wheat

Agriculture: Shipping disruptions from Brazil push coffee higher

  • Arabica coffee front month contract jumped around 7% yesterday as shipping disruptions from Brazil risk tightening the market in the short term. Brazil’s ports are facing strikes by customs officers and other inspectors from 22-26 January that are likely to delay shipments originating from Brazil. The tensions around the Red Sea trade route have further supported coffee prices. The shipment disruptions from Brazil could impact other commodities as well including soybeans, corn and sugar.

 

    According to China’s Ministry of Agriculture and Rural Affairs, soybean production in China reached an all-time high of 20.84mt in 2023 primarily due to the country’s support for food security. Meanwhile, the soybean planting area in China reached 157 million mu (about 10.47 million hectares) last year, while that of oilseed crops exceeded 200 million mu. The ministry added that it plans to further increase the planting

Markets News: Crude Oil, Gold, EuroStoxx 600, Copper

Market News: Crude Oil, Gold, EuroStoxx 600, Copper, Natural Gas

Marc Chandler Marc Chandler 07.03.2022 14:46
March 07, 2022  $USD, China, Currency Movement, Oil, Russia, SNB, South Korea Overview:  The economic disruption seen since the US warning of an imminent Russian attack on February 11 continue to ripple through the capital and commodity markets.  Equities are being slammed.  Most Asia Pacific bourses were off 2-3% today. Europe's Stoxx 600 gapped lower ad has approached February 2021 levels, orr about 2.6% today.  US futures are around 1.5% lower. The reaction in the major bond markets is subdued.  The US 10-year yield is near 1.72%, off about 10 bp from a week ago.  European benchmark yields are mostly firmer after falling 15-20 bp last week.  In the foreign exchange market, the dollar-bloc currencies continue to show resilience, while the European complex remains under pressure.  The Swedish krona continues to underperform.  It is off more than 5% in the past week.  The euro slumped to almost $1.0810 in the European morning. The JP Morgan Emerging Market Currency Index is down 1.3% after last week's 4.6% drop.  Central European currencies, as one might expect, continue to be punished the most.  They appear to be being treated like high-beta euros.  Gold is flirting with $2000.  April WTI gapped higher and spiked to $130.50 before pulling back to around $123.  US natgas is up more than 1%.  It has risen by more than a quarter of the past three weeks.  Europe's natgas benchmark is surging by nearly a third today after jumping by almost 123% last week.  Iron ore rose about 5.5% today after 14.7% last week.  Copper initially rose by more than 1.5%, but is pulling back a bit. Still, it is up around 0.5% after gaining more than 10% last week.  May wheat is rising for the sixth consecutive session.  Today's 7% advance comes on top of last week's 40.6% jump.   Asia Pacific China and Russia's relationship is on two-tracks.  The strategic relationship is based on the antipathy to a US-centric world and the expansion of NATO, which Beijing says the US is trying to create a Pacific version.  The other track is tactical.  They avoid saying much about each other's neighborhoods, including Ukraine, Taiwan, or the fact that Russia sells weapons to India that ae used to fight and resist China.   China reports a larger than expected Jan Feb trade surplus of nearly $116 bln.  The median forecast in Bloomberg's survey was for a $95 bln surplus.  Exports rose 16.3%, more than anticipated, while imports rose 15.5%, a bit less than expected.  Separately, and also surprisingly, the value of China's reserves fell to $3.21 trillion from $3.22 trillion.  A small gain had been expected.  Still, it appears that valuation, weaker non-dollar reserve currencies and a sell-off in bonds, is the key consideration.    China's National People's Congress gave a 5.5% growth target this year.  It is on the upper end of expectations and is higher than a weighted average of the projections of the provinces, which typically over-deliver. Still, it is the lowest since 1990, excluding 2020.  China's economy is said to have grown 8.1% last year. Despite increased spending and slower growth, the NPC projected that the budget deficit would fall to 2.8% of GDP from 3.2% last year.  Here, Beijing seems to plant to draw from unspent funds from past year.  The targets seem ambitious and would seem to require more monetary and fiscal support.   South Korea votes on Wednesday for a new president, who serves one five-year term.  The contest will go down to the wire. Lee represents the governing Democrats, who enjoy a super-majority in parliament.  Of note, he has endorsed a universal basic income.  Yoon is the candidate of the major opposition People Power Party.  He enjoyed a slight lead in the last poll, and he may have enjoyed a slightly bump when a minor conservative candidate dropped out and endorsed him.  Both campaigns have been marred with gaffes and petty scandals.  Unlike Japan and China, South Korea is experiencing rising price pressures (3.7% February CPI and 3.2% core). The seven-day repo rate has been hiked three times beginning last August to 1.25%.  The won is off about 3.1% this year.   The yen is sidelined.  The dollar is trading in a narrow range between about JPY114.80 and JPY115.15.  Last week's range was roughly JPY114.65-JPY115.80.  Nevertheless, benchmark three-month implied volatility has risen above 8% to approach last November's spike to 8.2%, the highest since September 2020.  The put-call skew (risk-reversal) is the most extreme since October 2020.  Demand for dollar puts, perhaps has protection for dollar receivables appears to be a key factor.  The Australian dollar's rally continues, as its commodity exposures attracts participants.  It reached $0.7440 today, its best level since last November.  It rose 2% last week, its fifth consecutive weekly advance.  It is getting stretched.  The upper Bollinger Band (two standard deviations above the 20-day moving average) is around $0.7330, and the Aussie has closed above it the past two sessions.  The greenback gapped higher against the Chinese yuan.  It opened on the session high near CNY6.3265 but ground lower to CNY6.3170.  The PBOC set the dollar's reference rate at CNY6.3478.  The market (Bloomberg survey) looked for CNY6.3450.   Europe The economic noose on Russia continues to tighten.  Mastercard and Visa will no longer support Russian activity (as of March 10).  Euroclear and Clearstream will no longer settle rouble transactions.  Russia's ability to service its debt is at risk.  While some bonds allow for rouble settlement and coupon payments, some do not.  Some dollar bond coupons are due next week, which reportedly do not have the rouble payment clause, and this could be the default event that triggers credit-default swaps.  Of course, these is talk that China will help, but its assistance is likely limited.  It CIPS payment system works for yuan settlement only.  Meanwhile, Russia has begun rationing staples ostensibly to prevent hoarding.   The euro plummeted through the CHF1.0 level for the first time today since early 2015 when the Swiss National Bank lifted its cap (floor) on the franc (euro).  Under the threat of intervention by the SNB, the euro rebounded to CHF1.0050 in early European turnover but has begun coming off again.  The weekly sight deposit report suggests not intervention took place last week.  Overall sight deposits were little changed, while the domestic sight deposits fell by about CHF3 bln.  While the SNB may not have intervened, central banks in central Europe are thought to have intervened.  The proximity to Russia and the weakness of the euro are the proximate triggers.   The euro is unable to sustain even modest upticks.  It is off for the sixth consecutive session. Last week, it tumbled 3%.  It was the fourth consecutive weekly drop.  The euro has risen in only two weeks this year.  A break of $1.08 could spur a move to the March 2020 low near $1.06, but there is increasingly talk of a move to parity.   Sterling is trading near $1.3150, its lowest level since December 2020.  The $1.3165 area corresponds to the (38.2%) retracement of the big rally since March 2020 low close to $1.14.  A convincing break of this area suggests a move into $1.2830-$1.3000 band.  America While the US begins moving to ban Russian oil imports (500k-600k barrels a day), Europe does not appear ready to do the same.  April WTI futures gapped higher and pushed a little through $130 a barrel before pulling back.  It is hovering around $123.  The pre-weekend high was near $116.00.  There have been several developments over the weekend to note.  Iran will provide more data on its nuclear efforts, and this could lead renewing the accord the US pulled out of and allow for Iranian oil in Q3.  US officials reportedly met with senior members of Venezuela's Maduro government, apparently to discuss lifting sanctions.  The US cut diplomatic ties in 2019.   Before the sanctions and mismanagement, Venezuela's was producing around 3 million barrels a day.  Meanwhile, some Canadian capacity is being taken offline for maintenance, and Libya has lost 200k barrels a day over the past few days due to the political crisis.  Lastly, Saudi Arabia announced it will hike prices to Asia next month.  The economic highlight for the week in the US is the February CPI figures on Thursday.  The headline pace could approach 8% and the core near 6.5%.  Ahead of that report, on tap today is the January consumer credit.  Note that American household debt increased by $1.02 trillion last year, the most since 2007.  Total consumer debt is around $15.6 trillion, including cars and houses.  Tomorrow, the US see the January trade balance, where a large deficit is expected, and the wholesale inventories, which may be linked to stronger imports.   In some quarters, there is still talk about "artificially" low rates in the US. However, consider what would happen if next week, the Fed Chair Powell were to channel Volcker and hike the Fed funds target by 100 bp.  We suspect that medium and long-term US interest rates would fall sharply.  Many would likely assume that it would drive the world's largest economy into contraction.  Note that 2-10-year yield curve is slipping below 25 bp today. Canada reports tits January trade figures tomorrow and return to surplus is expected.  The highlight of the week will be the jobs report on Friday.  After losing 200k jobs in January, the Canadian jobs market is expected to have recovered smartly.  The unemployment rate is expected to fall to 6.3% from 6.5% even while the participation rate is projected to rise to 65.2% from 65.0%.  Mexico report February CPI figures on Wednesday.  A rise to nearly 7.25% is expected after 7.07% in January.  At the end of the week, January industrial production figures are due.  A small decline is expected.     Since late January, the US dollar has mostly been in a CAD1.2650-CAD1.2800 range.  It was briefly pushed below CAD1.26 in the middle of last week but quickly snapped back to the upper end of the range.  It is trading inside the pre-weekend range (~CAD1.2670-CAD1.2790).  The Canadian dollar appears pulled between its commodity exposure and its risk-off sensitivity.  The Mexican peso is less ambivalent.  The greenback jumped 1.5% before the weekend and is up another 1.2% today.  Near MXN21.20, the US dollar is at its best level since mid-December, when it poked above MXN21.36.  The dollar is rally has lifted it more than three standard deviations (~MXN21.21) from its 20-day moving average.    Disclaimer
Is It Too Late To Begin Adapting To Higher Volatility In The Market?

Is It Too Late To Begin Adapting To Higher Volatility In The Market?

Chris Vermeulen Chris Vermeulen 07.03.2022 22:18
Now is the time for traders to adapt to higher volatility and rapidly changing market conditions. One of the best ways to do this is to monitor different asset classes and track which investments are gaining and losing money flow. Knowing what the Best Asset Now is (BAN) is critical for consistent growth no matter the market condition.With that said, buyers (countries, investors, and traders) are panicking as the commodity Wheat, for example, gained more than 40% last week.‘Panic Commodity Buying’ in Wheat – Weekly ChartAccording to the US Dept. of Agriculture, China will hold 69% of the world’s corn reserves, 60% of rice and 51% of wheat by mid-2022.Commodity markets surged to their largest gains in years as Ukrainian ports were closed and sanctions against Russia sent buyers scrambling for replacement supplies. Global commodities, commodity funds, and commodity ETFs are attracting huge capital inflows as investors seek to cash in on the rally in oil, metals, and grains.How does the Russia – Ukraine war affect global food supplies?The conflict between major commodity producers Russia and Ukraine is causing countries that rely heavily on commodity imports to feed their citizens to enter into panic buying. The breadbaskets of Ukraine and Russia account for more than 25% of the global wheat trade and nearly 20% of the global corn trade.Last week, it was reported that many countries have dangerously low grain supplies. Nader Saad, an Egypt Cabinet spokesman, has raised the alarm that currently, Egypt has only nine months’ worth of wheat in silos. The supply includes five months of strategic reserves and four months of domestic production to cover the bread needs of 102 million Egyptians. Additionally, Avigdor Lieberman, Israel’s economic minister, said on Thursday (3/3/22) that his country should keep “a low profile” regarding the conflict in eastern Europe, given that Israel imports 50 percent of its wheat from Russia and 30 percent from Ukraine.Sign up for my free trading newsletter so you don’t miss the next opportunity!The longer-term potential for much higher grain prices exists, but it’s worth noting that Friday’s close of nearly $12.00 a bushel for wheat is not that far away from the all-time record high of $13.30, recorded 14-years ago. According to Trading Economics, wheat has gone up 75.08% year-to-date while other commodity markets like Oats are up a whopping 85.13%, Coffee 74.68%, and Corn 34.07%.How are other markets reacting to these global events?Year-to-date comparison returns as of 3/4/2022:-9.18% S&P 500 (index), -7.49% DJI (index), -15.21% Nasdaq (index), +37.44% Exxon Mobile (oil), +20.08% Freeport McMoran (copper & gold), -20.68% Tesla (alternative energy), -24.49% Microstrategy (bitcoin play), -40.51% Meta-Facebook (social media)As stock holdings and 401k’s are shrinking it may be time to re-evaluate your portfolio. There are ETFs available that can give you exposure to commodities, energy, and metals.Here is an example of a few of these ETFs:+53.81% WEAT Teucrium Wheat Fund+41.79% GSG iShares S&P TSCI Commodity -Indexed Trust+104.40 UCO ProShares Ultra Bloomberg Crude Oil+59.32% PALL Aberdeen Standard Physical Palladium SharesHow is the global investor reacting to rocketing commodity prices and increasing market volatility?We can track global money flow by monitoring the following 1-month currency graph (www.finviz.com). The Australian Dollar is up +4.25%, the New Zealand Dollar +3.72%, and the Canadian Dollar +0.30% vs. the US Dollar due to the rising commodity prices like metals and energy. These country currencies are known as commodity currencies.The Switzerland Franc +0.96%, the Japanese Yen +0.35%, and the US Dollar +0.00% are all benefiting from global capital seeking a safe haven. As volatility continues to spike, these country currencies will experience more inflows as capital comes out of depreciating assets and seeks stability.We also notice that capital outflow is occurring from the European Union-Eurodollar -4.55% and the British Pound -2.22% due to their close proximity (risk) to the Russia - Ukraine war.www.finviz.comGlobal central banks will need to begin raising their interest rates to combat high inflation!Due to the rapid acceleration of inflation, the US Federal Reserve may have been looking to raise interest rates by 50 basis points at its policy meeting two weeks from now. However, given Russia’s invasion of Ukraine, the FED may become more cautious and consider raising interest rates by only 25 basis points on March 15-16.What strategies can help you navigate current market trends?Learn how I use specific tools to help me understand price cycles, set-ups, and price target levels in various sectors to identify strategic entry and exit points for trades. Over the next 12 to 24+ months, I expect very large price swings in the US stock market and other asset classes across the globe. I believe the markets have begun to transition away from the continued central bank support rally phase and have started a revaluation phase as global traders attempt to identify the next big trends. Precious Metals are starting to act as a proper hedge as caution and concern start to drive traders/investors into Metals and other safe-havens.Now is the time to keep your eye on the ball!I invite you to learn more about how my three Technical Trading Strategies can help you protect and grow your wealth in any type of market condition by clicking on the following link: www.TheTechnicalTraders.com
Summarised Fluctuations Of Gold, Crude Oil, Bitcoin And Rouble Since The Russia-Ukraine War Started (with chart)

Summarised Fluctuations Of Gold, Crude Oil, Bitcoin And Rouble Since The Russia-Ukraine War Started (with chart)

Mikołaj Marcinowski Mikołaj Marcinowski 08.03.2022 12:27
It’s been almost two weeks since Russia invaded Ukraine. Even if the first day weren’t affected by huge rises, recent days show a major lift across markets. Source: TradingView.com Nickel There are some sensational rises beginning with Nickel price which increased by over 150% what can significantly affect many branches as Nickel is used, among others, in automotive and medical industries. Gold Gold raised by ‘only’ 4%, but it trades over magic $2000 level which nears ATH of Ca. $2100 (2020). XAU is believed to be a safe-haven as tensions rise and other assets’ fluctuations scare off investors. Crude Oil – BRENT and WTI Crude Oil prices have been rising since the first sights of invasion, but hitting Ca. $130 per barrel (to put it mildly) confused both investors and drivers around the world. Generally speaking, Crude Oil price has increased by Ca. 30% since the beginning of the war. Bitcoin BTC hasn’t fluctuated much and sticks to the levels near $40k, increasing by Ca. 5% since the invasion. Russian Rouble Currency of the invader has weakened significantly – by ca. 40% as RUBUSD chart shows. It will be really hard to get the Russian currency back to the game after such decrease. MOEX Some say Russian Index (RTSI – RU50) ‘surrendered’ shortly after the invasion has started as it remains closed since 1/03. At that time RTSI had been ca. 26% higher than on the first day of the warfare. DAX (GER 40) One of the greatest European index has lost almost 10%, what shows how broad is the influence of Russia-Ukraine War. Wheat Last but (definitely) not least… Wheat price increased by over 40% as conflicted countries – Russia and Ukraine are the major suppliers of such commodities. Don’t forget to follow us on Twitter! Data: TradingView.com
Ringing the Bell

Ringing the Bell

Monica Kingsley Monica Kingsley 09.03.2022 16:03
S&P 500 once again gave up intraday gains, and credit markets confirmed the decline. Value down significantly more than tech, risk-off anywhere you look. For days without end, but the reprieve can come on seemingly little to no positive news, just when the sellers exhaust themselves and need to regroup temporarily. We‘re already seeing signs of such a respite in precious metals and commodities – be it the copper downswing, oil unable to break $130, or miners not following gold much higher yesterday. Corn and wheat also consolidated – right or wrong, the market seeks to anticipate some relief from Eastern Europe.The big picture though hasn‘t changed:(…) credit markets … posture is very risk-off, and the rush to commodities goes on. With a little check yesterday on the high opening prices in crude oil and copper, but still. My favorite agrifoods picks of late, wheat and corn, are doing great, and the pressure within select base metals, is building up – such as (for understandable reasons) in nickel and aluminum. Look for more to come, especially there where supply is getting messed with (this doesn‘t concern copper to such a degree, explaining its tepid price gains).And I‘m not talking even the brightest spot, where I at the onset of 2022 announced that precious metals would be the great bullish surprise this year. Those who listened, are rocking and rolling – we‘re nowhere near the end of the profitable run! Crude oil is likely to consolidate prior steep gains, and could definitely continue spiking higher. Should it stay comfortably above $125 for months, that would lead to quite some demand destruction. Given that black gold acts as a „shadow Fed funds rate“, ......its downswing would contribute to providing the Fed with an excuse not to hike in Mar by 50bp. After the prior run up in the price of black gold that however renders such an excuse a verbal exercise only, the Fed remains between a rock and hard place, and the inflationary fires keep raging on.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 is reaching for the Feb 24 lows, and may find respite at this level. The upper knot though would need a solid close today (above 4,250) to be of short-term significance. Remember, the market remains very much headline sensitive.Credit MarketsHYG clearly remains on the defensive, but the sellers may need a pause here, if volume is any guide. Bonds are getting beaten, and the outlook remains negative to neutral for the weeks ahead. Gold, Silver and MinersPrecious metals keep doing great, but a pause is knocking on the door. Not a reversal, a pause. Gold and silver are indeed the go-to assets in the current situation, and miners agree wholeheartedly.Crude OilCrude oil is having trouble extending gains, and the consolidation I mentioned yesterday, approaches. I do not think however that this is the end of the run higher.CopperCopper is pausing already, and this underperformer looks very well bid above $4.60. Let the red metal build a base, and continue rising next, alongside the rest of the crowd.Bitcoin and EthereumCryptos upswing equals more risk appetite? It could be so, looking at the dollar‘s chart (I‘m talking that in the summary of today‘s analysis).SummaryEvery dog has its day, and the S&P 500‘s one might be coming today or tomorrow. It‘s that the safe havens of late (precious metals, commodities and the dollar) are having trouble extending prior steep gains further. These look to be in for a brief respite that would be amplified on any possible news of deescalation. In such an environment, risk taking would flourish at expense of gold, silver and oil especially. I don‘t think so we have seen the tops – precious metals are likely to do great on the continued inflation turning into stagflation (GDP growth figures being downgraded), and commodities are set to further benefit from geopolitics (among much else).Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
How Will The Next Events Around Russia-Ukraine Conflict Affect Markets?

How Will The Next Events Around Russia-Ukraine Conflict Affect Markets?

FXStreet News FXStreet News 09.03.2022 16:19
Russia's denial of wanting to overthrow Ukraine's government has boosted the market mood. Ongoing bombing, accusations of using biological weapons may come to haunt markets. The safe-haven dollar and gold have room to recover after the recent slide. All markets are saying, is give peace a chance – paraphrasing John Lennon's song, that is what is going on, with stocks and risk currencies rising while safe-haven assets are tumbling down. However, it may become worse before it becomes better. The latest bout of optimism stems from Russia's statement that it does not seek to overthrow Ukraine's government and its preference to resolve differences via discussions. The Kremlin added that it has never threatened and does not threaten NATO. These olive branches join Tuesday's news that Ukrainian President Volodymyr Zelenskyy signaled he is willing to give up NATO membership and the upcoming meeting of the two countries foreign ministers planned for Thursday in Turkey. On the ground, a humanitarian ceasefire is in effect in several Ukrainian cities on Wednesday, and civilians are begin evacuated, so far safely. Markets have reacted positively to these developments, with S&P futures jumping by 2%, EUR/USD jumping by some 80 pips, and safe havens such as gold and the dollar suffering significant falls. Is the war nearing its end? Not so fast. Reasons to worry First, Russia continues bombing Kyiv and is likely using this day of relative calm to regroup and resupply its troops, which have suffered massive logistical failures. Several of the previous ceasefires were not respected and this may happen again. Secondly, Russia's statements are also one that the US has declared economic war on it. Such comments contradict the better vibes that have previously boosted the market mood. Russia also accuses its enemy of developing biological weapons, in what seems like an excuse to intensify attacks. Third, Ukrainian President Zelensky called on Russian troops to "surrender while you still can" and that "we will answer in full for all our killed people" – militant statements are not exclusive to one side. The war will eventually end, hopefully, sooner rather than later. However, it seems overoptimistic to circle Wednesday as the beginning of the end, and that everything improves from here. Another escalation may come shortly, souring the market mood and boosting the safe-haven gold and dollar. Moreover, with every day that passes, the damage to the global economy increases. While shortages of energy have yet to be seen – prices are rising without any stop in the flow of oil or gas – food issues may become a burden for the global economy. Russia and Ukraine produce a vast amount of wheat and barley, which are now blocked. That is already raising food prices. And while the war continues, so do new Western sanctions. The EU has approved a new list of restrictions on Russian leaders and oligarchs, and also disconnect several Belarusian banks from the SWIFT payments system. All in all, it will likely get worse before it becomes better and that means another rush to the dollar and gold.
Not Passing Smell Test

Not Passing Smell Test

Monica Kingsley Monica Kingsley 10.03.2022 16:01
S&P 500 tech driven upswing makes the advance a bit suspect, and prone to consolidation. I would have expected value to kick in to a much greater degree given the risk-on posture in the credit markets. The steep downswing in commodities and precious metals doesn‘t pass the smell test for me – just as there were little cracks in the dam warning of short-term vulnerability at the onset of yesterday, the same way there are signs of the resulting downswing being overdone now.And that has consequences for the multitude of open positions – the PMs and commodities super bull runs are on, and the geopolitics still support the notion of the next spike.Let‘s move right into the charts (all courtesy of www.stockcharts.com).S&P 500 and Nasdaq OutlookS&P 500 turned around, and the volume isn‘t raising too many eyebrows. However, the bulls should have tempered price appreciation expectations, to put it politely...Credit MarketsHYG turned around, but isn‘t entirely convincing yet. We saw an encouraging first step towards risk-on turn that requires that the moves continue, which is unlikely today – CPI is here, and unlikely to disappoint the inflationistas.Gold, Silver and MinersPrecious metals downswing looks clearly overdone, and I continue calling for a shallow, $1,980 - $2,000 range consolidation next. This gives you an idea not to expect steep silver discounts either. Miner are clear, and holding up nicely.Crude OilCrude oil downswing came, arguably way too steep one. Even oil stocks turned down in spite of the S&P 500 upswing, which is odd. I‘m looking for gradual reversal of yesterday‘s weakness in both.CopperCopper has made one of its odd moves on par with the late Jan long red candle one – I‘m looking for the weakness to be reversed, and not only in the red metal but within commodities as such.Bitcoin and EthereumCryptos are giving up yesterday‘s upswing – they are dialing back the risk-on turn and rush out of the safe havens of late.SummaryThe S&P 500 dog indeed just had its day, but the price appreciation prospects are not looking too bright for today. With attention turning to CPI, and yesterday‘s „hail mary decline aka I don‘t need you anymore“ in the safe havens of late (precious metals, crude oil, wheat, and the dollar to name just a few) getting proper scrutiny, I‘m looking for gradual return to strength in all things real (real assets) – it‘s my reasonable assumption that the markets won‘t get surprised by an overwhelmingly positive headline from Eastern Europe at this point. Focusing on the underlying fundamentals and charts, I don‘t think so we have seen the real asset tops – precious metals are likely to do great on the continued inflation turning into stagflation (GDP growth figures being downgraded), and commodities are set to further benefit from geopolitics (among much else).Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals.
ECB Analysis: EUR/USD selling opportunity? Taper helps with inflation, full war shock still to come

ECB Analysis: EUR/USD selling opportunity? Taper helps with inflation, full war shock still to come

FXStreet News FXStreet News 10.03.2022 16:14
The ECB has announced a quick phasing out of bond buys, boosting the euro.Shoring up the currency helps the eurozone in the short term.The full impact of Russia's Ukraine invasion is still to come.ECB may refrain from rate hikes in 2022, bringing the euro down.Influenced by inflation, (almost) ignoring the war – the European Central Bank has announced a fast pace of tapering its bond-buying scheme as prices rise and despite the adverse effects of Russia's invasion of Ukraine. EUR/USD has jumped, but it may be premature. The ECB plans to buy some €40 billion worth of bonds in April, falling to €30 billion in May and €20 billion in June. That opens the door to raising interest rates already in the summer rather than in the autumn. While that would not be considered surprising after the previous decision, it seems hawkish given the war. After two weeks of fighting, the Frankfurt-based institution seems to focus on the surge in commodity prices coming from Russian President Vladimir Putin's "special operation." Russia is the world's third-largest oil producer and some 40% of European natural gas is sent on orders from Moscow. Ukraine and Russia are responsible for a substantial portion of global wheat exports, and port blockades are already felt in supermarkets.However, Russia's atrocities in a European country are pushing prices higher and destroying demand. A war on the doorstep of the eurozone is hitting confidence and also leaving consumers with less money to spend. Even if headline inflation rises, underlying prices may fall.ECB President Christine Lagarde promised decisions based on new forecasts presented in March, but these new projections may remain slient while the cannons are heard. The taper announcement serves to push the euro higher and somewhat squeeze the prices hikes coming from imports. However, that is nothing in comparison to the economic damage done by the war and the sanctions, and that may eventually haunt the common currency. It may come sooner than later, providing a selling-opportunity on EUR/USD now.
EM currencies: growing polarisation

EM currencies: growing polarisation

Alex Kuptsikevich Alex Kuptsikevich 22.03.2022 13:04
Since the start of the year, the performance of emerging market currencies mirrors what we saw in 2021, but with more polarisation. The Brazilian real has been the growth leader against the dollar since the start of the year, gaining around 13%. It is followed by the South African rand and Colombian peso, gaining just over 7%. Among the hardest hit is the Russian Rouble (-33%), but also the Egyptian Pound (-14%) and the Turkish Lira (-10%). In our view, this polarisation only promises to increase in the coming months.Commodity-exporting countries have benefited amid a global jump in energy and agricultural commodity prices. Brazil gets a chance to seriously boost its oil sales to the US amid a supply embargo from Russia. Though net oil exporters, the states must buy significant amounts of heavy crude to run their refineries. Until 2019, oil from Venezuela was used for the right blend, subsequently replaced by Russian crude. Now it is being replaced by oil from Brazil, which promises a significant increase in exports and supports the exchange rate of the Brazilian real.The South African rand is in demand, receiving dividends from last year's monetary tightening and a surge in metal prices since the start of the year. As most global markets look for alternatives to the Russian metal, the ZAR is enjoying demand from speculators in anticipation of increased exports from South Africa for political reasons.We may well be seeing a global reversal in the attitude towards commodity exporters' currencies, as even in the event of a military settlement, there is no expectation of a quick recovery of previous economic ties.At the other end of the spectrum are countries' currencies that depend on imports of oil and agricultural products. Egypt buys most of its wheat consumption from Russia and Ukraine, and rising prices severely damage the balance of payments. Egypt's central bank has responded by tightening monetary policy to suppress inflation. But such steps tend to hurt economic growth. Turkey imported almost all its gas from Russia and Azerbaijan and bought its wheat from Ukraine and Russia. Price jumps and supply-chain disruptions will be costly for the economy and cause increased pressure on the Turkish lira.In addition to the prospect of inflated import volumes, Turkey and Egypt face a severe drop in revenues from the tourism industry, as Russia and Ukraine have provided a significant flow of tourists.
Russia Look Set To Double Its Exports For The First Half Of 2023

Wheat Futures Prices Influenced, By Weather, Naturally!

Rebecca Duthie Rebecca Duthie 12.04.2022 10:22
Silver Safe-haven inlight of inflation uncertainty The price of silver is dependent on consumer supply and demand balances. Due to the inverse relationship Silver has to the US Dollar, the commodity is popular to use as a hedge against inflation. Silver also has high liquidity making it a popular commodity to trade especially inlight of the current market situations, the conflict between the Ukraine and Russia and the China shutdown concerns. The market sentiment of the commodity is currently being presented as bearish with prices reaching a high of $25.282 since the market opened this morning. Price of Silver Chart NGAS: The prices of natural gas are constantly changing due to the prices being heavily dependent on external factors such as supply and demand, weather and the viability of alternative resources. It is a volatile, liquid and reasonably spread asset, all of these characteristics make Natural Gas (NGAS) a popular commodity to trade. Since the market opened today NGAS prices reached a high of $6.885. The demand is still high for NGAS, however the supply is low, driving the price of NGAS up to a 13 year high. Price of Natural Gas Chart The Weather affecting the price of Chicago SRW Wheat futures: The US is experiencing some adverse weather conditions currently, these weather conditions are driving the prices of futures up, yesterday wheat closed on the highest price since late March due worries around supply. The price of these wheat futures have been fluctuating over the last 8 hours, however the future price now is sitting high at $1110.00. Price of Wheat futures Chart Charts: Finance.Yahoo.com
Elon Musk Sells 8 Millions Tesla Stocks? Here Is Why!

Unexpectedly Gold Price (XAUUSD) Falls, Canada And Chicago - Weather Makes Wheat Futures Fluctuate. The Price Of Palladium - Industrial Activity Is Taking Strain

Rebecca Duthie Rebecca Duthie 20.04.2022 11:23
Summary: The price of gold fell to the lowest price in almost 2 weeks. Volatility in U.S Wheat futures due to the Weather. Palladium Prices driven down by the rising dollar index. Gold Prices Hit Lows - elevated U.S treasury yield affecting the demand of the commodity The price of gold hit its lowest value in almost 2 weeks as a result of the elevated U.S treasury yield affecting the demand of the commodity. The increase in the yields also increases the opportunity cost for investors who hold gold because the commodity is not yielding. Investor expectations of the Fed's hawkish outlook could be the reason for the price fall, especially inlight of the expected Fed Speech this week. Price Chart of Gold Read next: Altcoins' Rally: Solana (SOL) Soars Even More, DOT and SHIBA INU Do The Same! | FXMAG.COM Chicago SRW Wheat Futures - terrible weather conditions in the US and Canada are causing supply fears The price of Wheat has been volatile over the past week, the terrible weather conditions in the US and Canada are causing supply fears, however market sentiment for this commodity has struggled to shake its bearish tone. Chicago SRW Wheat Futures Price Chart Read next: (UKOIL) Brent Crude Oil Spikes to Highest Price For April, (NGAS) Natural Gas Hitting Pre-2008 Prices, Cotton Planting Has Begun Palladium Price - the war continues, the industrial activity is taking strain The price of Palladium saw an increase in price as an initial market reaction to the start of the Russia-Ukraine war, and as the war continues, the industrial activity is taking strain. However, on Tuesday, the price of palladium fell as a result of the rising dollar index. Palladium Futures Price Chart Sources: Finance.yahoo.com, economies.com
Russia Look Set To Double Its Exports For The First Half Of 2023

The Commodity Market Felt The Effect Of The Poor Market Conditions This Week - Wheat Futures, Platinum Futures & RBOB Gasoline Futures

Rebecca Duthie Rebecca Duthie 12.05.2022 12:34
Summary: The future of the Wheat futures prices depend on the supply available as adverse weather conditions and geopolitical tensions continue. As embargos on Russia intensify, Platinum futures prices rise. Read next: Don't Worry Coffee Lovers! The Price Of Coffee Futures Falling Amidst Current Market Conditions, Crude Oil (WTI) Recovers Slightly, Palladium Prices Show Steady Downward Price Trend  Wheat Futures On Monday the price of Chicago Wheat Futures dropped, this came in the wake of the poor performance of the global markets. Since Monday the price of wheat futures have been recovering steadily. There are concerns around the market supply of wheat going forward, with Russia and The Ukraine exports decreasing due to the war, and the possibility of India reducing their exports amidst the heatwave causing their production to reduce. As concerns around supply and demand and weather conditions continue, we are likely to see volatility in the price of Wheat Futures. SRW Wheat Futures Jul ‘22 Price Chart Platinum prices rise amidst concerns over supply. Platinum futures prices seem to be recovering after hitting their one-week low on May 9th. The recovery comes as worries around Russian supply are renewed. The U.K announced GBP1.4 billion worth of import restrictions from Russia and a 35% increase in import tariffs on multiple products, including platinum. Hence, pushing prices up. Platinum Jul ‘22 Futures RBOB Gasoline prices The price of RBOB gasoline futures, along with wheat futures and platinum futures have felt the effects of the poor market conditions this week. However, the price of RBOB gasoline is likely to continue to show bullish signals going forward, this will come as a result of the increasing concerns around supply. RBOB Gasoline Jun ‘22 Futures Price Chart Read next: (XAUUSD) Gold Prices Remain Stable Despite Hawkish Fed, EU Regains Control Of Their NGAS Supplies, Cotton Futures Prices.  Sources: finance.yahoo.com, tradingeconomics.com
COT Soft Commodities Charts: Speculator bets mostly cool off this week

COT Soft Commodities Charts: Speculator bets mostly cool off this week

Invest Macro Invest Macro 15.05.2022 14:46
By InvestMacro | COT | Data Tables | COT Leaders | Downloads | COT Newsletter Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC). The latest COT data is updated through Tuesday May 10th and shows a quick view of how large traders (for-profit speculators and commercial entities) were positioned in the futures markets. Soft commodities speculator bets cooled off this week with nine out of the eleven markets we cover showing a decrease in their positioning. Soft commodities markets have been red hot this year with the war in Ukraine causing food disruptions, general production problems, food protectionism and, of course, with inflation rising throughout the world. Overall, the soft commodities that saw higher bets this week were just Soybean Oil (3,305 contracts) and Wheat (1,674 contracts). Meanwhile, the soft commodities that saw lower speculator bets on the week were Corn (-30,957 contracts), Sugar (-14,407 contracts), Coffee (-8,142 contracts), Soybeans (-15,794 contracts), Soybean Meal (-15,429 contracts), Live Cattle (-7,233 contracts), Lean Hogs (-5,671 contracts), Cotton (-1,674 contracts) and Cocoa (-15,513 contracts). Data Snapshot of Commodity Market Traders | Columns Legend May-10-2022 OI OI-Index Spec-Net Spec-Index Com-Net COM-Index Smalls-Net Smalls-Index WTI Crude 1,736,594 0 310,803 2 -354,479 98 43,676 77 Gold 571,447 34 193,315 40 -227,756 57 34,441 57 Silver 142,752 9 19,082 41 -30,519 69 11,437 9 Copper 184,502 15 -22,626 26 19,249 73 3,377 45 Palladium 8,832 11 -3,245 3 3,434 96 -189 33 Platinum 66,064 32 1,363 5 -5,373 98 4,010 18 Natural Gas 1,108,451 6 -112,529 45 64,006 51 48,523 100 Brent 173,911 19 -31,215 59 30,562 44 653 18 Heating Oil 349,618 31 6,455 52 -32,434 37 25,979 88 Soybeans 694,454 20 174,608 72 -147,698 33 -26,910 26 Corn 1,510,783 23 470,908 90 -415,345 13 -55,563 11 Coffee 212,659 5 32,555 69 -33,559 37 1,004 0 Sugar 797,453 0 187,185 75 -220,611 26 33,426 49 Wheat 308,326 0 21,686 48 -17,779 34 -3,907 92   CORN Futures: The CORN large speculator standing this week totaled a net position of 470,908 contracts in the data reported through Tuesday. This was a weekly reduction of -30,957 contracts from the previous week which had a total of 501,865 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 90.2 percent. The commercials are Bearish-Extreme with a score of 12.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 11.1 percent. CORN Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 37.9 42.7 8.9 – Percent of Open Interest Shorts: 6.8 70.2 12.6 – Net Position: 470,908 -415,345 -55,563 – Gross Longs: 573,327 644,830 134,903 – Gross Shorts: 102,419 1,060,175 190,466 – Long to Short Ratio: 5.6 to 1 0.6 to 1 0.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 90.2 12.8 11.1 – Strength Index Reading (3 Year Range): Bullish-Extreme Bearish-Extreme Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -1.4 1.3 1.1   SUGAR Futures: The SUGAR large speculator standing this week totaled a net position of 187,185 contracts in the data reported through Tuesday. This was a weekly lowering of -14,407 contracts from the previous week which had a total of 201,592 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 75.1 percent. The commercials are Bearish with a score of 26.3 percent and the small traders (not shown in chart) are Bearish with a score of 49.2 percent. SUGAR Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 31.5 45.8 10.8 – Percent of Open Interest Shorts: 8.0 73.5 6.6 – Net Position: 187,185 -220,611 33,426 – Gross Longs: 251,330 365,263 86,129 – Gross Shorts: 64,145 585,874 52,703 – Long to Short Ratio: 3.9 to 1 0.6 to 1 1.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 75.1 26.3 49.2 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 5.3 -3.4 -9.6   COFFEE Futures: The COFFEE large speculator standing this week totaled a net position of 32,555 contracts in the data reported through Tuesday. This was a weekly decrease of -8,142 contracts from the previous week which had a total of 40,697 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 69.2 percent. The commercials are Bearish with a score of 36.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 0.0 percent. COFFEE Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 23.8 56.1 3.6 – Percent of Open Interest Shorts: 8.5 71.9 3.1 – Net Position: 32,555 -33,559 1,004 – Gross Longs: 50,564 119,399 7,690 – Gross Shorts: 18,009 152,958 6,686 – Long to Short Ratio: 2.8 to 1 0.8 to 1 1.2 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 69.2 36.5 0.0 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -4.9 7.3 -20.9   SOYBEANS Futures: The SOYBEANS large speculator standing this week totaled a net position of 174,608 contracts in the data reported through Tuesday. This was a weekly fall of -15,794 contracts from the previous week which had a total of 190,402 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 71.9 percent. The commercials are Bearish with a score of 33.1 percent and the small traders (not shown in chart) are Bearish with a score of 25.6 percent. SOYBEANS Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 32.4 48.2 7.1 – Percent of Open Interest Shorts: 7.3 69.5 11.0 – Net Position: 174,608 -147,698 -26,910 – Gross Longs: 225,260 334,792 49,376 – Gross Shorts: 50,652 482,490 76,286 – Long to Short Ratio: 4.4 to 1 0.7 to 1 0.6 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 71.9 33.1 25.6 – Strength Index Reading (3 Year Range): Bullish Bearish Bearish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -8.3 7.8 1.3   SOYBEAN OIL Futures: The SOYBEAN OIL large speculator standing this week totaled a net position of 100,596 contracts in the data reported through Tuesday. This was a weekly lift of 3,305 contracts from the previous week which had a total of 97,291 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 76.6 percent. The commercials are Bearish with a score of 21.8 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 81.5 percent. SOYBEAN OIL Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 32.0 45.8 9.9 – Percent of Open Interest Shorts: 4.8 77.9 5.0 – Net Position: 100,596 -118,831 18,235 – Gross Longs: 118,463 169,761 36,820 – Gross Shorts: 17,867 288,592 18,585 – Long to Short Ratio: 6.6 to 1 0.6 to 1 2.0 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 76.6 21.8 81.5 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 7.7 -8.6 10.0   SOYBEAN MEAL Futures: The SOYBEAN MEAL large speculator standing this week totaled a net position of 84,132 contracts in the data reported through Tuesday. This was a weekly reduction of -15,429 contracts from the previous week which had a total of 99,561 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 74.3 percent. The commercials are Bearish with a score of 26.8 percent and the small traders (not shown in chart) are Bullish with a score of 57.5 percent. SOYBEAN MEAL Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 30.7 47.1 12.5 – Percent of Open Interest Shorts: 7.4 77.1 5.9 – Net Position: 84,132 -108,059 23,927 – Gross Longs: 110,648 169,583 45,065 – Gross Shorts: 26,516 277,642 21,138 – Long to Short Ratio: 4.2 to 1 0.6 to 1 2.1 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 74.3 26.8 57.5 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -21.0 22.2 -25.5   LIVE CATTLE Futures: The LIVE CATTLE large speculator standing this week totaled a net position of 39,803 contracts in the data reported through Tuesday. This was a weekly fall of -7,233 contracts from the previous week which had a total of 47,036 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 26.5 percent. The commercials are Bullish with a score of 66.7 percent and the small traders (not shown in chart) are Bullish with a score of 67.9 percent. LIVE CATTLE Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 36.0 38.1 10.8 – Percent of Open Interest Shorts: 23.1 49.7 12.1 – Net Position: 39,803 -35,783 -4,020 – Gross Longs: 111,188 117,509 33,291 – Gross Shorts: 71,385 153,292 37,311 – Long to Short Ratio: 1.6 to 1 0.8 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 26.5 66.7 67.9 – Strength Index Reading (3 Year Range): Bearish Bullish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -14.7 8.4 22.1   LEAN HOGS Futures: The LEAN HOGS large speculator standing this week totaled a net position of 16,360 contracts in the data reported through Tuesday. This was a weekly reduction of -5,671 contracts from the previous week which had a total of 22,031 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 24.6 percent. The commercials are Bullish-Extreme with a score of 80.7 percent and the small traders (not shown in chart) are Bullish with a score of 67.8 percent. LEAN HOGS Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 30.7 38.0 10.2 – Percent of Open Interest Shorts: 23.1 43.0 12.8 – Net Position: 16,360 -10,817 -5,543 – Gross Longs: 66,483 82,353 22,102 – Gross Shorts: 50,123 93,170 27,645 – Long to Short Ratio: 1.3 to 1 0.9 to 1 0.8 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 24.6 80.7 67.8 – Strength Index Reading (3 Year Range): Bearish Bullish-Extreme Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -40.1 40.4 13.7   COTTON Futures: The COTTON large speculator standing this week totaled a net position of 81,759 contracts in the data reported through Tuesday. This was a weekly decline of -1,674 contracts from the previous week which had a total of 83,433 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 74.8 percent. The commercials are Bearish with a score of 23.9 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 81.2 percent. COTTON Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 46.8 33.8 8.5 – Percent of Open Interest Shorts: 6.3 79.6 3.1 – Net Position: 81,759 -92,603 10,844 – Gross Longs: 94,579 68,251 17,191 – Gross Shorts: 12,820 160,854 6,347 – Long to Short Ratio: 7.4 to 1 0.4 to 1 2.7 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 74.8 23.9 81.2 – Strength Index Reading (3 Year Range): Bullish Bearish Bullish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -1.5 2.7 -14.1   COCOA Futures: The COCOA large speculator standing this week totaled a net position of 21,046 contracts in the data reported through Tuesday. This was a weekly decline of -15,513 contracts from the previous week which had a total of 36,559 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 38.3 percent. The commercials are Bullish with a score of 59.9 percent and the small traders (not shown in chart) are Bullish with a score of 53.8 percent. COCOA Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 31.0 44.1 6.1 – Percent of Open Interest Shorts: 23.5 53.6 4.0 – Net Position: 21,046 -26,770 5,724 – Gross Longs: 87,140 124,216 17,042 – Gross Shorts: 66,094 150,986 11,318 – Long to Short Ratio: 1.3 to 1 0.8 to 1 1.5 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 38.3 59.9 53.8 – Strength Index Reading (3 Year Range): Bearish Bullish Bullish NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: -18.3 21.1 -30.6   WHEAT Futures: The WHEAT large speculator standing this week totaled a net position of 21,686 contracts in the data reported through Tuesday. This was a weekly gain of 1,674 contracts from the previous week which had a total of 20,012 net contracts. This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 48.3 percent. The commercials are Bearish with a score of 34.4 percent and the small traders (not shown in chart) are Bullish-Extreme with a score of 92.3 percent. WHEAT Futures Statistics SPECULATORS COMMERCIALS SMALL TRADERS – Percent of Open Interest Longs: 36.2 39.1 9.7 – Percent of Open Interest Shorts: 29.1 44.9 10.9 – Net Position: 21,686 -17,779 -3,907 – Gross Longs: 111,546 120,631 29,835 – Gross Shorts: 89,860 138,410 33,742 – Long to Short Ratio: 1.2 to 1 0.9 to 1 0.9 to 1 NET POSITION TREND: – Strength Index Score (3 Year Range Pct): 48.3 34.4 92.3 – Strength Index Reading (3 Year Range): Bearish Bearish Bullish-Extreme NET POSITION MOVEMENT INDEX: – 6-Week Change in Strength Index: 10.4 -11.9 1.2   Article By InvestMacro – Receive our weekly COT Reports by Email *COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets. The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting).See CFTC criteria here.
European Construction Markets: A Look at Poland, France, and Turkey's Prospects

The Commodities Feed: US gasoline tightness | ING Economics

ING Economics ING Economics 18.05.2022 07:45
Your daily roundup of commodities news and ING views Learn more on ING Economics Energy The oil market has seen a partial recovery in early morning trading today, after Brent settled more than 2% lower yesterday. Reports that the US is looking to ease some sanctions against Venezuela contributed to yesterday’s weakness, with it thought that the easing could see a partial resumption of Venezuelan oil to Europe. Any increase is likely to be rather limited, at least in the short term.   There are growing concerns over the refined products market. What started out as a tight middle distillate market appears to be spreading into the gasoline market, at least for the US. At a time when US gasoline inventories should be building ahead of the driving season, inventories instead have declined for most of this year. These are now below the low end of the 5-year range.  Gasoline demand should only increase over the coming months and, in the absence of a pick up in refinery runs, the gasoline market is likely to continue to tighten. The tighter gasoline market appears to have also contributed to a narrowing in the WTI/Brent discount, given the  need for higher US refinery runs, which should be supportive for US crude demand. Gasoline stocks in the ARA region of Europe are more comfortable, and are at least at a decade high for this time of the year. Given the tightness on the US East Coast and more comfortable European stock levels, we would expect to see a pick-up in European gasoline flows to the US East Coast in order to help alleviate some of this tightness. API numbers released overnight confirm the tightening in the market. US crude oil inventories are reported to have fallen by 2.4MMbbls, whilst stock levels at Cushing, the WTI delivery hub, fell by 3.1MMbbls. It was the gasoline market which saw the largest decline, with stocks falling by 5.1MMbbls over the last week. EIA numbers will be released later today. The EU carbon market saw some strength yesterday, with the market breaking above EUR91/t. The European Parliament’s Environmental Committee voted yesterday on reforms to the EU ETS. The committee agreed on the need for more aggressive carbon emission reduction targets. The committee would like to see emissions covered by the ETS fall by 67% by 2030 from 2005 levels, this compares to the initial proposal for a 61% reduction. In order to achieve this, the committee has  recommended that the amount of emission allowances should be reduced by 4.2% in the first year the reform starts, and then this reduction should increase by 0.1% each year through until 2030. The committee also wants to see the phasing out of free allowances between 2026 and 2030, and the full implementation of  the EU Carbon Border Adjustment Mechanism (CBAM) by 2030, which would be 5 years earlier than currently proposed. In addition,  the Environmental Committee wants to phase out free allocations for the aviation  sector  by 2025, which would  be 2 years earlier than the Commission had proposed. The proposal will also see maritime transport included in the ETS from 2024, which would cover 100% of intra-EU routes, and 50% of emissions from extra-EU routes coming in and out of the EU initially. Finally, the committee also agreed on the implementation of another emission trading  system for commercial buildings and transport, which would start in 2025, whilst private buildings and transportation will be excluded  from this new ETS until at least 2029. This latest proposal will be put to a vote  in parliament next month, after which negotiations between member states will likely start. Metals Latest reports that Shanghai might start relaxing its two-month lockdown after three days of zero community transmission, along with better-than-expected retail sales and consumer spending data from the US, were constructive for risk assets yesterday. Most base metals settled higher on the day, with LME aluminium closing more  than 2% up. Shrinking LME inventories have provided some support  to aluminium. The latest LME data shows that on-warrant inventories for the metal fell for an eighth consecutive day to a new record low of 230kt yesterday. Turning to steel, and China Iron & Steel Association (CISA) said that China will keep its restrictions on new steel capacity intact and would push for more mergers and acquisitions within the industry. Due to ongoing Covid-related restrictions, steel demand has remained under pressure recently, but this should improve as the Covid situation improves. Mysteel expects China’s steel demand over 2H22 to rise by 10% compared to 1H22, whilst YoY growth is expected to hit 15% in 2H22. This growth is expected  to be supported by local government policies. Agriculture CBOT wheat continued to trade firm yesterday, even after India relaxed its stance with its recently announced export ban on wheat. New directives from the Indian government indicate that the restrictions will not apply to wheat shipments that have already been handed over to the customs department for clearance and loadings. However, the export restrictions will still apply to wheat sales where the shipments are not yet finalised through the issuance of irrevocable LoC. Reuters reported that only around 400kt of wheat (out of around 2.2mt of wheat currently at ports) would be eligible for relief and likely to be exported. The relaxation is unlikely to provide much relief to the global market. TagsWheat Oil Metals Gasoline EU carbon Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Australia Is Expected To Produce A Bumper Year Of Crops

The UN Is Stepping In To Help Wheat Exports, Platinum Prices Experiencing Volatility and The West Turns To Asia For RBOB Gasoline Supply

Rebecca Duthie Rebecca Duthie 19.05.2022 13:13
Summary: The UN plans to help bring wheat prices down and even out exports. Concerns around supply and demand causing Platinum price volatility. Asia beginning to supply the west with gasoline Read next: More Expensive Coffee!? Weather Conditions In South America Can Limit Crops. (WTI) Crude Oil Price Recovering, Palladium Prices Rise Amidst Concerns Around Supply  Wheat prices calm as the UN steps in The price of wheat futures have dropped in the wake of the UNs announcement of their plans to “revamp” wheat exports, especially those that were affected by the war in the Ukraine. Expectations of an increase in control over wheat exports and therefore more certainty around supply has brought the price of wheat slightly down. Concerns around supply of wheat have been heightened by the Ukraines issues around exporting as their ports are being targeted by the Russian forces, in addition, the wheat supply from India has been stripped away from the international market. Wheat Jul ‘22 Futures Price Chart Platinum prices seeing volatility On Wednesday the price of platinum futures hit $950, the price rise came amidst concerns that there will be an increase in demand in the automotive industry and a falling supply which is due to reduce the current surplus the metal has. There are concerns around supply due to the sanctions on Russia and operational problems with some of the largest producers in South Africa. Platinum Jul ‘22 Futures Price Chart RBOB Gasoline futures prices fall Although the price of RBOB gasoline futures is decreasing the demand is expected to increase in the summer as driving increases, putting the supply under even more pressure. The West is turning to Asia to supply them with gasoline barrels, the increased supply is driving the price down, however whether or not that will last is under question. RBOB Gasoline Jun ‘22 Futures Price Chart Read next: (XAUUD) Gold Regains Investor Interest As The Dollar Weakens, NGAS Prices Going Up, Cotton Price Rising Along With Concerns Around Supply   Sources: finance.yahoo.com, tradingeconomics.com
Russia Look Set To Double Its Exports For The First Half Of 2023

Platinum Prices Touchine 22-month Lows, RBOB Gasoline, Wheat Consumption Expected To Decrease

Rebecca Duthie Rebecca Duthie 14.07.2022 14:17
Summary: The market expects lower demand for Platinum. Wheat Futures are approaching near four-month lows. Expensive Gasoline prices are keeping summer drivers off the road. Read next: Recession Fears Continue To Weigh On The Commodity Market: Coffee, Palladium & WTI Crude  Platinum prices are falling Platinum futures are touching 22 month lows as prospects of lower demand outweighed prospects outweighed supply concerns. Higher than expected US inflation data increased expectations of tighter and more aggressive monetary policy. In addition, the fresh new Covis cases in China are causing demand expectations to fall. Supplies are also expected to remain low as supply shipments from Russia disruptions continue. In addition, during June Britain sanctioned the chief executive and principal shareholder of Nornickel, Vladimir Potanin. Nornickel is the 3rd largest producer of the metal. Platinum Oct ‘22 Futures Price Chart Wheat supplies are expected recover Wheat Futures are approaching near four-month lows, and extending is move away from pre-Russian invasion levels receiving support from a stronger supply outlook. The combination of a forecast that reflected a decrease in consumption for the rest of the world for the 2022/23 marketing year as well as new data from the USDA’s supply and demand report pointed to a sharp increase in the supply, exports, and ending stocks of wheat in the United States. At the same time, concerns around a worldwide recession led the consumption estimated to be revised downward. Chicago Wheat Sep ‘22 Futures Price Chart RBOB Gasoline Expensive Gasoline prices are keeping more drivers off the road in the US than at the height of the pandemic. Gasoline demand tumbled last week, below the same week in 2020 and to the lowest (seasonally) since 1996. The numbers now paint a clearer picture of demand faltering amid mounting concerns over a wider economic slowdown. RBOB Gasoline Aug ‘22 Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com
Powell signals Fed needs to be nimble, Canada Inflation hits near 40-year high, bitcoin tries to hold USD20k

Platinum Futures Nearing 21-month Lows, Wheat, RBOB Gasoline Prices Falling

Rebecca Duthie Rebecca Duthie 21.07.2022 14:49
Summary: Weaker demand prospects for platinum outshine supply concerns. Russian grain and fertilizers will not be sanctioned by the US. RBOB Gasoline. Read next: Altcoins: renBTC (RENBTC) - What Is It? - A Deeper Look Into the renBTC (RENBTC) Platform  Platinum Prices are hitting 21 month lows Platinum prices are nearing 21 month lows as concerns around weakening demand outshone supply concerns. Higher than expected inflation numbers drove up expectations for more aggressive monetary policy tightening and heightened fears of a global economic recession. In addition, the demand from the top-consumer, China, is expected to fall in the wake of newly imposed lockdown regulations, which is also expected to hurt economic activity. At the same time, supply from Russia is expected to remain subdued due to the war in the Ukraine. Platinum Oct ‘22 Futures Price Chart Wheat futures prices returning to normal levels Chicago Wheat futures hit a one week high on July 20th but have since returned down to somewhat normal levels that were seen before Russia invaded the Ukraine amidst prospects of higher supplies. USDA forecasts show the levels predicted that supply, exports and ending stocks in the US are going to increase sharply and a decrease in consumption around the world. In addition, strong Russian harvest and lower export taxes expectations aided in the bearishness, this eased shortage relief when the US announced that Russian grains and fertilizers will not be sanctioned. Chicago Wheat Sep ‘22 Futures Price Chart RBOB Gasoline Gasoline futures fell to levels that have not been seen since April 25th, this fall comes in the wake of concerns around weakening demand. In addition, according to the EIA, domestic inventory levels increased well above market expectations. Gasoline consumption levels are standing around those of the first year of the pandemic, but lower than every year going back to 2000. RBOB Gasoline Aug ‘22 Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com
Australia Is Expected To Produce A Bumper Year Of Crops

Platinum Futures Recovering, RBOB Gasoline Futures, Concerns Around Demand For Wheat Futures

Rebecca Duthie Rebecca Duthie 12.08.2022 16:47
Summary: The Fed may slow down the pace of interest rate hikes. Hot and dry weather jeopardizes wheat growth. Rising demand vs Limited supplies for gasoline. Platinum Futures Following a break in the dollar gain after Fed Chair Jerome Powell suggested the possibility of reducing the pace of interest rate hikes amid contraction in the US economy, platinum futures touched $880 per tonne, recovering from a 22-month low of $844 recorded on July 14th. Foreign investors are enticed to purchase the dollar-denominated commodity by low-cost dollars. As the war in Ukraine rages and the West continues to impose economic sanctions on Russia, shipment interruptions from Russia are anticipated to keep the metal supplies lower. The Russian mining behemoth Nornickel's CEO and largest shareholder, Vladimir Potanin, was subject to sanctions earlier in June by the British government. Nornickel, with a 10% global output share, is the third-largest producer of platinum. Platinum Oct ‘22 Futures Price Chart Chicago wheat futures As a result of the hot and dry weather that jeopardized the yield in the ongoing harvests in the growing regions of North America and Europe, Chicago wheat futures inched up to $8 in August, lingering at levels not seen in a week. Traders are awaiting Friday's WASDE data to assess the potential impact of recession concerns on demand. Although grain supplies out of Black Sea ports continued, prices were still close to the six-month low of $7.5 reached earlier in the month and remained below levels before Russia's invasion of Ukraine. After an agreement between the Ukrainian and Russian delegations opened secure trade routes to ease the world food crisis, ships carrying Ukrainian grain resumed operations. It is anticipated that Ukraine will sell more than 20 million tonnes of grain that have reportedly collected in port silos since its invasion began on February 24 in addition to freeing up critical storage space for the next wheat harvest. Chicago Dec ‘22 Futures Price Chart RBOB Gasoline Futures As the market still needs to balance rising demand and limited supplies, gas and oil prices should increase through the end of the year, according to Goldman Sachs Group Inc. As industrial companies and power generators move away from more expensive natural gas, demand for crude is expected to increase. Consumption should increase as a result of the combination of relatively reduced prices and the ongoing reopening of economies. Lack of a gasoline and diesel inventory cushion at a time when refineries are entering their maintenance season worsens the supply outlook. RBOB Gasoline Sep ‘22 Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com
Commodities Update: Strong Russian Oil Flows to China and Volatility in European Gas Market

Platinum futures drop to their lowest level in a month, RBOB Gasoline, Wheat Futures Close To 10-month Lows

Rebecca Duthie Rebecca Duthie 25.08.2022 15:22
Summary: A hawkish Fed is causing investors to shy away from non-yielding assets. Ships transporting Ukrainian grain out of Black Sea ports continued to run without a hitch. RBOB Gasoline. Platinum Futures touching one-month lows Late in August, platinum futures experienced a decline to below $880 per ounce, the lowest level in a month, and followed other precious metals as hawkish comments from Federal Reserve policymakers boosted demand for the US dollar and scared investors away from non-interest-bearing assets. A global economic slowdown's effect on the auto industry's outlook, which lowered demand for autocatalyst components, also put pressure on prices. In July, car registrations were down year over year in the UK, Germany, and Italy, while declines were seen in the US and Canada according to June statistics. Platinum Oct ‘22 Futures Price Chart Wheat futures remain close to 10 month lows Late in August, with a lack of certainty over the weather in the US's growing regions, Chicago wheat futures eked out a small gain. Despite this, prices remained near to the 10-month low reached last week and were far lower than they were before Russia invaded Ukraine, as ships transporting Ukrainian grain out of Black Sea ports continued to run without a hitch. It is anticipated that Ukraine will sell more than 20 million tonnes of grain that are said to have collected in port silos since its invasion began on February 24 in addition to freeing up critical storage space for the next wheat harvest. Meanwhile, the USDA raised the world's supplies upward in its most recent WASDE report, boosted by projections for record production in Russia and higher output from China and Australia. The outlooks for US supplies were also upgraded because strong spring wheat more than made up for declines in winter and durum wheat. Wheat Futures Price Chart RBOB Gasoline According to AAA, the national average cost of gas in the United States has decreased for 70 days in a row to $3.89 a gallon. However, buyers shouldn't get complacent and believe that this streak will continue all the way to the end of the year. And one energy trader predicts that gas prices will rise once more, especially as we head into the fall and winter. RBOB Gasoline Sep ‘22 Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com
Australia Is Expected To Produce A Bumper Year Of Crops

Platinum Prices Drop To November 2020 Lows, US Gasoline Prices Falling, Wheat Prices Elevated

Rebecca Duthie Rebecca Duthie 01.09.2022 15:41
Summary: Elevated interest rates continue to drive platinum prices down. Supply concerns around wheat drive prices. US Gasoline prices fall to pre-Russia’s invasion of Ukraine levels. Platinum touching lowest levels since November 2020 As global interest rates are expected to continue rising and should remain high for a prolonged period of time, even if it slows growth, platinum futures extended losses to below $850 per ounce, closing in on their lowest level since November of 2020. They have also been tracking other precious metals lower. The fed funds rate has already increased by 225 basis points since March at the Federal Reserve, the most potent central bank in the world. Fed policymakers are now advocating for rises to continue at least until the level of 4% in early 2019. Additionally, despite expectations that they would subside in the second part of the year, ongoing shortages and supply chain problems hurt the auto industry and lower demand for autocatalyst components. Platinum Oct ‘22 Futures Price Chart Wheat futures remain elevated Chicago wheat futures saw a strong increase at the end of August after hitting a nine-month low in the middle of the month due to supply issues and increasing demand. According to government figures, Ukraine will harvest close to 20 million tonnes of wheat this year, down from 32.2 million the year prior as a result of weaker yields and the loss of farmed area to Russian forces during their invasion. Additionally, the nation intends to free up storage space for the upcoming harvest by selling the roughly 20 million tonnes of grain that are said to have collected in port silos since its invasion began on February 24. Meanwhile, US heatwaves cut corn harvests, further straining wheat supplies. Wheat Futures Price Chart RBOB Gasoline On Wednesday, wholesale gasoline prices in the United States plummeted to their lowest levels since before Russia invaded Ukraine, indicating that motorists in the world's largest energy consumer will soon witness cheaper pump prices. Markets for crude oil futures and gasoline have been kept in check by worries about a worldwide recession and a record level of emergency oil sales from national stockpiles. RBOB Gasoline Futures Price Chart Sources: finance.yahoo.com, tradingeconomics.com
Yen (JPY) Takes A Stab At Resilience, The Grains Sector Has Survived Well

Concerns About Global Supply On The Wheat, Apple Without Price Increases

Saxo Bank Saxo Bank 08.09.2022 09:39
Summary:  US Treasury yields retreated sharply yesterday, bringing relief to equity markets and turning the US dollar back lower. The soaring USDJPY found resistance near 145.00, while EURUSD backed up toward parity ahead of today’s ECB meeting, which is set to deliver the largest rate hike in the central bank’s history of 75 basis points as the bank seeks to catch up with global peers in its fight against inflation. Crude oil slumped below support on demand concerns, especially in China.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) US equities rallied hard yesterday with S&P 500 futures surging 1.8% in what mostly looks like a technical rebound across many asset classes as positions maybe are trimmed ahead of the US CPI report on Tuesday. The obvious key level to watch in S&P 500 futures on the upside is the 4,000 level with the futures trading around the 3,988 level this morning. The 50-day moving average at 4,027 is currently colliding with the 100-day moving average making the 4,030 level a key area to test in the short-term. Apple unveiled a low-risk update to its iPhone suite introducing the iPhone 14 with a few hardware updates. The cost-of-living crisis may jeopardize Apple’s expected upgrade cycle that the market is currently expecting. Hong Kong’s Hang Seng (HSIU2) and China’s CSI300 (03188:xhkg) Despite the S&P 500 rallied by nearly 2% and the Nasdaq Golden Dragon China Index surged by 2.3% overnight in the US, Hang Seng Index (-0.4%) continued its multi-session decline since the beginning of September. In mainland China, the CSI300 had a lackluster day fluctuating between small gains and losses. The weakness in Tencent (00700.xhkg), -2.3%, dragged down the benchmark index in Hong Kong. According to filings to the stock exchange, about $7.6bn worth, or 2% of the market cap, of Tencent shares have been transferred to the exchange’s clearing and settlement system. The news stirred up speculation that Prosus, a majority shareholder holding over 28% of Tencent, is selling Tencent shares.  In June, Prosus (PRX:xams) announced that the company was going to offload its stake in Tencent to raise cash to buy back its own shares and Naspers’ (NPN:xjse) shares (Prosus’ parent) at a discount to NAV. Strong USD tamed by treasury yields. EURUSD focus today in FX on ECB The latest leg higher in the US dollar was driven by a sharp move higher in US Treasury yields, a move that reversed yesterday and took the US dollar back a few notches with it. An important test ahead for the broader US dollar picture today is in EURUSD as the ECB is expected to deliver a 75-bp rate hike, the largest hike in its history, in an attempt to play catchup with global peers in its inflation fight – will the move support the Euro further or does Europe’s grinding energy emergency keep a lid on EURUSD for now? The market has priced more than 50/50 probability of a 75-bp move versus a 50-bp move and would need to hike 100 basis points to really impress the market. JPY downward spiral as global yields jump The USDJPY spike finally found resistance at the 145.00 level yesterday as US Treasury yields reversed lower. The move higher has been aggravated by the rising tide of global yields that contrasts with the Bank of Japan policy of standing pat with its yield-curve-control (YCC) policy. Often, a weak JPY encourages hedging activity by the Japanese holders of enormous savings held abroad but hedging activity has been low this time as Japanese investors abroad have enjoyed strong returns. The cycle top in EURJPY just above 144.00 is also a focus today as the ECB is set to hike as noted above. Given the scale of JPY weakening in recent days, Japanese officials will likely be out soon with a more determined response, generating two-way volatility. Crude oil (CLV2 & LCOX2) Oil prices steadied in the Asian morning after steep declines in the last few days amid demand concerns especially in China where its zero Covid policy is now impacting areas and a population that accounts for around 25% of GDP. Before the slump below $90 in Brent and WTI $85 the market had briefly rallied on Putin threats that he would cut supplies to countries agreeing on a price cap for Russian oil and gas. Supply issues had little impact, even as EIA lowered its annual oil production forecast for this and next year while raising its global demand outlook amid rising gas-to-fuel switching activity, mainly in Europe. The likelihood of an Iran nuclear deal adding supply is also fading. Focus on further OPEC+ action with Brent sliding further away from $100/b. Resistance: WTI at $85.75 and Brent at $91.50. Gold (XAUUSD) Gold once again managed to find buyers below $1700 thereby avoiding another attempt at challenging key support around $1680, a level from where the price has bounced multiple times during the past two years. Main source of directional input continues to be provided by yields and the dollar, both of which trade softer overnight (see above and below comments). Gold’s best chance of a further bounce at this point would come from short covering from recently established short positions, but for that to happen, the price as a minimum would need to break above $1735. Focus today on today’s expected ECB rate hike and its impact on EURUSD. US Treasuries (TLT, IEF) US Treasury yields reversed much of the previous day’s gains yesterday and followed through a bit lower still, taking the 10-year treasury yield below 3.25% this morning. The move helped bring relief to global risk sentiment as the USD also edged lower. The persistent move higher in US longer yields from the early August base allows for a test all the way to the 3.00% yield area in that 10-year benchmark without reversing the trend. The focus to the upside is the 3.50% peak from mid-June, around the timing of the June FOMC meeting. What is going on? Putin supply threat lifts wheat futures The Chicago and Paris contracts both jumped by more than 3% on Wednesday with the US traded contract reaching the highest level in nearly two months, after Putin criticized the UN-brokered Ukrainian grain export deal, saying the developing world had been “cheated” with the bulk of the shipments going to Turkey and Europe. Comments that could see Russia trying to revise its term to limit countries that can receive shipments. Paris Milling wheat, the high protein variety used for human consumption, still trades 25% below the May panic peak but any developments that reduces flow from Ukraine may add to global supply worries and lift the price further. New dock workers strike in the United Kingdom The UK has been facing recurring transport disruptions over the past few years. This is related to Brexit, Covid and now higher cost of living. A dockers strike at Felixstowe port (the country’s biggest container port) ended a few days ago. But a new one is looming at the port of Liverpool. The dockers trade union is calling for a strike from 19 September to 3 October (at least) after negotiations to raise salaries failed. This matters a lot. The port of Liverpool is a key hub for transatlantic sea transport. If inflation continues to rise (which is likely), expect many more strikes to come and not only in the transport industry. Social tensions will probably increase sharply in the coming months. Apple unveils iPhone 14 models If investors were hoping for a major product release of the most popular and iconic smartphone on the market they were left disappointed yesterday. Apple delivered a low-risk upgrade to its iPhone series with the iPhone 14 delivering some few hardware upgrades and no change to its overall design. The computer chip A15 Bionic is also staying the same. The biggest positive was probably no price increases which is quite telling, but also underscoring the cost-of-living crisis that many consumers are facing and in fact is jeopardizing the expected upgrade cycle of the iPhone. US retail investor readings still rock-bottom The AAII investor readings are still dire reading for the market with the spread between bullish and bearish readings hitting -35.2 in its latest data point which is worse than during the lows in 2020 and on par with the darkest hours during the Great Financial Crisis. This very negative sentiment of course could be fuel for a sharp rebound in the case Tuesday’s US inflation print turns out lower than expected. Dovish speech from Reserve Bank of Australia chief Philip Lowe In Australia overnight, RBA Governor Lowe delivered perhaps the first somewhat dovish speech in a long while from a non-BoJ developed market central bank, arguing that “the case for a slower pace of increase in interest rates becomes stronger as the level of the cash rate rises”. This lowered anticipation that the October RBA meeting will deliver another 50-bp hike after four consecutive half-point increases that have taken the policy rate to 2.35%. Australia’s trade surplus halves as coal and iron ore exports fall from record highs Australia’s trade surplus almost halved in July, plunging from A$17.1b to a A$8.7b surplus, when the market expected the surplus balance to fall to just A$14.5b. It comes as exports of coal and iron ore fell from their record highs, dragging down total exports by 10%. Coal export earnings fell 17% with the northern hemisphere in peak summer, while iron ore export earnings fell 15% tarnished by China’s slow down. Australian imports (covering outbound tourists) rose 5% with Aussies escaping the record cold winter to enjoy European sun. Fed speakers, and another possible WSJ article “guiding” for the September FOMC Meeting? Federal Reserve Vice Chair Brainard noted rates will need to rise further and policy will need to be restrictive for some time. She needs to see several months of low inflation readings to be confident inflation is moving down to 2% but how long it takes to get back to target will depend on a combination of continued easing in supply constraints, slower demand growth, and lower markups, against the backdrop of anchored expectations. The Cleveland Fed’s Mester (2022 voter) reaffirmed that she is not yet convinced about inflation peaking yet, and she also spoke on the August jobs report, where she said they are beginning to see some moderation, but labour market conditions remain strong. Elsewhere, the WSJ's Nick Timiraos wrote: "The Federal Reserve appears to be on a path to raise interest rates by another 0.75 percentage point this month in the wake of Chairman Jerome Powell’s public pledge to reduce inflation even if it increases unemployment." After a Timiraos article triggered a spike in anticipation that the June FOMC meeting would deliver 75 basis points rather than 50 bps, the market may have taken note, as money market pricing of a 75bps rate hike at the September 21 FOMC meeting has picked up from 68% on Tuesday to 81% now. Bank of Canada hikes 75 basis points As expected, the Bank of Canada hiked rates by 75bps bringing the rate to 3.25% and into restrictive territory, given the central bank’s estimate of neutral rate is 2-3%. The tone remained hawkish, but lacked clear guidance as it reiterated that further hikes will be necessary to bring inflation to target, implying the BoC is not done yet and will move even further into restrictive territory. While growth is slowing and housing prices are down 18% since February, short-term inflation expectations remain high, signaling a risk that elevated inflation becomes entrenched. What are we watching next? Japan’s Ministry of Finance, Bank of Japan and FSA to hold first three-way meeting since June This is clearly in response to the breathtaking weakening in the Japanese yen this week. We can expect some form of more determined intervention from here and with it, more two-way volatility. ECB interest rate hike today The ECB will have no other choice but to send a strong signal to the market regarding its commitment to lower inflation (expect a 75-basis point interest rate hike today). We forecast the ECB will need to keep increasing rates in the coming months for at least four main reasons: 1) inflation is high and it is not just about energy prices. Core inflation stands at 4.3 % year-over-year and is likely to continue rising in the short-term; 2) inflation expectations are up sharply. In the space of only eight months, inflation expectations for 2023 have risen from 1.5 % to 4.2 %; 3) the economy is able to cope with higher interest rates (eurozone consumer credit growth is steady which seems to indicate that monetary policy is not tight enough); and 4) the low euro exchange rate is a headache (since it increases imported inflation). The ECB will need to convince the markets they are able to curb the decline of the single currency. This is not an easy task. EU proposes five measures to curb gas demand and prices Ahead of Friday’s emergency energy meeting, European Commision President Ursula von der Leyen proposed five radical steps to curb costs and demand: 1) Smart savings of electricity by mandatory targets to reduce peak hour demand for electricity; 2) Cap on revenues of companies producing electricity with from low-cost sources such as wind and solar with profits being re-channeled to vulnerable people and companies; 3) Solidarity contribution from fossil fuel companies; 4) Liquidity support for energy utility companies in order for them to cope with elevated market volatility; 5) Cap on Russian gas revenues on the remaining 9% Russia supplies  to Europe, down from a pre-war level around 40% Earnings to watch Today’s key earnings release is DocuSign which was a pandemic darling but has since been seeing growth coming down dramatically and its valuation hit by higher interest rates. Analysts expect FY23 Q2 (ending 31 July) to show revenue growth of 17.7% y/y with a significant jump in operating income which the company must deliver to avoid further downward pressure on its valuation. Thursday: Sun Hung Kai Properties, Sekisui House, Zscaler, DocuSign Friday: Dollar Stores, Kroger Economic calendar highlights for today (times GMT) 1100 – Mexico Aug. CPI 1215 – ECB Rate Announcement 1245 – ECB President Lagarde Press Conference 1300 – Poland central bank governor Glapinski press conference 1310 – US Fed Chair Powell to speak at a conference (includes Q&A) 1430 – EIA Natural Gas Storage Change 1500 – EIA's Weekly Crude Oil and Fuel Stock Report (delayed by a day) 1525 – Canada Bank of Canada’s Rogers to deliver report 1600 – US Fed’s Evans (voter 2023) to speak 1820 – US Fed’s Kashkari (voter 2023) to speak 1900 – US Jul. Consumer Credit 0130 – China Aug. PPI/CPI  Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher     Source: https://www.home.saxo/content/articles/macro/market-quick-take-sep-8-2022-08092022
Volatility may be still there as crude is being impacted by loosening COVID restrictions in China, Russian-Ukrainian war and more

Wheat Prices Driven By Russian Attacks, Crude Oil May Feel Not That Strong As The US Labour Market Data Plays In Favor Of 75bp Hike

ING Economics ING Economics 11.10.2022 17:33
Wheat prices rose yesterday as concern mounted for Ukrainian exports following Russia’s latest attack on a number of Ukrainian cities. The oil market appears to have shrugged off growing tensions and instead seems focused on the weaker macro outlook Energy- oil rally fades Oil prices corrected lower after last week’s significant move higher. The above-consensus US jobs report at the end of last week has reinforced expectations that the Fed will hike by 75bps at its next meeting, and this has put pressure on most risk assets, including oil. ICE Brent settled almost 1.8% lower yesterday. It appears that, after digesting the recent OPEC+ cuts, the market is once again focused on central bank policy and what it means for the demand outlook. The oil market even seemed to shrug off Russia’s latest attacks on a number of Ukrainian cities, including Kyiv. This lack of reaction is likely due to the limited potential actions the West could take to further hit Russian oil exports. Already, a number of countries have sanctioned Russian oil, whilst the EU ban comes into force later this year. While there is always the potential for secondary sanctions on Russian oil, this is something that the US and other countries are unlikely to pursue given the tighter oil outlook (particularly after the recent OPEC+ cuts) as well as the fact that the US has been pushing a price cap on Russian oil to keep Russian oil flowing, whilst simultaneously trying to limit oil revenues for Russia. Metals – copper spreads strengthen Whilst the bulk of the metals complex came under pressure yesterday due to a stronger US dollar, LME copper 3M prices managed to climb for the first time in four sessions and the cash/3M spread also strengthened by US$9/t to a backwardation of US$59.25/t. The flat price and spreads have been boosted by slower China inventory gains, a tightening global supply outlook and risks of a potential ban on Russian supplies by the LME. Last week, the exchange launched a formal three-week discussion process on the possibility of banning Russian metal. Russia accounts for about 4% of global copper production. Inventories of copper in China rose 16,500 tonnes to 82,700 tonnes during the Golden Week holiday ending October 9 from a week earlier, according to Shanghai Metals Market data. The increase was smaller than in the same period last year (20,900 tonnes). Meanwhile, the latest data from the Shanghai Futures Exchange (ShFE) showed copper inventories declined to their lowest level in more than eight months at 30,500 tonnes in the week ending 30 September. Agriculture – wheat jumps on Ukraine grains export risk Wheat prices rallied yesterday following the latest Russian attack on Kyiv and other cities in Ukraine. CBOT wheat settled more than 6.5% higher on the day and traded to an intraday high of almost US$9.50/bu, which is the highest level since June. Russia’s escalation calls into question the future of the Black Sea grain export deal, which is due to expire in the next month. In addition, there is a backlog of vessels awaiting inspection, with UN data showing 99 vessels awaiting clearance. Since the introduction of the Black Sea Grain Initiative in early August, almost 6.9mt of grains and foodstuff have been exported under the deal. Read this article on THINK TagsRussian oil price cap Russia-Ukraine Grains Copper Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Portugal's Economic Outlook: Growth Forecast and Inflation Trends

Soft Commodities: Tighter Corn Market May Make Prices Increase

ING Economics ING Economics 13.10.2022 11:13
Yesterday's WASDE report was largely constructive. For the US market, corn and wheat saw lower 2022/23 ending stocks. However, the market was expecting even more aggressive reductions. As for soybeans, unchanged US ending stocks proved supportive for prices US corn yields revised lower The USDA revised lower its estimate for US corn stocks at the end of 2022/23 to 1.17b bushels compared to an earlier estimate of 1.22b bushels. However, this still left stocks above the roughly 1.13b bushels the market was expecting. The move was largely due to lower beginning stocks which were lowered by around 0.15b bushels. The agency also lowered domestic corn production estimates for this season from 13.94b bushels to 13.89b bushels on account of lower yields. Export estimates were also revised down by 126m bushels to 2.15b bushels. For the global market, the USDA reduced its estimate for global ending stocks from 304.5mt to 301.2mt; again, largely on account of smaller stocks at the start of the season. Global beginning stocks were revised down by around 5.1mt due to lower stocks in the US and Ukraine. The revised numbers are largely in line with market expectations of around 301.9mt. Global corn output was lowered by 3.8mt to 1,168.7mt due to lower supply from the US (-1.2mt) and the EU (-2.6mt). Meanwhile, global demand estimates fell from 1,180.2mt to 1,174.6mt.  While the numbers, particularly for the US were not as bullish as the market was expecting, both the US and the global market continue to tighten, which should provide support to prices. Corn supply/demand balance Source: USDA US soybean output cut The USDA revised lower production estimates for US soybeans by 69m bushels to 4.3b bushels. This was due to a reduction in yield expectations, which were revised down from 50.5 bu/acre to 49.8 bu/acre. Both yields and production came in below market expectations and this has provided a boost to soybean prices. Meanwhile, the agency estimates that lower output and increased competition from South America could impact exports, which were cut from 2.09b bushels to 2.05b bushels. US ending stocks for 2022/23 were left unchanged at 200m bushels; however, this was below the roughly 245m bushels the market was expecting. For the global market, 2022/23 ending stocks were increased from 98.9mt to 100.5mt, largely on account of higher supplies from Brazil. This number was also slightly higher than the 99.7mt the market was expecting. Global soybean production estimates increased by around 1.2mt to 391mt, which was driven by a 3mt increase in Brazilian supply. Global demand numbers were also increased by around 2.5mt to 380.2mt for 2022/23. Soybeans supply/demand balance Source: USDA Wheat balance sheet tightens The USDA lowered US wheat ending stock estimates for 2022/23 from 610m bushels to 576m bushels (lowest since 2007/08); although it was still higher than the roughly 563m bushels expected. The agency lowered production estimates from 1.78b bushels to 1.65b bushels due to falling acreage and yields. The global wheat balance saw few changes in aggregate with 2022/23 ending stock estimates revised down slightly from 268.6mt to 267.5mt, which was in line with market expectations. 2022/23 output was cut from 783.9mt to 781.7mt with key reductions coming from the US (-3.6mt) and Argentina (-1.5mt). Wheat supply/demand balance Source: USDA Read this article on THINK TagsWheat WASDE USDA Soybeans Corn Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Australia Is Expected To Produce A Bumper Year Of Crops

Soft commodities - corn and wheat up. Crude oil prices may end October above-the-line after very long time

ING Economics ING Economics 31.10.2022 09:59
It’s not surprising that wheat and corn opened higher this morning after Russia suspended the Black Sea grain deal over the weekend. Meanwhile, markets will be focused on the outcome of the FOMC meeting later this week and looking for any hints or signals that the Fed may slow the pace of rate hikes in upcoming meetings Energy - oil set to end the month higher The oil market has seen quite a bit of strength over October and is set to finish the month higher, after four consecutive months of declines. Announced OPEC+ supply cuts have provided support to the market at a time when there is plenty of demand uncertainty. OPEC+ supply cuts are set to start tomorrow which should see 1.1MMbbls/d of supply taken off the market. In addition to this, there is still plenty of uncertainty over the full impact of the EU ban on Russian seaborne crude oil, which comes into force on 5 December. Clearly, it is constructive for the market, but how constructive will depend on how much more Russian oil the likes of China and India can absorb. Speculators have been more positive on the market over the last month. The latest positioning data shows that speculators increased their net long in ICE Brent by 28,574 lots over the last reporting week - to leave them with a net long of 205,451 lots as of last Tuesday, which is the largest position speculators have held since June. Looking further at ICE Brent positioning data and focusing on commercial positioning shows that producers have been fairly active in hedging over the last couple of months. The gross producer short in ICE Brent stood at 1.21m lots as of last Tuesday, up from 978k lots in early September. This increased producer hedging could be driven by growing uncertainty over the demand outlook. Although, it is worth pointing out that the gross producer short is still well below levels seen pre-2022. Read next: Elon Musk Closes Twitter Deal, Apple Reported Record Revenue, ECB May Turn Dovish| FXMAG.COM As for the calendar this week, ADIPEC kicks off in Abu Dhabi today, which will continue through until Thursday. Speakers at the event will include a number of OPEC oil ministers and so expect plenty of noise around the market outlook and also more comments and views on the recent OPEC+ supply cuts. However, the event this week which could have the biggest impact on the oil market is the FOMC meeting. Expectations are that the Fed will hike interest rates by 75bps. However, the market will also be eager for any signals on what the Fed could do at its December meeting. There is a growing expectation that the Fed could slow the pace of hikes In December. Any hints from the Fed of a slowing in the pace of hikes would likely provide some support to risk assets, including oil. Metals – Glencore's production falls, cuts guidance Glencore reported lower production in Q3 for half the commodities it mines and lowered full-year guidance on zinc, nickel and coal. The company cited extreme weather in Australia, industrial action at nickel assets in Canada and Norway, and supply chain issues in Kazakhstan caused by Russia’s war in Ukraine. Glencore’s copper production fell 14% YoY to 770.5kt, while zinc output fell 18% YoY to 699.6kt in the first nine months of the year. The company reduced zinc production guidance to 945kt for the year, compared to its previous guidance of 1.01mt due to the emerging supply-chain issues due to Russia-Ukraine war. In ferrous metals, the most active contract for iron ore trading on SGX is on course for five consecutive sessions of declines with prices trading down to an  intra-day low of US$75/t this morning- the lowest levels since September 2020. The raw material prices are already down more than 50% from the recent highs of US$171/t seen in March this year. The extended weakness in China’s property sector along with the nation’s Covid restrictions is weighing on steel consumption at a time when ex-Chinese demand is also bleak due to tighter monetary policy and a worsening energy crisis in Europe. Over the coming weeks, potential winter output curbs in China would result in rising stockpiles of iron ore, further weighing on the prices. Meanwhile, Baoshan Iron & Steel Co., the world’s largest steelmaker, highlighted a weak outlook for the steel industry in China last week and forecasts that steel demand in the country could fall 5% this year. Chinese manufacturing PMI data for October, which was released this morning will certainty not help with the PMI falling from 50.1 to 49.2 - leaving it in contraction territory. Agriculture - Russia suspends Black Sea grains export deal It’s no surprise that CBOT wheat and corn opened significantly higher this morning after Russia suspended the Black Sea grains export deal, following attacks on Russian navy vessels in the Black Sea. The latest data from the UN shows that a little over 9.3mt of grains and foodstuff have been exported from Ukraine under the deal since August. However, around 2.65mt of this is still awaiting inspection and its unclear what will happen to these cargoes now. The deal was originally set to expire on 19 November, but there was hope that it would be extended. We will need to see if involved parties can  somehow put the deal back on track, but clearly there is the very real risk that Ukrainian grain exports see a significant slowdown due to these latest developments. Previously, Ukraine’s Grain Association had said that Ukraine could export 50mt of grains if the deal was prolonged, without it the maximum volume would likely be around 35mt. Read this article on THINK TagsRussia-Ukraine Oil Metals Grains China PMI Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bearish WASDE Report Impacting Corn, Soybeans, and Wheat

The Commodities Feed: Specs boost positioning in oil

ING Economics ING Economics 11.04.2023 08:34
There is plenty on the calendar for oil markets this week. All eyes will be on the OPEC and IEA reports which will likely shed some light on the latest views on the demand outlook Energy – Specs boost net long in oil ICE Brent settled a little more than 1% lower yesterday amid reduced trading volumes due to a number of countries still off for Easter. However, the market has made a partial recovery in early morning trading today. Plenty of uncertainty is hanging over the market, and recently announced OPEC+ supply cuts have only added to this. Supply cuts can always be interpreted in two ways. First, and the most obvious, is that supply cuts are bullish given they will lead to reduced supply, and second, supply cuts are a bearish signal, as they possibly signal demand concerns. Prior to the announced cuts, the market was already expected to be tight over the second half of the year, but additional supply reductions could signal that OPEC+ is of the view that demand could underperform relative to expectations. However, the latest positioning data suggest that speculators hold a more constructive view following the recently-announced supply cuts. The latest data show that the managed money net long in ICE Brent increased by 73,354 lots over the last reporting week to 234,461 lots as of last Tuesday. This was driven predominantly by fresh longs, with the gross long increasing by 44,236 lots. There was also a fair amount of short covering following the surprise cuts, with the gross short decreasing by 29,118 lots. Unsurprisingly, the managed money net long in NYMEX WTI also saw a large increase, growing by 63,138 lots over the week to 176,414 lots. However, this move was predominantly driven by short covering, with the gross short falling by 44,736 lots. Read next: Tight US jobs market favours 25bp Fed rate hike| FXMAG.COM Bloomberg reports that the Russian Energy Ministry has said that oil output in March fell by 700Mbbls/d, which if true would be more than the 500Mbbls/d planned reduction the government previously announced. However, this reduction does not appear to align with exports, as seaborne crude oil flows remain strong.    For this week, there are a number of key releases. Later today the EIA will release its short-term energy outlook, which will include US oil production forecasts. Then later in the week, OPEC will release its monthly oil market report on Thursday, followed by the IEA’s monthly oil report on Friday. The market will be keen to see what demand revisions are made, if any, and if so how this changes the outlook, particularly in light of the recent supply cuts announced by some OPEC+ members. Agriculture – US winter wheat conditions weaken The United States Department of Agriculture's (USDA's) latest weekly crop progress report shows that the winter wheat crop condition slightly deteriorated over the last week and remains well below year-ago levels. The USDA rated 27% of the winter wheat crop in good-to-excellent condition as of 9 April compared to 28% a week ago and 32% at this point in the season last year. For corn, the USDA reported that 3% of the crop is planted, marginally higher than the 2% reported last week and a year ago as well. Recent data from Thailand’s Office of the Cane and Sugar Board show that Thailand crushed 93.88mt (+2% year-on-year) of sugarcane in 2022/23, lower than the initial estimates for more than 100mt of cane. This has resulted in sugar output of around 11mt. Lower-than-expected output from Thailand, combined with lower Indian supply, continues to support sugar prices, which have recently broken above USc23/lb. Key for the market in the coming months is how the CS Brazil crop develops. CS Brazil is expected to produce its second-largest amount of sugar on record this season. However, there are concerns about whether Brazil will be able to export all of this supply with increased competition for logistics following record domestic soybean and corn crops. Read this article on THINK TagsWinter wheat Sugar Speculators Russian oil ban OPEC+ Oil Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
Bearish WASDE Report Impacting Corn, Soybeans, and Wheat

WASDE update: USDA's first crop estimates for 2023/24

ING Economics ING Economics 15.05.2023 10:15
The USDA’s first estimates for the 2023/24 marketing year presents a soft outlook for corn and soybeans as global supply improves, whilst demand is expected to increase at a modest pace. However, the wheat outlook is more constructive with the market facing yet another fall in ending stocks in 2023/24 Supply gains outpace demand growth for corn The USDA expects US corn production to rise significantly by over 10% year-on-year in 2023/24, with first estimates suggesting record output at 15.3b bushels due to improved yield and higher acreage. The market was expecting a number closer to 15.1b bushels. Corn acreage is expected to rise from 79.2m acres to 84.1m acres in 2023/24, whilst yields are projected to increase from 173.3bu/acres to 181.5bu/acres. US domestic demand and exports are expected to rise by 430m bushels to 12.4b bushels and by 325m bushels to 2.1b bushels, respectively. Consequently, US ending stocks for 2023/24 are estimated at 2.22b bushels, up from 1.42b bushels at the end of 2022/23. The market was expecting a number closer to 2.1b bushels. For the global corn balance, world production is estimated to total 1.22bn tonnes in 2023/24, up 6% YoY. Supply gains from the US (+39mt), Argentina (+17mt) and the EU (+11.3mt) are expected to more than offset supply losses from Ukraine (-5mt) and Brazil (-1mt). Global ending stocks for 2023/24 are projected at 312.9mt, up by 15.5mt from the previous year. This is also higher than the roughly 308mt the market was expecting. Above-consensus ending stock numbers are clearly not constructive for corn prices and this is aligned with the relatively more bearish view we have held for corn. However, there are still clear upside risks as we move into the US growing season, whilst there is also still plenty of uncertainty over the extension of the Black Sea Grain Initiative. Corn supply/demand balance Source: USDA, ING Research Soybean market well supplied in 2023/24 2023/24 estimates for US soybeans were bearish with increased supply, higher ending stocks and lower exports compared to the preceding year. The USDA projects US soybean ending stocks at 335m bushels, much higher than the 215m bushels estimated for 2022/23. This is also well above the 293m bushels the market was expecting. US soybean production is seen at 4.51b bushels in 2023/24, up from an estimated 4.28b bushels in 2022/23, primarily due to higher yields. US exports are projected to decline by 40m bushels to 1.98b bushels following increased overseas competition. Meanwhile, USDA projects US soybean demand at 2.44b bushels, up 4% YoY. For the global market, the USDA estimates production will jump significantly, following higher production estimates from South America and the US for 2023/24. The agency forecasts global soybean production to rise almost 11% YoY to 410.6mt (+40.2mt YoY) with higher supplies coming from Argentina (+21mt), Brazil (+8mt), the US (+6.4mt) and Paraguay (+1.2mt). Meanwhile, global soybean demand is expected to increase by 6% YoY to 386.5mt with demand growth mainly coming from Argentina (+5.5mt), China (+5.3mt) and Brazil (+2.7mt). Global soybean ending stocks are estimated at 122.5mt for 2023/24, compared to 101mt from a year ago and market expectations of around 108mt. Overall, the release was bearish for soybeans with both US and global ending stocks coming in above market expectations. This also gives us comfort in our more bearish outlook. But obviously, there are still risks heading into the US summer. Soybeans supply/demand balance Source: USDA, ING Research Wheat balance to tighten further The USDA expects US wheat ending stocks for 2023/24 to fall by 42m bushels (-7% YoY) to 556m bushels, the lowest in 16 years. The market was expecting a number closer to 602m bushels. US wheat production is estimated at 1,659m bushels for 2023/24, marginally higher than the 1,650m bushels seen a year ago due to the increased area. However, it is still below market expectations of 1,812m bushels. Global wheat ending stocks are forecast to total 264.3mt for 2023/24, slightly lower than the 266.3mt estimated for 2022/23 but above market expectations of around 260mt. Global wheat production projections were seen at 789.8mt, up 1.5mt from 2022/23 estimates. The increase in supply from Argentina, Canada, China, the EU, and India was partially offset by declining output from Australia, Russia, Ukraine, and Kazakhstan. Read next: FX Daily: Conflicting forces, but debt ceiling dominates| FXMAG.COM The WASDE was somewhat bullish for wheat prices given the large drop expected in US ending stocks for 2023/24. However, developments related to the Black Sea grain deal will also be crucial for price direction.    Wheat supply/demand balance Source: USDA, ING Research Read this article on THINK Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more
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Profitability Under Pressure: Analyzing the Impact of Falling Grain Prices on IMC's Financial Outlook

GPW’s Analytical Coverage Support Programme 3.0 GPW’s Analytical Coverage Support Programme 3.0 31.05.2023 09:45
Falling grain prices likely weigh on profitability In this report we revise financial forecasts and valuation for IMC downgrading recommendation from Buy to Hold and lowering target price from PLN 22.56 to PLN 18.28 p.s.   Since our last company update from Dec 2022, wheat and corn prices fell by 31% and 14% respectively. Falling spot prices reflect ample supply, coming mainly from Russia. USDA forecast 2023e harvest to remain high as well, likely weighing on expectations of future prices. On the side of production costs we highlight falling of fertilizers and diesel prices.   Regarding IMC financial forecast, we lowered our EBITDA estimates for 2023e which is associated with lower grains’ prices and rising costs (IMC makes major cost positions hedges well in advance). Compared to our previous report, we also expect lower volumes sales mainly stemming from higher sales of inventories between 4Q22 and 1Q23. Realized prices will continue to command hefty discount to European market prices stemming from high transport cost.   Weak macro and worsening of operational prospects in current year may take back seat in the light of falling geopolitical risk. Successful Ukraine’s counteroffensive may fuel rerating of Ukrainian companies pushing share prices higher on the optimism surge. For the moment being we assume Ukraine’s risk free rate at 36%/20%/7% in 2023e/24e and thereafter.   We also assume risk premium at 20% in 2023e and 10% thereafter, which in our view reflect the risk of investing in companies operating in a country where full-scale war takes place. From the point of view of cash flows, thanks to the high inventories sales between 4Q22 and 1Q23 cash generation seemed solid, hence for the moment being, liquidity risk lowered considerably. The company said in 1Q23 financial report it managed to extend credit line and pay off short-term debt.     Forecasts and valuation update Financial forecasts update   In this report, we change our financial forecasts for IMC mainly due to the falling of grain prices since our previous company update released in September 2022. Both corn and wheat remain under pressure which stems from the ample supply as well as economic slowdown (corn is more exposed to the cycle through ethanol fuel enduses).   We point out price discounts IMC is reporting on sales compared to the average spot market prices (76% vs ca. 100% of full-cycle average for corn). High price discount is also associated with rising selling and distribution expenses per ton, likely the result of costly process of exporting grains by railway (in general it’s more expensive than ship) or freight (costs of insurances, freight rates etc.). Admittedly, the unit cost of sales went down over a few months from ca. USD 60 to USD 30, however volumes sales growth keep sales expense in the P&L at elevated level. We also highlight the problem of rising production costs: admittedly spot fertilizers prices go down recently, but hedging of 2023e costs took place in winter 2022.   In our view, the change of sentiment toward Ukrainian agri companies require either reversing the negative trend on grains prices or falling of geopolitical risk associated with the upcoming Ukrainian counter-offensive. From the point of view of business environment we’d rather err on the safe side hence the change of recommendation and cut of target prices. However, in case of some optimistic scenarios regarding development on the war front, Ukrainian companies’ shares prices may gain as a result of sentiment change or rerating of market multiples.     FAO grain index dropped in April 2023 to 136 points, the lowest since February 2022 when the war broke out. Most grains suffered losses in April, except for rice. In case of wheat, prices remained under pressure due to the ample availability from Russia and Australia. Beneficial weather conditions in the USA, Russia and Europe as well as EU reaching an agreement over Ukrainian grains transit through neighboring countries (including Poland) also encouraged prices to continue downward trend. In May, USDA raised the estimate of US grains conditions by 2 p.p. to 28%.   The agency also forecast second highest wheat harvest in Russia. Production is expected at 81.5mn tons, 11% down vs. record 2022 but still 2% higher vs 5Y average. USDA also remains optimistic with respect to European harvest, except for drought-hit Iberian Peninsula. European production is expected to come in around 139mn tons, 3% higher yoy and 5% higher vs 5Y average. Regarding corn, falling prices came on the heel of record high harvest in Brazil.   The additional factor dragging prices down are falling spot diesel and fertilizers prices. After pushing out Russian from Poltawa, Sumy, Czernichov and Charkow region, the key problems of Ukrainian agri companies remained export disruptions.   On July 22, 2022, Russia, Ukraine, Turkey and UN signed Istambul Black Sea agreement, which guarantee safe marine grain export from Ukrainians ports on Black Sea.   The aim of said agreement was to reduce the price pressure on global grains market and prevent the famine affecting the poorest countries in the world. The agreement was set to last for 120 days with potential for renewal. In May 2023, the Black Sea agreement has been extended for another 60 days which has been confirmed by Ukraine and Turkey, brokering the deal and guaranteeing its execution. Marine grain transport was responsible for 70% of Ukrainian cereals international sales, whereas railway accounted for only 20% of sales.   Considering the importance of the agreement for Turkey and its bargaining power over Russia, we do not expect the deal will be terminated in the foreseeable future. Nonetheless, there is a non-zero risk of such an event following further escalation of the ongoing military conflict. In mid-April Poland, as well as other countries neighboring Ukraine, introduced unilateral bans on Ukrainian agri produce including grains.   The bold step was preceded by domestic farmers protests, blaming Ukrainian import for dumping prices and increased competition. Kiev as well as Brussels voiced its concerns and disappointment over the ban, whereas the latter said it’s EC jurisdiction to shape common trade policies.   At the end of April, the agreement has been reached which established a ban of produce sales directly in neighboring countries, whilst those countries will let the Ukrainian grain to be transited over their territories further West. It's difficult to say what part of rail export ended up specifically in CEE EU countries, nonetheless the extent of rail export is considerably lower vs. marine transport in general. We do not assume the agreement will have meaningful effect on Ukraine’s export level, which would suffer incomparably more in case of Black Sea agreement termination.   We assume total IMC grain sales at 874k tons this year and 770k tons in following years. We highlight the change of sales structure which reflects different grain acreage structure of corn, sunflower and wheat from 75%/10%/15% to 58%/14%/19%.   Changing production in favor of wheat and sunflower at the expense of corn stems from the need of limiting the usage of gas and power which is indispensable in the process of corn grain drying. Volume sales in 2022 turned out to be higher than we expected therefore proportionally lower sales in 2023 vs our previous expectations. From the point of view of financial results we expect this year considerably lower gain on sales of biological assets, which results from falling grains prices (additionally lowered by cost of transit) as well as higher costs of production.   At the same time, there is a chance of recognizing higher results on sales due to the very low price level used for establishing gains on recognition of biological assets in the preceding quarters vs current spot market prices. We highlight the accounting character of gains recognized on valuation of biological assets which is not tantamount to cash flows the company generates.   Valuation Our IMC valuation is based on DCF model indicating a 12M target price of PLN 18.26 per share.   We attach 100% weight to this valuation method as it better captures the long-term prospects, company-specific factors and country risk as well as limited number of peers exposed to similar set of risk factors. For illustrative purposes, we have prepared a peer comparison valuation based on 2023E - 2025E multiples which yields a 12M valuation of PLN 27.75              
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China's Imports Recover: Crude Oil, Natural Gas, and Copper Boost Market Sentiment

ING Economics ING Economics 07.06.2023 10:48
The Commodities Feed: China's imports recover China’s crude oil and natural gas imports recovered strongly in May, which could help improve market sentiment. For copper, China’s concentrate imports jumped to a fresh high, while unwrought copper imports remain soft.   Energy – China's crude oil imports recover China’s crude oil imports recovered to 51.44mt or around 12.16MMbbls/d (up 17% month-on-month and 12% year-on-year) in May 2023, as some of the refineries increased their utilisation rate after concluding maintenance. Demand slowdown from China has been a major concern for the crude oil market recently, and a recovery in oil imports is likely to provide some comfort to the oil market. Higher refinery utilisation has also increased refined product supplies in the Chinese market, with China reverting to being a net exporter of refined products last month. Among other energy products, natural gas imports into China increased 17.3% YoY to 10.6mt in May as lower gas prices in the Asian market supported demand for storage.   In its latest short-term energy outlook report, the Energy Information Administration (EIA) revised higher domestic oil production estimates, as the decision by OPEC+ to extend output cuts could push oil prices higher and bring more investments into exploration.   The administration revised higher the production estimates to 12.61MMbbls/d for 2023 compared to earlier estimates of 12.53MMbbls/d and output of 11.88MMbbls/d in 2022. For 2024, production estimates are revised higher to 12.77MMbbls/d compared to earlier estimates of 12.69MMbbls/d. On the other hand, US demand for crude oil is revised down from 20.47MMbbls/d to 20.42MMbbls/d on slow demand for distillates – although this is still higher than the 20.28MMbbls/d of consumption in 2022.   Meanwhile, the American Petroleum Institute (API) reported that the US crude oil inventories decreased by 1.71MMbbls over the last week, in contrast to market expectations for the addition of around 350Mbbls. Cushing crude oil stocks are reported to have increased by 1.53MMbbls. On the products side, API reported that gasoline and distillates inventories rose by 2.42MMbbls and 4.5MMbbls respectively over the week ending 2 June. The more widely followed EIA report will be released later today.     Metals – Chinese copper concentrate imports at record highs China released its preliminary trade data for metals this morning, which shows total monthly imports for unwrought copper fell 4.6% YoY to 444kt in May, largely on account of higher domestic production of the refined metal. Cumulatively, unwrought copper imports fell 11% YoY to 2.14mt in the first five months of the year.   Meanwhile, imports of copper concentrate rose 16.7% YoY to a fresh record of 2.56mt last month, with year-to-date imports up 8.8% YoY to 11.31mt from January to May this year. In ferrous metals, iron ore monthly imports rose 3.9% YoY (+6.3% MoM) to 96.17mt last month, while cumulative imports are up 7.7% YoY to 480.7mt from January to May.   On the exports side, China’s unwrought aluminium and aluminium products shipments fell 29.7% YoY to 475.4kt last month while year-to-date exports declined 20.2% YoY to 2.32mt in the first five months of the year. Exports of steel products jumped 41% YoY to 36.4mt from January to May this year.   Meanwhile, data from the Mines and Geosciences Bureau shows that nickel output in the Philippines rose 5.4% YoY to 3.9dmt in 1Q23 despite only a few mines being in production. The bureau reported that only 13 out of the nation’s 33 operating mines reported output for the above-mentioned period, as some were impacted by unfavourable weather conditions while few were undergoing scheduled maintenance.   However, the bureau remains optimistic about the outlook for the mining industry over the long term, following the expected recovery of the global economy and strong demand for nickel ore.     Agriculture – Chinese soybean imports surge The latest trade numbers from Chinese Customs show that soybean imports in China rose 24.3% YoY (+65.6% MoM) to a record high of 12.02mt in May. The imports surged sharply as the delayed cargoes (due to last month's strict inspections) were finally unloaded at ports. Cumulatively, soybean imports rose 11.2% YoY to 42.3mt over the first five months of the year.   Weekly data from the European Commission show that soft wheat shipments from the EU reached 28.9mt for the season as of 4 June, up 11.4% compared to 25.9mt from the same period last year. Morocco, Algeria, and Nigeria were the top destinations for these shipments. Meanwhile, the EU’s corn imports stood at 24.6mt, compared to 15.3mt reported a year ago.
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Metals: Zinc and Lead Stocks Climb, Agriculture: IGC Lowers Corn Output Estimates

ING Economics ING Economics 30.06.2023 09:39
Metals – Zinc and lead on-warrant stocks climb Recent LME data shows that total on-warrant stocks for lead increased by 1,075 tonnes to 41,225 tonnes as of yesterday, the highest since February 2022. The majority of the additions came from the warehouses in Port Klang, Malaysia. As for zinc, on-warrant stocks rose by 2,625 tonnes to 68,350 tonnes.     Agriculture – IGC lowers corn output estimates In its latest monthly update, the International Grains Council (IGC) lowered its 2023/24 global corn output forecasts from 1,217mt to 1,211mt, while consumption projections were reduced to 1,205mt from a previous forecast of 1,211mt. Weaker consumption means that global corn ending stocks are expected to increase from 272mt to 276mt. For wheat, the council revised its global ending stock estimates down from 271mt to 264mt, despite a slight increase in output forecasts. The reduction in stocks was driven by expectations of stronger demand.   The USDA’s weekly net export sales for the week ending 22 June showed strong demand for US corn and wheat, while soybean shipments dropped over the previous week. US corn shipments surged to 263.9kt, compared to the 83.1kt reported in the previous week and 208.1kt from a year ago. Similarly, wheat exports rose to 155.2kt, higher than the 123.9kt reported a week ago but lower in comparison to 496.7kt from a year ago. Finally, soybean shipments stood at 244.4kt, lower than the 626.3kt reported a week ago.
Bearish WASDE Report Impacting Corn, Soybeans, and Wheat

Bearish WASDE Report Impacting Corn, Soybeans, and Wheat

ING Economics ING Economics 13.07.2023 08:41
Agriculture: Bearish WASDE report The USDA’s latest WASDE report was a largely bearish affair, particularly for corn and soybeans. The USDA revised up its US corn production estimate by 55m bushels to 15.32bn bushels, on the back of a larger than expected planted area as reported in its recent acreage report. A reduction in yield estimates (due to recent dry weather) was not enough to offset the higher acreage. The market was expecting a larger fall in yields, therefore the USDA’s production estimate was above the 15.15b bushels the market was expecting. Higher output sees US ending stock estimates for 2023/24 at 2,262m bushels, up slightly from the previous forecast and above the 2,166m bushels the market was expecting. For the global balance, corn production for 2023/24 is forecast to increase by 1.7mt to 1,224.5mt, as output increases from Canada (+0.7mt) and Ukraine (+0.5mt) partially offset by reductions from the EU (-0.9mt). 2023/24 global ending stocks for corn were left largely unchanged at 314.1mt, although this was above the little more than 312mt the market was expecting. The USDA lowered 2023/24 US soybean output estimates by 210m bushels to 4,300m bushels due to lower acreage. The market was expecting further downside to soybean output, however, the agency left yields unchanged from last month. US 2023/24 ending stock estimates were reduced from 350m bushels to 300m bushels, which was still well above the roughly 206m bushels the market was expecting. For the global market, 2023/24 soybean production estimates were lowered by 5.4mt to 405.3mt, which leaves ending stocks for 2023/24 at just under 121mt.   Lastly, the USDA projects US wheat supplies to increase by 74m bushels to 1,739m bushels. This pushes US ending stock estimates up by 30m bushels to 592m bushels, which is above the roughly 565m bushels the market was expecting. For the global wheat market, the USDA expects 2023/24 wheat production to fall to 796.7mt this season, down from an earlier estimate of 800.2mt. As a result, ending stocks for 2023/24 were lowered by 4.2mt to 266.5mt, which is less than the market was expecting.
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Agriculture Market Update: Wheat Continues Decline Amid Global Supply Concerns

ING Economics ING Economics 31.07.2023 15:54
Agriculture: Wheat extends decline CBOT wheat futures extended the fall for a fourth consecutive session this morning as worries surrounding the Black Sea dilemma were overshadowed by the prospects of increasing supplies from other major producing nations. Recent reports from the last week’s US crop tour showed that the estimates of the spring wheat yield were higher than the USDA’s latest estimate, whilst France’s soft wheat production is also expected to remain higher than last year. Meanwhile, Russia is expected to increase its overseas shipments of grains to as much as 60mt in the new season. In its latest report, the European Commission projects that the EU’s soft wheat harvest will reach 126.4mt this year, down from 128.9mt estimated in June. The group also trimmed the corn crop projections to 63mt, compared to the earlier estimate of 63.7mt whereas the export estimates were kept unchanged at 32mt. The latest CFTC data shows that money managers turned net bullish in CBOT corn as gross longs outnumbered gross shorts by 26,603 lots as of 25 July, compared to the net bearish bets of 46,926 lots from a week ago. Looking at wheat, the net speculative short positions decreased by 14,086 lots to 40,332 lots over the last reporting week. The move was driven by a drop in gross shorts by 13,674 lots taking the total to 98,192 lots. Meanwhile, speculators increased their net bullish bets for soybean by 24,925 lots for a second consecutive week to 120,739 lots fuelled by an increase in gross longs. For sugar, money managers increased their net bullish positions by 31,980 lots to 178,530 lots. The gross long position in sugar increased by 29,183 lots compared to last week taking the total to 229,126 lots.
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USDA Slashes Corn and Soybean Crop Ratings, Improving Weather Conditions Bring Hope

ING Economics ING Economics 01.08.2023 13:14
Agriculture: USDA slashes corn and soybean crop ratings CBOT corn extended losses for a fifth consecutive session yesterday on the prospect of improving weather conditions in the Northern Hemisphere, with the hot and dry weather conditions coming to an end this week, although adverse weather over the preceding few weeks has continued to hurt the current crop. The USDA’s latest weekly crop progress report rated 55% of the corn crop to be in good-to-excellent condition, compared to 57% last week and 61% reported last year; the market was expecting 56% of the crop to be rated in good-to-excellent condition. Meanwhile, the agency rated 52% of the soybean crop as good-to-excellent, lower than 54% from a week ago and 60% reported a year ago. The market was expecting a number closer to 53%. For wheat, the USDA data showed that 80% of the winter wheat crop was harvested as of 30 July, compared to 68% from a week ago and 81% at the same stage last season. The market was expecting the harvest to reach 78%. The USDA’s weekly export inspection data for the week ending 27 July pointed towards improving demand for US grains. The USDA’s export inspections of corn stood at 522.9kt in the above-mentioned period, higher from 329.8kt in the previous week but lower in comparison to the 905.3kt reported a year ago. Similarly, US soybean export inspections stood at 329.5kt, higher compared to 288.5kt from a week ago but lower than the 595kt from a year ago. For wheat, US export inspections stood at 581.3kt, up from 361.1kt from a week ago and 282.1kt reported a year ago.
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Escalating Ukraine-Russia Tensions Drive Wheat Gains: Market Insights

ING Economics ING Economics 07.08.2023 14:03
Agriculture – Wheat gains on escalating Ukraine-Russia tensions CBOT wheat futures edged higher with the most active contract rising more than 2% this morning due to increasing tensions in the Black Sea region following the Ukrainian attack on Russian ships. According to recent updates about the Ukraine and Russia conflict, Ukrainian drone strikes near the Black Sea port of Novorossiysk, a key hub for Russian grain and oil shipments, led to the closure of the port for several hours. The move was in retaliation for the numerous attacks by Russia on Ukrainian ports. Meanwhile, the latest reports from the Ukrainian Agriculture Ministry showed that the nation's grain shipments rose 29% YoY to 2.4mt as of 4 August. The exports included around 1.2mt of corn (- 3.7% YoY), whilst wheat shipments surged twofold against last year and stood at 880kt. The French agriculture ministry's initial estimates for the season show that the nation's corn harvest for the year is expected to rise to 11.2mt, compared to 10.9mt a year ago. Meanwhile, soft-wheat crop output is now seen slightly higher at 35.6mt, compared to the July estimate of 35mt. Despite the drop in planting, the improvement in harvest projections reflects the better yield after the drought-stricken 2022 which damaged crops. In its latest report, the European Commission reported the EU’s soft wheat exports for the ongoing season at 2.35mt this year as of 30 July, down from 2.7mt reported in a similar period a year ago. The major destinations for these shipments were Morocco, Algeria, and South Africa. The commission added that the nation's corn imports in a similar period stood at 1.17mt, down 28% compared to a year ago. The latest CFTC data show that money managers reduced their net bullish bets in CBOT corn by 9,862 lots to 16,741 lots as of 1 August. The fall was led by an increase in gross shorts by 25,065 lots, taking the total to 168,281 lots. Similarly, speculators decreased their net bullish bets in soybean by 26,246 lots to 94,493 lots. The move was fueled by a drop in gross longs by 22,583 lots, taking the total gross longs to 123,815 lots. Meanwhile, the net speculative short positions in CBOT wheat rose by 10,096 lots to 50,428 lots over the last reporting week following an increase in gross shorts.
EUR/USD Rangebound Ahead of Data Releases and Rate Expectations

Positive Shift: US Crop Ratings Show Improvement in Agriculture Sector

ING Economics ING Economics 08.08.2023 10:54
Agriculture: US crop ratings start to improve The USDA’s latest weekly crop progress report rated 57% of the corn crop to be in a good-to-excellent condition as of 6 August, compared to 55% last week and 58% reported last year; the market was expecting 56% of the crop to be rated in good-to-excellent condition. As for soybeans, the agency rated 54% of the crop as good-to-excellent, higher than 52% from a week ago. However, that's lower than the 59% reported a year ago. It was in line with the average market expectations of 54%. For wheat, the USDA data showed that 87% of the winter wheat crop was harvested as of 6 August, compared to 80% from a week ago and 85% at the same stage last season. The market was expecting the harvest to reach 88%. Trade data from the Chinese Customs released this morning show that China’s soybean imports rose 23.4% YoY to 9.7mt in July as domestic crushers ramped up the purchases to take advantage of higher supplies by Brazil. Cumulative imports rose 15% YoY to 62.3mt over the first seven months of the year. The USDA’s weekly export inspection data for the week ending 03 August shows weakening demand for US grains. The USDA’s export inspections of corn stood at 377kt in the above-mentioned period, lower from 538kt in the previous week and 556kt reported a year ago. Similarly, US soybean export inspections stood at 282kt, lower compared to 334kt from a week ago and 871kt from a year ago. For wheat, US export inspections fell to 275kt, compared to 585kt from a week ago and 636kt reported a year ago.
Dr. Copper: Building a Foundation Amidst Commodity Challenges

Dr. Copper: Building a Foundation Amidst Commodity Challenges

Saxo Bank Saxo Bank 12.09.2023 11:23
Dr Copper: building a foundation Copper spent most of the second quarter on the defensive, after a less commodity-intensive recovery in China upset expectations for a strong rebound in demand of key industrial metals. However, during June, the prospect of additional China economic stimulus and falling inventories at exchange-monitored warehouses to a five-month low helped trigger a change in sentiment from hedge funds who, up until then, had traded copper with a short bias. Additional China stimulus or not, we view the current copper weakness as temporary, as the green transformation theme in the coming years will continue to provide strong tailwinds for so-called green metals, the king of which is copper – the best electrical-conducting metal needed in batteries, electrical traction motors, renewable power generation, energy storage and grid upgrades. Adding to a challenged production outlook as miners see lower ore grades, rising production costs, climate change and government intervention, as well as the ESG focus which reduces the available investment pool provided by banks and funds. From its current level well below $4 we see the High Grade contract eventually move higher and reach a fresh record high, potentially not until the new year when the global growth outlook and the central bank rate focus turns to cuts from hiking. Crude oil: demand concerns offsetting Saudi supply cut WTI and Brent crude oil’s sideway trading action since May looks set to continue into the third quarter with global economic growth concerns continuing to be offset by the willingness of key OPEC+ members to sacrifice revenues and market share to support the price. Overall, we believe prices are near a cycle low, but a few more challenging months cannot be ruled out, primarily because of worries that a robust pickup in demand, as forecast by OPEC and the IEA, will fail to materialise. The latter is potentially the reason why Saudi Arabia took the unprecedented step of announcing a unilateral production cut shortly after the group announced production cutbacks. It all adds up to what could become a challenging few months for OPEC, especially if demand should fail to recover with Saudi Arabia, then raising the pressure on other producers to curb production. For now, the de facto leader of OPEC has managed to send a signal of support which may help prevent a deeper correction, while an eventual recovery, which we believe will occur, paves the way for higher prices. Until then, Brent will likely remain stuck in the $70’s before, towards the end of the quarter, eventually breaking back above to the psychologically important $80 level, thereby shifting the current 70-80 range higher by 5-10 dollars, where it will be trading ahead of year-end. Crop production risks downgrade amid rising weather concerns Following a year-long retreat, the grains sector joined a rally already well established across key soft commodity futures from sugar and cocoa to coffee and orange juice. The grains sector has sprung back to life amid concerns of the potentially damaging impact of drought in key production regions across the Northern Hemisphere, where unseasonably dry conditions have been noted across some the key growing areas, from the Black Sea to Northern Europe and, most recently and not least, the US. Weekly data showing the conditions of the three major crops of wheat, corn and soybeans have all deteriorated, and unless dry conditions are reversed soon by rainfalls, concerns about the eventual production results may underpin prices ahead of the harvest season. These developments are occurring at a time when markets are on high alert for the potential impact of a returning El Niño, and having formed a month or two earlier than most El Niños, the head of NOAA’s El Niño/La Niña forecast office said it would give it room to grow, raising the risk of a strong event over the coming months. El Niño strongly tilts Australia towards drier and warmer conditions, with northern countries in South America — Brazil, Colombia, and Venezuela — likely to be drier and Southeast Argentina and parts of Chile likely to be wetter. India and Indonesia also tend to be dry through August in El Niños. In addition to these, the prospect of a long drawn-out war in Ukraine challenging supply from the Black Sea region, and China, following domestic weather woes, becoming the world’s largest importer of wheat could increase global competition for this sought-after crop -- especially in a year where El Niño may reduce production in Australia, China’s biggest supplier of wheat by far.  
USDA's WASDE Update: Wheat Tightens, Corn Loosens

USDA's WASDE Update: Wheat Tightens, Corn Loosens

ING Economics ING Economics 13.09.2023 08:49
WASDE update: Tighter wheat and looser corn market The USDA’s latest monthly WASDE report was constructive for wheat as adverse weather in Australia, Canada and the EU is expected to tighten global supply. However, the release was more bearish for corn on the back of revisions higher to US acreage and ending stocks.   Higher acreage pushes US corn supply up The USDA revised up its 2023/24 US corn production estimates by 23 million bushels to 15.13 billion bushels, with an increase in acreage offsetting lower yields. This is higher than the roughly 15 billion bushels the market was expecting. Planted acreage estimates were increased by 0.8 million acres to 94.9 million acres, whilst yield estimates were lowered by 1.3bu/acre to 173.8bu/acre. With no changes to demand estimates, 2023/24 ending stocks were increased by 19 million bushels to 2.2 billion bushels. This is higher than the roughly 2.13 billion bushels the market was expecting. Therefore, it was not surprising to see CBOT corn coming under pressure following the release. For the global balance, 2023/24 ending stock estimates were revised up from 311.1mt to 314mt primarily due to higher beginning stocks and expectations for larger US output. The market was expecting a number below 310mt, so again, the USDA’s estimate is a lot more bearish than what the market was expecting. It will also provide some comfort to those who have been concerned over lower export availability from Ukraine since the suspension of the Black Sea Grain deal.   Corn supply/demand balance
Ukraine's Odessa Port Damage Disrupts Grain Exports; US Wheat and Soybean Shipments Rise

Ukraine's Odessa Port Damage Disrupts Grain Exports; US Wheat and Soybean Shipments Rise

ING Economics ING Economics 26.09.2023 14:47
Agriculture – Damage to Ukraine's Odessa port Wheat prices firmed up yesterday on reports that Russia has ‘significantly damaged’ the Odesa port in Ukraine, one of the major ports for grain export. The latest attacks were reported to have damaged port infrastructure, grain storage facilities and warehouses at the ports. Ukraine’s export of grains from the port has largely stopped after Russia pulled out of the export deal. However, recently a few ships were reported to have managed shipments from the port. The latest attacks are likely to stop any residual exports from the port and also lower the possibility of export resumptions from the port in the near term. The USDA’s weekly export inspection data for the week ending 21 September show that US soybean and wheat shipments rose while corn exports slowed over the last week. US weekly inspection of corn exports stood at 661kt, lower than the 676kt over the previous week and up from 550kt reported a year ago. For wheat, export inspections stood at 451kt, up from 423kt last week but lower than the 589kt seen for the same period last year. Soybean export inspections stood at 482kt, higher than 430kt from a week ago and 292kt from a year ago. The USDA’s latest crop progress report shows that 53% of the US corn crop is rated in good to excellent condition, up from 51% in the previous week. Meanwhile, the harvest is progressing well with 15% of the crop harvested, up from 11% at the same stage last year and also above the five-year average of 13%. As for the US soybean crop, 50% of the crop is rated good to excellent, down from 52% the previous week. However, the harvest is progressing well, with 12% of the area harvested, up from just 7% at the same stage last year. It is also higher than the five-year average of 11%. Finally, winter wheat plantings are falling behind last year with 26% of the area planted, down from 30% at the same stage last year and also lower than the five-year average of 29%.
Brazilian Shipping Disruptions Propel Coffee Prices Higher in Agriculture Market

Brazilian Shipping Disruptions Propel Coffee Prices Higher in Agriculture Market

ING Economics ING Economics 25.01.2024 13:10
Agriculture: Shipping disruptions from Brazil push coffee higher Arabica coffee front month contract jumped around 7% yesterday as shipping disruptions from Brazil risk tightening the market in the short term. Brazil’s ports are facing strikes by customs officers and other inspectors from 22-26 January that are likely to delay shipments originating from Brazil. The tensions around the Red Sea trade route have further supported coffee prices. The shipment disruptions from Brazil could impact other commodities as well including soybeans, corn and sugar.   According to China’s Ministry of Agriculture and Rural Affairs, soybean production in China reached an all-time high of 20.84mt in 2023 primarily due to the country’s support for food security. Meanwhile, the soybean planting area in China reached 157 million mu (about 10.47 million hectares) last year, while that of oilseed crops exceeded 200 million mu. The ministry added that it plans to further increase the planting of genetically modified corn and soybean crops in a push to boost grain output and bolster food security in the country.   The USDA’s weekly export inspection data for the week ending 18 January shows that export inspections for corn stood at 713.3kt over the week, lower than 946.4kt in the previous week and 728.8kt reported a year ago. Similarly, US soybeans export inspections stood at 1,161.1kt, down from 1,278.2kt a week ago and 1,839.2kt seen last year. For wheat, US export inspections came in at 314.5kt, compared to 242.2kt from a week ago and 349.4kt reported a year ago.

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