Commodities: NGAS Declining Amidst Weaker Demand Prospects, Cotton Rising, Gold Futures Increasing
Rebecca Duthie 09.08.2022 15:09
NGAS prices declining amidst prospects of declining demand.
Market expectations set at 75 bps rate hike for September.
Cotton futures rising to 2 week highs.
US natural gas futures continued to decline below the $8.0/MMBtu barrier, under pressure from expectations that collapsing demand will ease as a result of cooler weather and record output levels as domestic producers profited from higher pricing. The gloomy prognosis was also strengthened by a larger-than-expected build in gas storage last week. The week ending July 29th saw US utilities add 41 billion cubic feet of gas to storage, much exceeding the forecast of 29 bcf. Additionally, Freeport LNG, a significant Texas export terminal, has reached an agreement with regulators to resume operations in October. As the crucial Nord Stream 1 pipeline from Russia to Germany is now operating at 20 percent capacity, demand from Europe is still helping to support prices. For refusing to accept its demand for payment for natural gas in Russian rubles, Russia has already stopped exports to Denmark, Finland, Bulgaria, the Netherlands, and Poland and cut supply to Germany.
Natural Gas Sep ‘22 Futures Price Chart
As investors anticipated US inflation data later this week that could provide additional hints on the Federal Reserve's rate hike trajectory, gold traded just around $1,790 an ounce on Tuesday after varying between $1,765 and $1,795 over the previous four days. The annual inflation rate is anticipated to have decreased from 9.1 percent in June to 8.7 percent, and a large surprise to the downside might trigger a surge in gold prices. According to a New York Federal Reserve study released on Monday, American consumers' expectations for inflation over the next year and the next three years have significantly decreased. The US economy unexpectedly added 528,000 jobs in July, which is more than double the 250,000 jobs that economists had forecast, according to figures released last week. The Fed will deliver another 75 basis point rate boost in September, according to market expectations.
Gold Dec ‘22 Futures Price Chart
Due to active buying from weavers, cotton futures on ICE reached 102 cents per pound, the highest level in more than 2 weeks. As companies anticipate a shortage of cotton yarn during the current cotton season, which runs until September 2022, higher production in the fabric and apparel segments and slower production in the spinning mills encouraged purchase. Additionally, the USDA noted decreased projections for US output, exports, and ending stocks for the years 2022–2023 in its July monthly report due to the possibility of dry weather in Texas. The pink bollworm pest, which this year attacked earlier than anticipated in Punjab and Haryana due to the lack of rainfall in the early part of the planting season, is another threat to cotton crops in India.
Cotton Oct ‘22 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com