, we’re the best people to work with.

Contact us to take your trading strategy to the next level.

Trade Finance News, Update & Trends Around The World

Bank Of America Merrill Lynch Supports Blockchain Innovation For Trade Finance

In an interview released on September 22, 2017, Peter Jameson, co-head of product management, GTS EMEA at Bank of America Merrill Lynch, spoke on the merits of blockchain technology and what it can bring to trade finance.

Jameson’s take on blockchain technology is optimistic and he thinks it can provide immediate benefits. He said, “The distributed nature of blockchain means that you could quite easily move from a place where a lot of things have to happen in sequence to a technology where a lot of the players involved in the transaction can do what they need to do all at the same time.” The so-called atomic swap, or instantaneous exchange of ownership, can easily be facilitated by blockchain-based settlement systems and executable distributed code contracts (also called smart contracts). Jameson said this capability is very powerful, given “the slow nature of some of the trade transactions today.”

Source: https://www.ethnews.com/bank-of-america-merrill-lynch-supports-blockchain-innovation-for-trade-finance

ICOs: the next goldmine for trade finance lenders?

An increasing number of non-bank lenders are looking to initial coin offerings (ICOs) as a source of funds for trade finance lending.

ICOs – also referred to as token sales – are unregulated means of crowdfunding, using cryptocurrency. In theory, through an ICO, you can raise money from anybody, anywhere in the world.

This is done by issuing digital tokens. Early backers are usually motivated by a prospective return on their investment, as a startup’s success would often translate into a higher token value.

For trade finance lenders, it offers access to an unorthodox – and, theoretically, unlimited – pool of investors in a market that is booming. In July, a report by research firm Autonomous found that startups had raised in total a record US$1.27bn in the first half of 2017 through ICOs, while the top four ICOs of the year, according to research firm Smith and Crown, have to date raised US$660mn between them.

Source: https://www.gtreview.com/news/fintech/icos-the-next-goldmine-for-trade-finance-lenders/

The C-Suite Challenges of a Trade Finance Bank

An insight into the challenges that plague the C-Suite of a bank determined to lead the trade finance business. Is Digitization the answer?

Trade Finance has been a well established and important business for Banks and Financial Institutions. Hardly any domestic or international Trade activity can take place safely and successfully without some form of trade financing, in fact as much as 80% of annual global merchandise trade is enabled through some form of trade financing. This financing can range from traditional instruments like Letters of Credit, Bank Guarantees to a more contemporary form of open account based supply chain financing.

Source: https://www.finextra.com/blogposting/14522/the-c-suite-challenges-of-a-trade-finance-bank

Trade Finance Revenues Slip $2.8 Billion At Top Banks

Top banking firms across the globe saw a $2.8 billion decline in transaction banking revenues in the first half of the year, marking a seven-year low for this area of banking, finds a new report from analysis firm Coalition.

Reports Tuesday (Sept. 19) revealed news that global transaction banking revenues jumped 4 percent year over year, hitting $18.6 billion for the first half of the year. The Americas and Asia led the increase, which also enjoyed a spike thanks to cash management revenues, which saw $11 billion in revenues in H1, a 7 percent increase and a six-year high. Coalition analysts pointed to an increase in deposit productivity.

Citigroup, HSBC and JPMorgan led the transaction banking and cash management increases, researchers noted. But the drop in trade finance reflected a decline in commodities trade finance, with corporate customers reducing activity, especially in Asia, the report found.

Source: https://www.pymnts.com/news/b2b-payments/2017/coalition-says-trade-finance-revenues-fell-2-8-billion/

Trade finance fund may be an answer as Fed, ECB prepare to unwind

As the US Federal Reserve (Fed) and the European Central Bank (ECB) prepare to unwind their easy money policy, which was in place since the financial crisis almost a decade ago, funds which are into trade finance among others may benefit.

With a rebound expected in global trade, and as banks become vary to finance companies in need of working capital, alternative sources like trade finance funds are gaining prominence even as analysts are expecting turbulent times in stock markets, which have been hitting record highs amid growing risks including geopolitical tensions and rising global debt.

“It’s a [Trade Finance] fund that will benefit from rising rates. In a rising rate scenario, equities and bonds take a beating, and this [trade finance] is an investment in the real economy,” said Doug Bitcon, head of credit strategies at Rasmala.

Souce: http://gulfnews.com/business/sectors/markets/trade-finance-fund-may-be-an-answer-as-fed-ecb-prepare-to-unwind-1.2094114

ABN Amro implements CBA trade finance front-end across global operations

Norwegian software vendor Commercial Banking Applications (CBA), today announced that ABN AMRO will be implementing the new IBAS Customer Front-End System for Trade Finance across its global operations as part of a project to offer additional functionality to customers, increase efficiency and reduce total cost of ownership.

The new IBAS front-end interfaces seamlessly with CBA’s IBAS Global Trade Finance Factory (IBAS GTF) mid- and back office solution. IBAS GTF is already being used by ABN AMRO to manage its trade finance operations across Europe, Asia Pacific and North America. The bank expects to put the new IBAS front-end into production in Q4 2017, replacing Surecomp’s allNETT solution in the Netherlands and manual processes elsewhere.

Source: https://www.finextra.com/pressarticle/70735/abn-amro-implements-cba-trade-finance-front-end-across-global-operations

Trade finance revenues hit seven-year low

Global trade finance revenues reached their lowest level in seven years, with a 5% decline year-on-year for the first half of 2017.

Total trade finance revenues for the ten largest global transaction banks (Bank of America Merrill Lynch, Barclays, BNP Paribas, CITI, Deutsche Bank, HSBC, JP Morgan, Société Générale, Standard Chartered and Wells Fargo) fell to US$2.8bn compared to US$2.9bn in the same period last year, according to the latest report by analytics company Coalition, which monitors bank activity.

Trade finance revenues comprise of traditional trade finance such as LCs as well as structured trade finance products. Structured trade finance revenue declined significantly, driven by reduced commodity trade finance activity across all regions, Coalition’s research director Eric Li tells GTR.

Source: https://www.gtreview.com/news/global/trade-finance-revenues-hit-seven-year-low/

DIGITALISATION AND TRADE FINANCE: WHAT’S NEXT?

Globalisation and the proliferation of technology have transformed the business world as we know it. But digitalisation is a priority for one industry in particular: trade finance. Greater use of technology could bring numerous benefits to the industry and even help plug the trade-finance financing gap—estimated at US$1.6 trillion by the Asian Development Bank (ADB).

As the ICC (International Chamber of Commerce) Banking Commission’s latest Global Survey on Trade Finance highlights, however, this is also a sector that has yet to fully realise the benefits of new technology. Fortunately, there is plenty that can be done to accelerate the digitalisation of the industry.

Source: https://internationalbanker.com/finance/digitalisation-trade-finance-whats-next/

AfDB, UBAF to Co-Sponsor Seminar on International Trade Finance

The African Development Bank (AfDB), in partnership with the Union de Banques Arabes et Françaises (UBAF), will co-sponsor a seminar on international trade finance in Abidjan, Côte d’Ivoire, from 3 – 5 October 2017.

Representatives of banking institutions from Côte d’Ivoire, Mali, Benin, Burkina Faso, Guinea, Togo, Senegal, Chad, Gabon and Niger will take part in this event, with the goal of improving their professional practice in international trade finance. Issues related to specific foreign trade financial products and the risks associated with managing these operations will be addressed.

This seminar will enable participants master trade finance issues, particularly documentary credit and standby letters of credit. It will also provide information on issues involved and characteristics of various trade finance products, including credit risk, conformity, communication and tools through practical case studies of traditional and structured transactions for commodities financing.

Source: https://www.newsghana.com.gh/afdb-ubaf-to-co-sponsor-seminar-on-international-trade-finance/

Commerzbank names Asia trade finance head

Deepan Dagur has been named head of trade finance and cash management, Asia, at Comerzbank.

Dagur is based in Singapore, reporting to Nick Johnson, regional board member for Asia, and March Kirchhoff, global head of trade finance and cash management.

He replaces Brigitte Volz, who took over a new role in the operational development group. He joins from ANZ, where he spent five years in various senior transaction banking roles. He previously worked with Standard Chartered, consultancy Bain and Company, investment bank Salomon Smith Barney and UBS Warburg.

Source: https://www.gtreview.com/news/on-the-move/commerzbank-names-asia-trade-finance-head/

$1.5 Trillion Trade Finance Gap Persists Despite Fintech Breakthroughs

Businesses of all sizes continue to struggle to access sufficient credit, resulting in a global trade finance gap of $1.5 trillion in 2016, according to an Asian Development Bank (ADB) Brief released on September 5. Developing Asia’s share of the trade finance gap was 40% of the global total.

In its fifth annual study, 2017 Trade Finance Gaps, Growth, and Jobs Survey, ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 515 banks and 1,336 firms from 103 countries. While the global trade finance gap stabilized in 2016 compared to the 2015 record high of $1.6 trillion, it still translated to missed growth opportunities and job creation.

“A sizeable trade finance gap is a drag on trade, growth, and job creation,” said Steven Beck, Head of Trade Finance at ADB. “We hope the results of the survey will encourage private and public sectors to ramp up collaborative efforts to improve businesses’ access to trade finance. Our Trade Finance Program (TFP) is here to assist and address these market gaps.”

Source: https://www.finchannel.com/business/67518-1-5-trillion-trade-finance-gap-persists-despite-fintech-breakthroughs

THE TRADE FINANCE GAP STANDS AT U$1.5 TRILLION. WHAT CAN CFOS DO?

What is happening to global trade?

There are three forces driving the US$1.5 trillion trade finance gap:

  • High number of rejected trade finance applications from the Asia Pacific (APAC) region
  • High rejection rate of applications from SMEs and midcap organizations
  • Reduced lending by banks to SMEs due to perceived risk (Know-Your-Customer issues) and declining profitability in trade financing

Taking a deeper dive into the trade-finance shortfall, the ADB report says Asia and Pacific are continuing to drive this gap. The general lack of trade finance provision is due to a high number of rejected applications – against the backdrop of the largest number of proposals/requests made for trade finance (see chart below).

It’s likely to be the perceived risk of emerging market financing that is driving this shortfall.

Source: https://www.cfoinnovation.com/story/13635/trade-finance-gap-stands-u15-trillion-what-can-cfos-do?destination

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Above news update and trends are sourced from internet and are purely meant for reading on the related subject and for information. Adam Smith Associate is not responsible for any of the content and nor it is meant for any commercial benefits

 

Nifty Small Cap Watch Out

Nifty Small 100 index has the most perfect chart for the set up that I have been considering for the Midcap Smallcap segment. That wave E of an expanding pattern is developing

 

This second chart published later in the evening day before to Insiders shows that momentum indicators rolled over as prices failed to breakout and today prices have broken the break down point and so wave E throwover should be compete. The implications should be going back to the lower end of this range and like the previous two occasions it can happen quite quickly.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

Currency Technical Analysis Report

USDJPY

After weeks of waiting USDJPY is back to rising. It did not fall below 61.8%. I am not sure of the long term structure but even if we consider corrective waves a move up to 115 or 118 again cannot be ruled out to start with

 

USDINR

On Wednesday I rejected the idea of any last move down in the USDINR as it moved up a lot. So we started minor wave iii up as discussed and earlier expeccted. On the long term chart i have repeated the 40 month average near 64 that needs to be protected and so far as shown below. Doing so the monthly chart would set up for wave 5 longer term to start. Here the 4th wave circle retraced close to 23.6% of wave 3 [63.04]. This meets the alternation requirement between waves 2 and 4, where wave 2 was 61.8%. Even within the third wave wave 2 is a running correction and wave 4 a zig-zag, meeting alternation in structure. Wave 5 of 3 shows loss of momentum. Now from here 5=1 points to 85 in the coming year. I say year as time is never exact. On the top of the chart you see two completed cycles with momentum back below zero. So the first thing we will look for is momentum to go back into buy mode and then above zero.

US 10 Years T Notes

Thanks to Fed we have the first day of a breakout in yields. Now to watch that the trend holds and continues after the event. Confirmed would mean wave 3 to a yield above 3% in the coming months. 

EURO

The Euro is at the fag end of a 5th wave rally starting April. The triangular base between Jan-Apr, can either be just that a triangle or waves 1-2 of the larger move. We will know which later. But taken as a triangle we have just completed the first meaningful advance in the Euro from a Long term Uptrend perspective. Now you may get a retracement of the rise. If the entire rally is a larger wave 1 then wave 2 down is open to all retracements. That will provide enough meat for the Euro bears to publish the End of Euro stories all over again. The real answer will come from the markets themselves. A higher bottom long term on extreme negative sentiment is what wave 2 declines are made of. There is no end of Euro anytime soon. Currencies do not just die, currency systems do. A break of 1.187 should mark the start of a clear downtrend that can last for 1-3 months

USDMXN

USDMXN bottomed in July in 5 waves. Wave A complete it is trying to start a wave B rally for a while. A move up should at least carry it to the 38.2% retracement mark near 19.20

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Commodity Technical Analysis Report

ALIMINIUM MCX

Aluminium MCX prices achieved 5=1 on this chart and closed down. Is wave 5 over? It maybe work considering if this 5 wave move can be retraced given that the trendline of the highs since 2010 at 141 and the rising channel at 143 are close. Consider yesterdays high at 141.40 as important till clearly taken out.

PALLADIUM

Palladium prices stopped at the trendline of the highs from 2010 and this could mark an important resistance or top. Without putting a number on the downside implications the trend may turn down from here [980].

COPPER

The short term decline in copper is looking like 5 waves down, meaning that it is only wave a of a correction. This raises the odds that the 5 wave advance from 2016 is complete and a more meaningful pullback near term can unfold. 2.875 is the first key support. 3.03 is resistance

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Gold, Silver & Platinum Technical Analysis

GOLD

Gold may be developing a leading diagonal as the 5 wave decline is overlapping. This would change if we fall below 1286 because then the third wave would become the shortest violating the wave count. wave A should be retraced in wave B up to 1315 or best case 1331 near 61.8% before the decline continues. Below 1286 prices may slide to 1270 near the 20 week average.

SILVER

Silver like Gold also witnessed a breakout failure and the rise so far is corrective. Unless there is new bullish evidence this pushes us back to the triangle view. The recent high would be wave D and wave E down would follow. We could spend months in a slow grind down as prices drop towards the lower end of the range near 15.30$.

PLATINIUM

As Precious metals start another corrective phase so do Platinium prices and they may decline to the lower end of this long term range. The lower line is near 822 where we should look for a possible bottom. Currently at 935

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

EURINR, USDINR and US 10 Year T Notes Technical Analysis

EURINR

The EURINR completes a 5 wave rise from April and should now be in wave 2 down, that can retrace 23.6% to 75 at least or 73.75 near 38.2% retracement

US 10 YEAR T NOTES

After a long wait the US 10 year and 30 year momentum indicators rolled over yesterday and tonight they broke the rising channel from the July low so the move up should be complete. The bond market started its next wave down. Unless it is part of a more complex rise, we should anticipate that wave 3/C down long term has finally started. Prices sold off from the 20 month averages. Next will be the broader rising channel from the March low.

USDINR

USDINR has spent a lot of time trying to move higher so it is possible that wave C down is developing into an ending pattern. The 20 week average at 64.24 is acting as a still resistance that can push prices down in wave e to 63.32. Unless we get above 64.24 this maybe the case. Once wave C is complete prices should start a prolonged advance.

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

 

Gold MCX and Gold Trend Analysis

GOLD MCX Daily

Prices closed below the 20dma and heading to the 40dema at 29400. If that breaks then the lower Bollinger band is at 29065 as the next support near a 50% retracement of wave 1.

GOLD

Gold broke below the 20dma and the rising channel for the trend. All the near term tops during 2017 that rose in 3 waves and broke the channel so far were followed by further declines. So far this looks the same. The move from 1204-1357 is 3 waves up and has broken down.

What this can mean is that the entire rise is still corrective in nature and will go back to test 1200 again. The final confirmation level is at 1278 below which the rise cannot convert to an impulse anymore. The 2016-2017 period will end up looking like a triangle when prices test the lower trendline once more. And a breakout above the neckline at 1350 will make the 2013-2017 pattern a inverted head and shoulders

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd

Nasdaq, Brazil, EURO, DAX & S&P 500 Technical Analysis

NASDAQ COMPOSITE

Negative divergences continue on the weekly momentum for the Nasdaq that keeps bouncing back from the 20wma support [red average], The bands are narrow and either prices can expand the bands again by breakout out upwards or else we should at least pull back to the lower Bollinger band near 6041 [Upper end 6472]

BRAZIL

Brazil is the big beneficiary of the falling dollar. The equity market there was in a bearish trend from 2010-2016 when the dollar was rising. Now it is just the opposite. Wave 2 circle did not retrace much as I was anticipating and now wave 3 circle points to 11500 odd. This is a bull market. The Indian market does not relate with this at all.

EURO

During the last week the Euro fell in 3 waves and that leaves open one last alternate that wave 5 is still forming as a triangle. Wave e of 5 can push up to 1.21 a last time.

DAX

I wrote some time back that the DAX index is a leading diagonal in wave 1. Since then we are waiting for wave 2 to complete. Wave 2 is taking the shape of an expanded flat. Wave c of 2 up is now forming and c is now =161.8 times wave a, so the Fibonacci projection has been achieved. Wave wise wave c has to be 5 waves and might need one more up down sequence to complete. After that we can expect a major 3rd wave decline in European stocks or at least the DAX as a leading indicator.

S&P 500

S&P 500 is back at the upper end of the long term channel from 2009, at 2500. The trendline of the highs from June to August goes higher to 2522.

 

Adam Smith Associates offers trade & commodity finance related services & solutions to its domestic and international clients. Views expressed in this article are purely of the author – Mr Rohit Srivastava – a leading technical analyst. Visit www.adamsmith.tv for services offered by Adam Smith Associates Pvt Ltd