ESMA sets first 3 commodity position limits | CFTC gives 2-year extension on position aggregation requirements | CFTC chairman vows to rewrite swaps-execution rules
August 17, 2017
Commodities Insight SmartBrief
Regulatory insight and top news for commodities markets
Regulatory & Compliance
ESMA sets first 3 commodity position limits
The European Securities and Markets Authority has released position limits for rapeseed, corn and milling wheat. Though ESMA says no more limits will be published "for the time being," the agency had indicated it would publish all final limits on commodity derivatives by November.
Risk (subscription required) (8/11),  Futures & Options World (subscription required) (8/11) 
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CFTC gives 2-year extension on position aggregation requirements
The Commodity Futures Trading Commission has extended temporary relief for certain position aggregation requirements until Aug. 12, 2019, responding to concerns from FIA and other groups. The CFTC says it aims to "strike a balance" between industry concerns and a need to perform surveillance and monitor positions.
Futures & Options World (subscription required) (8/11) 
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CFTC chairman vows to rewrite swaps-execution rules
Commodity Futures Trading Commission Chairman J. Christopher Giancarlo says rewriting swaps-trading rules to better reflect the Dodd-Frank Act is a top priority. "The swaps market cannot, will not trade the way futures trade," he said.
The Wall Street Journal (tiered subscription model) (8/11) 
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Energy regulator says anti-manipulation rules are clear
Sean Collins, director of analytics and surveillance at the US Federal Energy Regulatory Commission, says criticism of the commission's anti-manipulation standards for natural gas and power markets as too vague are unfounded. "I think consultants, lawyers, compliance departments and internal counsel do a good job of explaining to them what is coming out of FERC and how to interpret what the FERC settlement orders or show cause orders are saying," he says.
Risk (subscription required) (8/9) 
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Hot Topics
This Week in Commodities
World looks to Henry Hub for natural gas prices
An abundance of natural gas from US shale drillers is flowing into Louisiana's Henry Hub, where numerous pipelines converge. This is elevating the hub from its status as a US price benchmark to global prominence as US gas spreads to markets around the world.
The Wall Street Journal (tiered subscription model) (8/17) 
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Commodity shippers monitor US-North Korea rhetoric
The potential conflict between the US and North Korea has commodity shippers on edge. If the war of words escalates into something more serious, shipping analysts say it could result in exclusion zones, port disruptions and other major obstacles to the flow of commodities.
Bloomberg (8/11) 
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Iron ore is on a roller-coaster ride
From its drop below $40 in 2015 to its recent robust rally, iron ore is revealing the fickle nature of raw materials, with one analyst comparing it to a famous literary character. "Most commodities are pretty Jekyll-and-Hyde," said Justin Smirk, senior economist with Westpac Banking Corp. "Iron ore does fit that trend. Hyde is meant to be angry, Jekyll is meant to lovely and nice."
Bloomberg Professional Services (8/15) 
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Blockchain set to revolutionize gold market
Companies including CME Group, TradeWind Markets and Paxos are introducing blockchain technology into the gold market to add accountability and to tap shy investors. The move likely takes market share away from futures, physical gold bullion and gold exchange-traded funds but creates "another avenue for where investors can look to find value," says Ebele Kemery of JPMorgan Asset Management.
Bloomberg (8/17) 
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Investor: Zinc headed for $3,000 a ton
Influential mining investor Evy Hambro says that zinc, a star in the base metal market recently thanks to prices that have risen 30%, is heading for $3,000 a ton.
Financial Times (tiered subscription model) (8/11) 
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Observers split over likely duration of China's commodity surge
Rapidly rising commodity prices in China have divided observers in the so-far becalmed bond markets. They disagree about whether demand for rebar, copper and aluminum is likely to continue or abate in the next few months, with implications for inflation and bond prices.
Bloomberg (8/14) 
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Climate change policies could threaten value of Saudi Aramco
An environmental campaign group, Oil Change International, is warning that new climate change policies could lower the value of Saudi Aramco by nearly 40%.
Financial Times (tiered subscription model) (8/13) 
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After record high, Chinese steel prices fall
Just one week after hitting record highs, steel prices in China are being pushed lower this week thanks, in part, to new limits on speculative trading. Even with the October contract slipping a little more than 2%, prices remain up by 35% for 2017.
CNBC (8/15) 
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Wheat futures enter bear market conditions
Global wheat inventory is in record territory, depressing futures prices for spring and soft red winter wheat by 17% and 21%, respectively, from peaks in early July. "Money is flowing out of all the commodity markets," said Standard Grain President Joe Vaclavik.
Bloomberg (8/16) 
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Bankers weigh in on farm economy outlook
The US agricultural economy is showing signs of stability, despite a continued decline in commodity prices, according to Federal Reserve and USDA reports. Bankers view crop insurance as a key factor in mitigating the effects of sluggish commodity prices and drought conditions, Philip Brasher writes.
Agri-Pulse (tiered subscription model) (8/11) 
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US shale oil producers on track to set record
US oil companies that extract from shale formations keep setting production records, and they're close to doing it again. The Energy Information Administration projects that production from the Permian Basin of Texas and New Mexico will hit a record 2.6 million barrels a day next month.
Bloomberg (8/15) 
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CME Group Insights
Russell 2000 may provide safe harbor in turbulent second half
Factors are piling up that indicate the major stock indexes are likely to experience significant turbulence in the latter half of the year, writes CME Group Chief Economist Bluford Putnam. However, smaller businesses continue to exhibit consistent strength and optimism as they add jobs, and investors wishing to take advantage might like to consider the Russell 2000 index.
CME Group (8/10) 
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