wheat price

Summary:  Equity markets lose steam and trade cautiously ahead of the Fed’s preferred inflation gauge. The S&P500 closes above it 200-day average for the second day - a sign there are more bulls in the market than bears, but Tesla's results could rock the boat. Australian and NZ CPI blow hotter than expected. Gold is on the cusp of a bull market. Oil slides, investors buy the dip ahead of the EU ban on Russian oil.

Equity markets lose steam and trade cautiously ahead of the Fed’s preferred inflation gauge

 

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
Australia Is Expected To Produce A Bumper Year Of Crops

Easing Concerns Around Supply Drives The Price Of Both Wheat And Platinum Down, RBOB Gasoline Continues To Rise

Rebecca Duthie Rebecca Duthie 26.05.2022 11:17
Summary: Platinum prices are falling with demand. Russia opens safe corridors for forign exports in the Ukraine. RBOB Gasoline prices continue to rise. Read next: Potential Frost Causing Concerns Around Coffee Supplies, Crude Oil Demand Is Expected To Rise, Palladium Price Falls Amidst Easing Concerns Around Supply And Demand  Platinum futures Platinum prices are well below their $1154 high that was hit in March of this year, the supply of platinum is rising whilst demand is struggling to recover. The lockdowns in China have slowed or stopped auto sector production causing the demand for platinum to fall, however, according to platinum's top supplier, Nornickel, the partial recovery of the global sector could offset the lower consumption in China. The market is expecting to see a surplus of Platinum at the end of the year. Platinum Jul ‘22 Futures Price Chart Easing supply concerns driving Wheat prices down As supply concerns ease, the price of wheat futures are falling. Russia said they would open safe corridors daily for forign ships to leave both Black Sea ports as well as Sea of Azov ports, which will allow commercial shipping to resume in the Ukraine after 3 months of fighting. In addition the Indian government announced an embargo on Wheat exports to try to guarantee food security and to discourage farmers from selling wheat on the private market at higher prices. Wheat Jul ‘22 Futures Price Chart RBOB Gasoline prices The prices of RBOB Gasoline have been rising amidst concerns around supply and the expected increasing demand. US President Joe Biden may limit US Gasoline exports in an attempt to decrease the prices in the US. RBOB Gasoline Jun ‘22 Futures Price Chart Read next: XAUUSD Prices Rise As Investors Turn To Safer Assets, Cotton Prices, NGAS Prices Still Rising As Concerns Around Supply Continue  Sources: finance.yahoo.com, tradingeconomics.com
Australia Is Expected To Produce A Bumper Year Of Crops

Wheat Prices Enter June On A Four Week Low Platinum Prices Rising Again, RBOB Gasoline Prices Reach New High

Rebecca Duthie Rebecca Duthie 02.06.2022 12:56
Summary: Wheat prices dropping as supply concerns ease. As China begins to lift covid-19 restrictions, demand for platinum is rising. RBOB gasoline prices rally in the wake of EU oil embargo. Read next: EU Reaches An Agreement On The Banning Of Russian Crude Oil, Coffee Prices Rise, Palladium Prices Decline Along With Supply Concerns  Wheat prices reach their lowest in four weeks Chicago wheat futures reached their lowest in four weeks on Thursday, as commodity traders carefully monitor the possible maritime trade corridors for Ukrainian wheat and fertilizers. The Russian president, Putin said that Russia was willing to open safe corridors to allow foreign ships to leave the both the Black Sea and the Sea of Azov ports, which would allow commercial shipping of Ukrainian grains after three months of war in the country, should western countries lift sanctions. In the United States there are higher projections for wheat in the future and in addition, the wheat prices remain supported thanks to India’s decision to impose a wheat embargo in an attempt to guarantee food security. Chicago Wheat Futures Price Chart Platinum Prices increased As China begins to re-open their economy after their covid-19 lockdown restrictions, the demand for platinum is increasing. Although the global outlook for metal use in car manufacturing will decline overall in 2022, concerns around supply and demand are still driving the price fluctuations of Platinum. Platinum Futures Price Chart RBOB gasoline RBOB Gasoline prices have risen to a new high at the start of the summer season. The latest rally comes in the wake of the European Union implementing a ban of seaborne oil imports from Russia, creating further concerns around supplies. RBOB Gasoline Futures Price Chart Read next: XAUUSD Prices Fall As The US Dollar Rebounds, Inflationary Pressures Driving Cotton Demand Down, NGAS Price Rising  Sources: finance.yahoo.com, tradingeconomics.com
Russia Look Set To Double Its Exports For The First Half Of 2023

Concerns Around Increasing Demand and Tightening Supply For Platinum, RBOB Gasoline, West Is Unlikely To Ease Sanctions On Russia Causing Wheat Supply Concerns Persist

Rebecca Duthie Rebecca Duthie 09.06.2022 11:39
Summary: Sanctions on Russia and protests in South Africa are causing problems for platinum exports. As shortage concerns continue, the price of wheat futures continue to rise. Read next: Coffee Supplies Remain Tight, Supply and Demand Concerns Are Easing For Palladium , WTI Crude Oil Nearing March High  Platinum faces a future of tight supplies Platinum futures rose above $1000 per tonne during the trading week, the highest price in over 2 months. The price rise comes in the wake of concerns around tight supplies and the demand recovery for the biggest platinum consumer, China. China’s platinum consumption is due to increase as the government lifts most of the Covid-19 health restrictions in Shanghai and announced support measures to help boost the economy. In addition, supply chain issues are persisting as the war in Eastern Europe continues and more sanctions are being placed on Russia, the top exporter of platinum. South Africa’s production of platinum is also set to fall amidst risks of extended strikes, as workers continue to protest for wage-negotiations. Platinum Jul ‘22 Futures Price Chart West unlikely to ease sanctions on Russia, wheat supply concerns persist As shortage concerns continue, the price of wheat futures continue to rise. The expectations of higher trading activity from Ukraine remained low as the west is unlikely to relax the sanctions on Russia, meaning Putin is unlikely to open Ukrainian ports and allow trade. Investors are remaining alert to any possible changes in India's export ban that was passed in May, following news that India’s government may allow exporters to ship some of the wheat that is currently stuck in cargos. Wheat Sep ‘22 Futures Price Chart RBOB Gasoline Prices of RBOB gasoline continue to rise as the concerns around energy supplies persist, globally. The continuing sanctions on Russia, is causing supply insecurity as the US enters into its summer driving season, driving demand up. RBOB Jul ‘22 Futures Price Chart Read next: (XAUUSD) Gold Should Be Bullish, NGAS Reaches Highest Price Since August 2008, Cotton Crop Planting Is Ahead Of Schedule  Sources: finance.yahoo.com, tradingeconomics.com
Russia Look Set To Double Its Exports For The First Half Of 2023

The Agreement Allowing Ukraine To Export Grain May Not Be Renewed

Saxo Bank Saxo Bank 18.10.2022 10:52
Summary:  The Crimea bridge blast last weekend destroyed a key supply route for Moscow’s forces in southern Ukraine. Putin was quick to retaliate by raining missiles over Kyiv and other cities after condemning the act as terrorism done by Ukrainian special services. This places the UN brokered grain deal in jeopardy with negotiations taking place now to extend it by a year. Elsewhere, OPEC+ cut output by 2 million barrels per day despite Western nations protests. The Crimea bridge blast last weekend destroyed a key supply route for Moscow’s forces in southern Ukraine. Putin was quick to retaliate by raining missiles over Kyiv and other cities after condemning the act as terrorism done by Ukrainian special services. He did not spare the port of Odesa, which is considered one of the key grain export ports that Russia has agreed to allow normal export operations to continue via the Black Sea. The bombings has continued for over a week now with central Kyiv being hit by kamikaze drones early yesterday while heavy fighting is still happening at the war front in southeastern Ukraine.Escalating tensions between Russia and Ukraine might see potential risk on grain supply. Prices in wheat (ZWZ2) and corn (ZCZ2) have gained as much as 7.5% and 3.3% respectively after the Kyiv bombings even though these moves look small compared to the ones we saw in the earlier part of this year. To provide some numbers, Ukraine is currently one of the world’s leading exporter of grain. We have the breakdown below:Percentage of global exportsSunflower oil – 46%  Corn – 12%   Wheat – 9% Rapeseed – 20%Barley – 17%UN brokered Grain DealEven though there is an existing UN-brokered deal to allow Ukraine to export grain via the Black Sea, this would expire in November and with tensions escalating between the two nations, there is a risk that this will not be extended a further year. The last time grain exports ceased due to the Russian invasion saw grain prices skyrocket as much as 60%. The market consensus is that it currently expects that the deal would be extended after some changes to the terms – primarily allowing a Russian pipeline to reopen to transport its ammonia fertilizer to Ukraine’s Odessa port for shipment.  However, the move to boost Russia’s export revenues to fund the war indirectly might not sit well with US and Europe which has recently approved a Russian oil price cap to limit export revenue in Russia. U.N. aid chief Martin Griffiths and senior U.N. trade official Rebeca Grynspan has travelled to Moscow last week to discuss this issue.OPEC+ CutJust as we thought supply side constraints were subsiding, we are now facing a possibility that commodity inflation might persist due to political uncertainties. Last week, OPEC+ made a key decision to slash oil output by 2 million barrels per day despite Western nations protesting the move as short sighted, perhaps prioritizing their agenda that maintaining oil revenue is more important than the global inflation problem or crippling Putin’s war now. This sent WTI crude oil rallying as much as 9% with rapid short covering as market was positioned with recessionary risk in mind. Oil has since given back some of those gains. The diverging interest of US and Saudi, both key oil producers globally can create instability in energy supplies.The FedThe US inflation breakdown in the month of September has shown lower inflation from energy while key drivers now are mostly from the demand/services side ( rent, medical, services and food). Because of this, the Fed has been relentless in utilizing every opportunity to reinforce their hawkishness with terminal fed funds rate now at 4.9%. If energy and agriculture prices start rising rapidly once again, this will provide the Fed even more ammunition to stay on the course despite some initial data that shows jobs growth is starting to cool off with vacancies falling 1 million in August. If supply constraints do not resolve, the combination of both demand and supply side factors does not bode well for equities and risk assets.    What trades to consider?Watch for the negotiation outcomes between UN and Russia regarding the grain export agreement set to be out by November. Strained relations between Ukraine and Russia might make negotiations tougher and the terms of the deal less favourable. Grains tradable on Saxo include Wheat futures (ZWZ2) and Corn futures (ZCZ2).The output cut by OPEC+ could trigger the start of a possible supply tightening cycle to support oil prices given weak global demand. The US – Saudi relationship souring could also lead to further price instability with volatility set to rise and possible retaliation from US by increasing their supply. Another bright spark is China reopening even though the recent Chinese Communist Party Congress indicated that China is not doing away with its Covid Zero policy in the near term. To trade, we have both Light Sweet Crude Oil (CLZ2) and Brent Crude (LCOZ2) futures.Lastly, if supply side inflation returns, the Fed might have no choice but to accelerate their rate hike cycle. To express this, USDCNH might be a trade to look at given China’s easing cycle is still ongoing to prop up the property market while the risk reward ratio looks more favourable as compared to USDJPY which has moved substantially and BOJ now jawboning the pair’s appreciation.   Wheat December Futures Corn December Futures Oil December Futures USDCNH Source: https://www.home.saxo/content/articles/commodities/st-note-supply-side-inflation-risks--wheat-corn-oil-and-the-fed-18102022
Natural Gas Prices Are In A Downward Trend

Natural Gas Prices In West Texas Moved Into Negative Territory | Global Steel Output Rose

ING Economics ING Economics 26.10.2022 14:02
While European natural gas prices strengthened yesterday, the market has been under pressure for much of the last week as milder weather and growing storage ease immediate supply concerns. Recent price weakness could provide some support to demand, which could leave the market more vulnerable in 2023 In this article Energy - negative gas prices during an energy crisis Metals – LME copper on-warrant inventories fall Agriculture – UNICA reports higher cane crush Energy - negative gas prices during an energy crisis The oil market has come under pressure in early morning trading today and this follows a relatively bearish API release overnight. The API reported that US crude oil inventories increased by 4.52MMbbls over the last week, quite a bit more than the roughly 1.5MMbbls build the market was expecting. In addition, Cushing crude stocks are reported to have increased by 740Mbbls. On the products side, gasoline inventories fell by 2.28MMbbls, whilst distillates stocks increased by 635Mbbls. The more widely followed EIA report will be released later today. The Saudi energy minister this week has continued to defend the recently announced OPEC+ supply cuts, saying that the gloomier macro outlook justified the action taken by the group. The energy minister also criticised the use of emergency stockpiles by  importers in an attempt to lower oil prices. The minister warned that drawing down on these stockpiles now could be “painful” in the months ahead. Given the price action since OPEC+ announced cuts, some could argue that it has helped to stabilise prices in the immediate term. However, with cuts set to last until the end of 2023, the market is expected to tighten over the course of next year. It may be surprising that in the middle of an energy crisis (specifically in natural gas), that we have seen moments of negative gas prices this week. At the start of this week, we briefly saw TTF next hour prices fall into negative territory as milder than usual weather across Europe means weaker heating demand, whilst EU storage continues to increase with it now close to 94% full. Weakness in spot prices has weighed on much of the forward curve, although, TTF prices early next year are still trading above EUR140/MWh, compared to day ahead prices of around EUR40/MWh. The risk with the sell-off in the European gas market is the potential that demand starts to pick-up. Already there are reports that fertilizer producers in Europe are easing curtailments, given the recent weakness that we have seen in gas prices. If this is part of a broader trend that we see in European demand, it makes it increasingly difficult for Europe to rebuild storage to comfortable levels ahead of the 2023/24 winter. In the US, natural gas prices in West Texas moved into negative territory, with pipeline maintenance work in the region limiting takeaway capacity at a time when natural gas output in the Permian region is growing. Next day prices at the Waha hub reportedly fell to negative $2/MMBtu on Tuesday. Metals – LME copper on-warrant inventories fall The latest data from the LME shows that on-warrant stocks for copper continued to decline for a third consecutive day, hitting the lowest level since April. Total on-warrant inventories decreased by 4.3kt over the day to 58kt, whilst the decline since early October has been even more impressive, falling by almost 79kt. The cash/3m spread has strengthened as a result - with it trading at a backwardation of US$133/t earlier this week, up from a backwardation of a little over US$40/t earlier this month. The latest data from the World Steel Association (WSA) shows that global steel output rose 3.7% YoY to 151.7mt in September. The majority of the increase came from Asia and the Middle East. Meanwhile cumulative output over the first nine months of the year fell 4.3% YoY to 1,405mt.  Chinese steel production gained 17.6% YoY and 3.7% MoM to total 87mt in September. Year-to-date Chinese steel output is down 3.4% YoY to total 781mt. Agriculture – UNICA reports higher cane crush The latest fortnightly report from UNICA shows that sugar mills in Brazil’s Center-South region crushed more cane in the first half of October than last year, although cumulative output still lags last season after a delayed start to crushing. UNICA reported that sugar cane crushing in the region increased 40.5% YoY to 27.7mt over the first half of October, whilst cumulative crushing so far this season is down 5.9% YoY to total 458.7mt. Sugar production increased 59% YoY to 1.8mt in 1H October, with around 48.3% of cane allocated to sugar production. Cumulative sugar output is down 7.3% YoY, to total 28.2mt. TagsSugar Steel OPEC+ Natural gas 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
Agricultural Commodities Markets Are Going To Remain Sensitive To Developments In The Russia-Ukraine War

Russia Is Threatening To Cut Off Ukraine’s Wheat Supply

Saxo Bank Saxo Bank 31.10.2022 09:04
Summary:  WATCH our three-minute video. Wheat prices are rising in anticipation of some traders and investors expecting higher food prices, with Russia exiting the Ukraine gain deal and threatening to cut off Ukraine’s wheat supply from the world. We explore the three elements to watch, from commodities, stocks to ETFs. Including the US' biggest wheat producer, General Mills, Australia's biggest grain seller, GrainCorp, as well as why fertilizer stocks and poultry companies including Tyson Foods perhaps could be of interest. Wheat prices (ZWZ2) rose 5.7% in anticipation of traders expecting food prices to pick up, after Russia exited the Ukraine gain deal and threatened to cut off Ukraine’s wheat supply from the world.What do you need to know? Typically, the globe relies on the Black Sea region for a quarter of annual wheat and barley exports, a fifth of global corn and the bulk of its sunflower oil. So, Russia’s termination of the Black Sea deal means farmers could face a possible lack of storage space with wheat and corn nowhere to go, plus fertilizers, which farmers rely on to grow crops could be cut off, meaning the fertilizer market will also likely once again focus on supply concerns. Here are the three agricultural elements to perhaps watching; Firstly - We will be watching Wheat and corn prices, as well as watching agricultural companies including General Mill (GIS), GrainCorp (GNC), Elders (ELD), as well as Fertilizers companies including CF industries (CF), Archer Daniels (AMD), who on sell such commodities and may be expected to sell goods at premium given supply could perhaps be cut short. Secondly - We will also be watching ETFs like – Invesco DB Agricultural Fund (DBA), iShares MSCI Global Producers ETF (VEGI) and Betashares Global Agricultural Companies ETF (FOOD). Thirdly - we will also be watching the flow on effects of the rising cost of wheat. It not only makes bread more expensive, but also the cost of chicken will likely rise, given Wheat is the biggest cost growing a chicken (75% of its costs). So if wheat prices continue to rise, farmers and sellers will likely be forced to hike their prices. So, it could be worth watching companies like Tyson Foods (TSN) who is one of the largest processors and sellers of chicken, mutton and beef in the US. In Australia there is Inghams (ING), who focused on producing and selling of poultry. Both Tyson Foods and Inghams shares are 8% up off their October low Note, this is a developing story. We will cover the latest developments here. Or please follow our head of commodity strategy, Ole Hansen.  For a global look at markets – tune into our Podcast.       Source: https://www.home.saxo/content/articles/equities/traders-expect-higher-agricultural-prices-after-russia-exits-gain-deal-31102022
Russia Look Set To Double Its Exports For The First Half Of 2023

The Saxo Bank's Economists Talk About The Upcoming Fed Decision, The Weak Chinese Currency (CNH) And Wheat Jumping

Saxo Bank Saxo Bank 31.10.2022 11:34
Summary:  Today, we scratch our heads a bit at Friday's wildly strong equity session, as the narrative supporting recent equity market strength - the anticipation of a dovish downshift in Fed policy guidance - was rapidly unwinding on the same day. An article at the weekend from "Fed whisperer" Nick Timiraos of the Wall Street Journal suggests that the Fed is concerned the market is expecting too much of a policy climb-down this Wednesday. We also discuss wheat jumping on Russia moving against the Ukrainian grain deal, industrial metals struggling on weak China data and a weak Chinese currency, the busy earnings and macro calendar for the week ahead and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting an on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: https://www.home.saxo/content/articles/podcast/podcast-oct-31-2022-31102022
Europe: Less air pollution isn't the only advantage of the potential switch from planes to trains

Soft Commodities Witnessed Another Awful Week

Saxo Bank Saxo Bank 31.10.2022 13:39
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, October 25. A week where financial markets received a boost from speculation the Fed was considering a pause. The dollar traded softer with commodities predominantly trading in the black with exceptions being soft commodities and not least wheat where short selling accelerated just ahead of today's price spike on renewed Ukraine supply worries Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Financial Markets Daily Quick TakeSaxo Market Call Daily Podcast This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, October 25. A week where financial markets received a boost from speculation the Fed was considering a pause to assess to the economic impact of already implemented rate hikes and quantitative tightening measures. Both the S&P and especially the Nasdaq traded higher ahead of earnings from the big technology companies while bond yields climbed and the dollar traded softer. Commodities traded predominantly in the black led by energy and industrial metals with heavy and continued selling of softs and wheat being the main outliers. Commodities The Bloomberg Commodity index traded up 1% on the week with strength in crude oil and industrial related metals attracting fresh buying from speculators. Overall, however, the combined net long held by money managers across the 24 major commodity futures tracked in this report remains relatively low at 1 million contracts compared with 2.2 million around the time of the Russian invasion of Ukraine. A slump that has been driven by the current lack of trends and strong momentum across many commodities, as well as concerns about the short-term outlook as the markets continue to focus on a slowing global economy. Biggest changes made by funds this past were buying of crude oil, soybean meal and corn, as well as cattle and hogs while sellers concentrated their efforts in gold, wheat, sugar and cocoa. Energy Speculators maintained a relative low conviction rate regarding the short term direction of crude oil with the 4% rally during the reporting week only attracting 34k lots of net buying, thereby only part reversing the 57k lots that was net sold in the previous week. Selling of natural gas continued during the reporting week with the front month contract briefly dipping below $5/MMBtu. The result being another small increase in the net short held across four Henry Hub related futures and swap contracts to -86k lots, a 31-month high.  Metals Gold, trading unchanged on the week, nevertheless saw increased short selling in response to another and failed attempt to break below $1615 suppor. As a result the net short jumped by 61% to 33k lots, just 8k lots below the near four-year high reached a few weeks ago. Silver, together with platinum and copper all saw net buying, not least platinum which during the past month has seen its discount to gold narrow by 100 dollars to around 700, the narrowest spread since July 2021.  Agriculture  In grains, four weeks of net selling was almost reversed as buyers added soymeal and soy oil length amid price gains of 3.4% and 5.1% respectively. Together with additional buying of corn these more than offset continued selling of CBOT wheat driving the net short up by 63% to 36k lots, a 28-month high. The latest selling occurring during a week where global demand worries attracted more attention than a rapidly expanding drought situation across the US grain belt, and also before Russia over the weekend announced that they were pulling out of a deal that has allowed Ukrainian grain exports from Black Sea ports.As a result wheat futures (ZWZ2) in Chicago surged as much as 7.7% to $8.93 on the Monday opening. Since the UN and Turkey supported grain corridor opened three months ago Ukraine has shipped more than 9 million tons of foodstuff and it has helped ease tight world supplies and control global food costs. Food exports from Ukraine also includes corn and sunflower oil and reduced supply of those has lifted corn futures (ZCZ2) in Chicago by 2.5% to trade near resistance at $7/bu and soybean oil futures by 1.8%.   Soft commodities witnessed another awful week with net selling hitting all four contracts, not least coffee and cotton, now down 33% and 45% respectively from their early 2022 peaks. The coffee net long was reduced by 75% to 3k lots, the lowest bullish conviction in almost two year primarily driven by an increase in the gross short position. A similar development was seen in cotton where global demand worries and another week of selling helped attract fresh short selling, resulting in the overall net long being cut by 40% to 13k lots, a 28-month low.  Forex In forex, flows remained mixed during a week that saw the dollar index trade softer by 1% after recently hitting a 20-year high. Overall the gross dollar long against nine IMM currency futures and the Dollar index rose by 5% to $15 billion, primarily driven by heavy JPY selling as the under siege currency dropped 2.3% towards the important 150 level. Elsewhere, a recovering Sterling saw net selling driven by a combination of gross longs being reduced and fresh short selling. The euro net long reached a four month high at 48k lots on a combination of fresh longs and reduced short participation. Since late August speculators have net bought €12 billion after flipping their euro exposure from a 48k lots short to a 48k lots long.     Source: https://www.home.saxo/content/articles/commodities/cot-wheat-short-jumps-ahead-of-latest-ukraine-supply-worry-31102022
Russia Look Set To Double Its Exports For The First Half Of 2023

Volatility In The Grain Market May Continue | Global Demand For Containers Will Fall This Year

Saxo Bank Saxo Bank 03.11.2022 10:45
Summary:  Traders were given a case of whiplash yesterday over the FOMC meeting after the new monetary policy statement confirmed the impression that the Fed will soon downshift the size of rate hikes after another 75 basis points hike at this meeting. But then a very hawkish press conference from Fed Chair Powell took Fed terminal rate expectations next year to new highs for the cycle, pummeling risk sentiment and lighting a fire under the greenback. The next key focus will be tomorrow’s US October jobs report.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) Powell delivered a jolt to equities communicating on the FOMC press conference that the terminal rate could be higher than what the market expects and that rates will stay higher for longer. S&P 500 futures could out many support levels on the downside in the last night session and are continuing lower this morning trading around the 3,765 level with the 3,700 level being the next level to watch on the downside. Powell’s remarks confirm our view that inflation and interest rates will remain higher for longer and that equities will be under pressure in the medium term, being negatively impacted by higher interest rates and more margin compression. Euro STOXX 50 (EU50.I) STOXX 50 futures are naturally responding to Powell’s statements yesterday trading lower this morning around the 3,575 level with the 100-day moving average around the 3,528 level being the gravitational point on the downside to watch. FX: USD bull market is back in business after hawkish Fed Chair Powell presser The dollar was first weak yesterday on the new monetary policy statement before the hawkish Powell presser lit a fire under the greenback as he made it clear that the ceiling could be raised next year for the “ultimate level” of Fed funds rate, de-emphasizing the size of rates from here after several 75-basis point moves. The US dollar ripped back to the strong side, generating compelling reversal patterns for USD bulls almost across the board, with the important 0.9876-0.9850 area falling in EURUSD, GBPUSD slipping below the bottom of the 1.1400-1.1500 zone, AUDUSD crushed back below 0.6400, USDJPY support at 145.00 surviving yesterday with the pair lifting back well north of 147.00, etc. Of course, the USD will be sensitive to incoming data, but yesterday established a clear line in the sand that USD bulls will now use for longs, eyeing the cycle highs for the greenback against most other G10 currencies. Gold (XAUUSD) Gold trades lower following a volatile session where Fed Chair Powell managed to wrongfoot most markets. Following the expected 75 bp rate hike the written statement raised the prospect of the FOMC pausing to assess the “cumulative tightening” impact before saying at the press conference “We still have some ways to go. And incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected”. Most markets, including gold, responded by turning sharply lower with the yellow metal slumping 2% from the high. These comments send a signal that we have not yet reached peak hawkishness and with that the risk of a prolonged period of dollar and yield strength slowing gold’s recovery. It’s the incoming data that everyone will have to watch, starting with US payrolls this Friday. Crude oil (CLZ2 & LCOF3) Crude oil traded lower after the FOMC meeting raised expectations for a higher peak in US rates and together with continued uncertainty over China demand they helped offset support from a tightening fuel market. Earlier in the day the market jumped after the EIA reported US gasoline supplies had fallen to a 2014 low while distillate supplies on the East Coast had reached a near record seasonal low. China’s zero-Covid tolerance remains the overall strategy according to the government, thereby removing some earlier optimism about a change. However, OPEC+ cuts from this month and upcoming EU sanctions is likely to keep the market rangebound with resistance in Brent at $97.25. US treasuries (TLT, IEF) The hawkish Powell press conference yesterday (more below) took Fed rate expectations to new highs for the cycle and the 2-year rate is pushing on cycle highs near 4.62%, while the 10-year merely rebounded above 4.00% as the yield curve is close to its most inverted for the cycle at below –50 bps for the 2-10 spread. Incoming US data will be the focus next for the longer end of the yield curve and whether 10-year yields can threaten the cycle highs well north of 4.25%. What is going on? FOMC one-two as dovish interpretation of new policy statement reversed by hawkish Powell presser The initial read of the FOMC statement was dovish, as the new statement inserted the phrase: “The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.” This read a bit dovish as the market assumed that this means the anticipated downshift in Fed rate hikes is coming and US yields dropped, risk up, USD down, etc. In the press conference, however, Fed Chair Powell was far more hawkish, saying there is a “ways to go”, and spelling out that the incoming data means that the “ultimate level” that the Fed funds reaches is likely to move to higher levels than was though at the September meeting. This had Fed expectations for the spring of next year edging back toward the cycle highs of 5.00% and then closing the day a full 10 basis points higher near 5.10%. While Powell did say it may be possible that the Fed steps down to smaller hikes as soon as the December meeting, the FOMC felt that the speed of hikes Is becoming “less important” (leaving market to infer that the Fed just keeps hiking at more meetings if incoming data supports doing so. As well, we must remember that the Fed has cranked up the pace of quantitative tightening in the background, which provides its own tightening pressure on markets and arguably equates with several hundred basis points of rate tightening over the course of a year. European earnings this morning Orsted is raising its full-year guidance on EBITDA excluding new partnerships to DKK 21-23bn and Q3 revenue was DKK 36.5bn vs est. DKK 26.7bn highlighting the increased profitability in power generation using renewable energy. BNP Paribas beats on both revenue and net income driven by strong results in its fixed-income, commodities, and currencies trading. BMW is also beating on both Q3 revenue and EBIT and maintaining its EBIT margin fo 7-9%. US earnings recap Fortinet, the industry leader in cyber security, delivered Q3 revenue of $1.15bn vs est. $1.12bn and adj. EPS $0.33 vs est. $0.27 and Q4 outlook on revenue of $1.28-1.32bn vs est. $1.27bn and Q4 EPS outlook of $0.38-0.40 vs est. $0.35, but despite strong figures shares were lower in extended trading. Albemarle delivered high growth in Q3 on revenue and earnings, but lowered its fiscal year revenue and EPS a bit against their previous guidance. Wheat (ZWZ2) prices slump as Russia to resume grain deal participation Amid mounting pressure on Russia to avoid a galloping food crisis, Russia finally agreed to resume its participation in the Ukraine grain deal, allowing safe passage of Ukraine’s crop exports. Wheat prices dropped over 6% on the news and corn was lower as well, with vessels likely to resume normal operations today. Russia however threatens to pull out of the agreement at any time, which suggests volatilities can continue till the war goes on. Better-than-expected US ADP turns attention on NFP US ADP national employment reported a 239k increase in October, above the expected 193k and the prior, revised lower, 192k, ahead of the key NFP on Friday. While there is little confidence in this data set as the methodology has been recently revised and there is limited backward data, a tight labor market is still the clear read. Focus now turns to NFP due on Friday, with unemployment rate and wage growth remaining as the key metrics to track. Bloomberg consensus expectations are still set for a headline gain of 200k for October, with unemployment rate inching a notch higher to 3.6% from 3.5% previously and wage growth slightly weaker at 4.7% YoY from 5.0% YoY previously. Maersk warns about rapid economic deterioration Maersk, the world’s largest owner of container ships, said it expects global container demand to decline by up to 4% this year, as against its previous estimate of +/- 1%. It also warned that next year could be worse, signalling further downturn in global trade may be on the cards. Still, Q3 earnings before interest and tax rose to $9.48bn vs. $8.63bn expected. What are we watching next? Next US data points and impact on US yields Fed Chair Powell made it clear yesterday that he didn’t feel the size of Fed rate hikes are very important after yesterday’s 75 basis point move, but that the Fed could continue to tighten beyond what the Fed itself was forecasting less than two months ago, suggesting a higher peak rate. Currently, peak Fed rates for next year are projected at 5.10% by next spring, a new cycle high and well above the prior highs just above 5.0% after Powell made a hawkish impression at yesterday’s press conference. That leaves the market still very sensitive to incoming data for gauging how high the Fed might take rates next year, with the next data points of note the October US ISM Services survey up today and the October jobs data up tomorrow. Earnings to watch Today’s US earnings focus is ConocoPhillips, PayPal, Starbucks, MercadoLibre, and Cloudflare. Based on previous results in the energy sector we expect ConocoPhillips to deliver good results. PayPal has had headwinds for some time and could disappoint. One of our worst performing theme baskets has been e-commerce which has been hit by difficulties in advertising targeting due to Apple’s data privacy decision, supply chain bottlenecks, and explosive prices on logistics. MercadoLibre is the South American version of Amazon and analysts expect revenue growth of 45% y/y and EPS growth of 24% y/y. Cloudflare will be in focus and given the negative sentiment over Fortinet’s earnings release last night expectations might be too high for any cyber security company to deliver on. Today: Verbund, Barrick Gold, Orsted, Novozymes, BNP Paribas, BMW, Enel, ING Groep, DBS Group, ConocoPhillips, Amgen, PayPal, Starbucks, Regeneron Pharmaceuticals, EOG Resources, Moderna, MercadoLibre, Block, Cloudflare, Coinbase Friday: Enbridge, Societe Generale, Intesa Sanpaolo, SoftBank, Amadeus IT Group, Duke Energy, Economic calendar highlights for today (times GMT) 0730 – Switzerland Oct. CPI 0805 – ECB President Lagarde to speak 0900 – Norway Norges Bank Deposit Rate announcement 1130 – US Oct. Challenger Job Cuts 1200 – UK Bank of England Rate Announcement 1230 – UK Bank of England Governor Bailey press conference 1230 – US Sep. Trade Balance 1230 – Canada Sep. Building Permits 1230 – Canada Sep. International Merchandise Trade 1230 – US Q3 Nonfarm Productivity/Unit Labor Coasts 1230 – US Weekly Initial Jobless Claims 1330 – Czech Central Bank Rate Announcement 1400 – US Sep. Factory Orders 1400 – US Oct. ISM Services 1430 – EIA's Weekly Natural Gas Strorage Change 0030 – Australia RBA Monetary Policy Statement 0030 – Australia Q3 Retail Sales 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-nov-3-2022-03112022
Analysis Of Crude Oil Futures: WTI Has An Initial Support At The Weekly Low

A Third Week Of Gains With Brent And WTI Crude Oil

Saxo Bank Saxo Bank 06.11.2022 09:39
Summary:  Commodities traded higher during a week where the focus altered between optimism over China reopening and an extended rate hike cycle in the US having a negative impact on global growth and demand. Overall China optimism won the day with strong gains being led by industrial metals, energy and cotton. Commodities traded mostly higher during a week where the focus altered between optimism over China reopening and an extended rate hike cycle in the US having a negative impact on global growth and demand. In addition, the energy market continues to focus on the price-supportive impact of OPEC+ production cuts and upcoming EU sanctions against Russian crude sales. Overall, the Bloomberg Commodity Index which tracks a basket of major commodity futures spread evenly between energy, metals and agriculture, traded higher by more than 4% near a three-week high. Following Wednesday’s expected 75 basis point rate hike, the fourth in this cycle, Fed Chair Powell went on to deliver what turned out to be a temporary hammer-blow to sentiment across markets after saying that any talk of a pause is “very premature”. However, it is also clear that the FOMC will be economic data driven, and any signs of weakness could alter this view after the Fed in its statement raised the prospect of pausing to assess the” cumulative tightening” impact. The time lag between rate hikes and the economic impact remains a worry that the bond market is trying to price through an increasingly inverted US yield curve. This week, the 2–10-year spread jumped to -61 basis points, the most inverted we have seen it since the 1980’s and it highlights the risk of a central bank policy mistake leading to weaker growth without successfully managing to get inflation under control. These developments helped support gold and silver, both bouncing strongly on short covering following an initial and failed attempt to drive them lower through key support. Gold recovering from another FOMC dump Gold traded higher on the week after managing to recover from the stronger dollar and rising yields driven sell-off that followed Fed Chair Powell’s press conference. The initial weakness saw gold challenge key support in the $1615 area for a third time with the subsequent bounce being supported by short covering and a softer dollar. Also supporting the price was the mentioned further inversion of the US yield curve signalling increased risks of an economic slowdown. Having returned to safer ground the market will be watching the incoming economic data, starting with US payrolls on Friday which despite being on the strong side did not arrest gold’s end of week rally. At Saxo, we maintain a long-held view that the medium term inflation outlook will likely surprise to the upside with a 4% to 5% range over the next decade not being that outrageous. Driven by a new geopolitical situation where the world is splitting into two parts with everything evolving around deglobalization driven by the need for self-reliance. Together with the energy transition, we are facing a decade that will be commodity and capital intensive and where scarcity of raw materials and labor will keep inflation elevated for longer, and higher than the 3% level currently being priced in through the swaps market.Such a scenario combined with the risk of an economic slowdown forcing a roll over in central bank rate hike expectations, sending yields and the dollar lower, may in our opinion create powerful tailwinds for gold and silver during 2023. Underlying support is already being provided by central banks who bought a record 400 tons in Q3, thereby more than offsetting a 227 tons reduction in total holdings across bullion-backed ETFs. With support firmly established at $1615, the first key upside challenge awaits in the $1675-80 area where we find a recent high, the 50-day moving and trendline from the March high. Crude oil bulls getting the upper hand Crude oil remains on track for a third week of gains with Brent and WTI crude oil both approaching the top of their established ranges with the focus on the supply impact of OPEC+ production cuts and upcoming EU sanctions against Russian oil as well as a tight product market while the demand side is torn between the prospect of a pickup in Chinese demand once Covid restrictions are lifted and worries that global economic activity will continue to weaken in the coming months. While crude oil has been mostly rangebound since July, the fuel product market has continued to tighten as supplies in Europe and the US have become increasingly scarce, thereby driving up refinery margins for gasoline and distillate products such as diesel, heating oil and jet fuel. The focus in terms of tightness remains the northern hemisphere product market where low stocks of diesel and heating oil continues to raise concerns. The market has been uprooted by the war in Ukraine and sanctions against Russia, a major supplier of refined products to Europe. In addition, the high cost for gas has supported increased switching activity from gas to other fuels, especially diesel and heating oil.This tight market situation is now being made worse by the OPEC+ ill-timed decision to cut production from this month. While the continued release of US (light sweet) crude from its strategic reserves will support the production of gasoline, the OPEC+ production cuts will primarily be provided by Saudi Arabia, Kuwait and the UAE – all producers of the medium/heavy crude which yields the highest amount of distillate.As long as the product market remains this tight, the risk of seeing lower crude oil prices -despite the current worry about recession - seems to be low so we maintain our forecast for a price range in Brent for this quarter between $85 and $100, with the tightening product market increasingly skewing the risk to the upside.   Strong week for industrial metals on reopening hopes The Bloomberg Industrial Metals Index was heading for its best week since July with gains being led by the three major metals of nickel, aluminum and copper on unverified talk that China could be moving closer to exit its strict Covid-zero policies as well as raised worries about tightening supply driven by increased activity from Chinese buyers. Copper in addition received a boost from a halt to operations at MMG’s giant Las Bambas mine in Peru, one of the world’s largest. Since October 31, operations have been challenged by blockades from locals. As per the chart below, HG copper, rangebound since July, traded sharply higher through a couple of resistance levels but in order to confirm a proper recovery it would need to break above the August high at $3.78 per pound. Only then can we potential see fresh momentum buying from speculators who for months have preferred to trade the metal with a short bias. Cotton jumps on short covering and signs of a demand rebound. Cotton, down by more than 50% since May on worries about the health of the global economy and with that demand for garments from consumers, has bounced 20% since last Friday. Despite renewed dollar strength weighing on other agriculture commodities, cotton has bounced on signs China’s yarn production seems to be picking up. A story supported by weekly US export sales to China showing a 98% jump from a year ago. Rollercoaster week for wheat Wheat traded in Chicago and Paris surged higher at the start of the week after Russia announced a suspension of the Ukraine grain-export deal, only to slump after an about-face from Russia allowed shipments to continue. Prices nevertheless maintained a bid on growing drought concerns in Argentina and the US Plains. Source: https://www.home.saxo/content/articles/commodities/metals-surge-on-china-covid-easing-speculation-04112022
Commodities: Copper Was Trading Near A Seven-Month High, The Global Primary Aluminium Increased,

Copper Buyers Sensing Support From Developments In China

Saxo Bank Saxo Bank 07.11.2022 13:15
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, November 1, the day before Fed Chair Powell sent shivers across markets. Ahead of the meeting speculators cut bullish dollar bets to a 15-month low, in commodities buying was concentrated in crude oil, natural gas, copper and soybeans with gold, sugar and coffee seeing continued selling Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial. Link to latest report What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Financial Markets Daily Quick TakeSaxo Market Call Daily Podcast This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, November 1. The day before the FOMC delivered its fourth consecutive 75 basis rate hike in this cycle while pouring cold water on the markets hope for a slowdown after Fed Chair Powell said there is still some way to go and that incoming data means will help determine the “ultimate level” that the Fed funds reaches. In the reporting week prior to the meeting technology stocks had sold of on disappointing earnings while the dollar and US Treasury yields traded softer. The commodity sector was mixed with gains in industrial metals and grains being partly offset by softness elsewhere.  Commodities The Bloomberg Commodity traded higher on the week with a small 0.6% gain reflecting a mixed market where gains in industrial metals and especially the grains sector was being offset by losses in softs and livestock. The energy sector traded lower with losses in natural gas and gas oil disguising an otherwise strong week for crude oil.Speculators where net buyers of commodities with length being added to 13 out of the 24 commodity futures tracked in this, led by and concentrated in crude oil, natural gas , copper and soybeans. Selling was concentrated across the softs sector where all four contracts continued to be sold. Energy Speculators raised bullish crude oil bets by a combined 38k lots to 426k lots, an 18 week high. In the week both WTI and Brent rallied by more than 3% in response to OPEC+ production cuts and renewed optimism about demand in China, developments that helped attract fresh longs, primarily into Brent. Small profit taking reduced the net length in gas oil and gasoline. In natural gas a 7% price drop triggered profit taking among short sellers resulting in the net short falling by 21% to -68k lots.    Metals Money managers were net sellers of gold for a third week ahead of last week's FOMC meeting. The 17% increase to -39k lots took the net short back to near a four-year high, just ahead of a volatile few trading days where anotherr downside rejection at $1615 support helped trigger a strong short covering rally ahead of the weekend. Short covering reduced the silver net short by 43% to 3.4k lots, platinum length was added for a fifth week taking the net long to 13.3k lots and highest since March. Copper buyers sensing support from developments in China helped flip the net back to a long position of 5.3k lots and highest since June.  Agriculture  The grains sector saw net buying for a second week lifting the combined long across six grains and soy contracts to a 19-week high at 553k lots. The bulk of the buying was led by the soybeans, soy meal and oil contracts with corn seeing a small increase in the net long. The 8% jump in wheat on Ukraine export worries did not alter the overall bearish view held by funds. Selling into strength they lifted the net short in Chicago wheat to -37k lots, the biggest short bet since the depth of the pandemic panic in June 2020. The four major softs commodities continued to see heavy net selling, this week being led by 48% reduction in the sugar long to 44k lots. The cocoa net short extended to -43.7k lots and not far from a five-year high, a development that increasingly could trigger a sharp rebound should the technical and/or fundamental outlook turn more friendly. Weeks of coffee selling continued resulting in the net flipping back to a net short of -10.4k lots for the first time in 25 months. A similar situation in cotton where nine weeks of continued selling has taken the net close to neutral at just 5.4k lots.    Forex In forex, flows turned decisively against the dollar, a day before Fed Chair Powell delivered his hawkish comments which only managed to trigger some temporary dollar strength. Before this reporting week, the Greenback had increasingly been losing steam against several of the nine IMM forex futures tracked in this report. The bulk of the net dollar selling had up until recently been mostly against the euro which since late August has seen €19 billion of net buying, reversing the net position from a 48k lots short to a 106k long. This past week buying accelerated with the net long jumping 41% to a 17 month high. Combined with an aggressive 24% reduction in the JPY net short and a 250% jump in the MXN net long, the combined dollar long ended up being reduced by 59% to just $5 billion, the weakest belief in a stronger dollar since August last year.     Source: https://www.home.saxo/content/articles/commodities/cot-crude-oil-and-copper-bought-gold-sold-ahead-of-fomc-07112022
The White Metal (Silver) Is Manifesting A Lackluster Performance

Volatility In The Nickel Market Has Become More Common

ING Economics ING Economics 15.11.2022 11:19
Most of the commodities complex came under pressure yesterday. Although nickel was one of the exceptions, hitting its daily limit of 15% after reports of a blast at a nickel pig iron plant in Indonesia In this article Energy- OPEC cuts demand outlook Metals – LME nickel briefly hits limit amid reports of blast in Indonesia Agriculture – slight improvement in US winter wheat condition Energy- OPEC cuts demand outlook The oil market came under pressure yesterday. ICE Brent settled almost 3% lower on the day. A partial recovery in the USD put pressure on oil and the broader commodities complex, but a poorer demand outlook appears to have been the key catalyst for the move. OPEC released its latest monthly market report yesterday, in which they revised their demand growth forecasts for both 2022 and 2023 down by 100Mbbls/d. This means that the group now expects 2023 demand to be 200Mbbls/d below their previous forecast. OPEC forecasts demand for their crude oil to be 29.3MMbbls/d in 2023, compared to output in October of 29.49MMbbls/d. Given the sizeable supply cuts from November through until the end of next year, OPEC supply will still be lower than demand for OPEC oil over 2023. The IEA’s monthly market report will be released later today. The latest drilling productivity report from the EIA shows that the number of drilled but uncompleted wells (DUCs) increased by eight in October, which is the first monthly increase in DUCs since June 2020. The US industry since Covid has relied heavily on DUCs to help drive a recovery in production, which has left the amount of DUCs at their lowest levels since at least 2014. Meanwhile, in the same report, the EIA estimates that US shale production will grow by 91Mbbls/d to 9.191MMbbls/d in December. Metals – LME nickel briefly hits limit amid reports of blast in Indonesia Nickel briefly jumped by its 15% daily limit after unconfirmed reports about a blast at a small nickel pig iron plant in Indonesia. The operator of the plant has, however, said that the reports are false. The LME price surged by more than $4,000/t before paring gains. Volatility in the nickel market has become more common in recent months with reduced liquidity ever since the short squeeze seen back in March. Copper inventories immediately available to withdraw from LME warehouses climbed by 23,175 tonnes, the highest daily inflow since June 2021, according to the latest data from the exchange. The increase was driven by gains from warehouses in Germany and the Netherlands. Meanwhile, LME exchange inventories rose by 8.9kt after declining for fifteen consecutive sessions. Agriculture – slight improvement in US winter wheat condition The latest data from Ukraine’s Agriculture Ministry shows that Ukraine exported around 15.1mt of grains so far in the 2022/23 season, a decline of almost 31% YoY. Total corn shipments stood at 8.1mt (+124% YoY), while wheat exports fell 56.5% YoY to 5.7mt as of 14 November. The latest crop progress report from the USDA shows that the condition of the US winter wheat crop has improved over the week. 32% of the winter wheat crop is rated good to excellent. This compares to 30% last week and 46% at the same stage last year. The poor condition of US winter wheat will raise concerns for US 2023/24 wheat supply. TagsWheat OPEC Oil Nickel IEA   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
There Are Risks That An Increase In The Price Of Oil May Provoke China To Limit The Export Of Diesel Fuel

The Crude Oil Market Came Under Further Pressure Yet Again

ING Economics ING Economics 24.11.2022 08:40
EU discussions on the proposed level for the G-7 Russian oil price cap put pressure on the oil market with the suggested level higher than many were expecting. Talks on the cap are expected to continue today In this article Energy- oil price cap talks Metals – China Covid concerns weigh on metals Agriculture – Ukrainian wheat exports   Tank farm for storage of petroleum products in Volgograd, Russia   Energy- oil price cap talks The oil market came under further pressure yet again yesterday. ICE Brent settled more than 3.3% lower on the day to close just above US$85/bbl. The key catalyst for this move was a report that EU members were looking at setting the price cap on Russian crude oil at somewhere between US$65-70/bbl. This is above previous reports of around US$60/bbl. Importantly, this is also around price levels that Russia was already receiving, given the discount with which Urals trade to Brent. Therefore, if we do see the cap set within this range, it would be less likely that Russia reduces supply as a result. At this level, the cap would achieve one of the two objectives - it would likely keep Russian oil flowing. As for the other objective of trying to cap Russian oil revenues, some may question how aggressive this level actually is. EU members failed to agree yesterday on the cap level, and we expect discussions to continue today. Weekly EIA data shows that US commercial crude oil inventories fell by 3.69MMbbls over the last week. However, when taking into account SPR releases of around 1.6MMbbls, total US crude oil inventories fell by 5.29MMbbls over the week. This crude draw occurred despite crude oil imports increasing by around 1.5MMbbls/d over the week, hitting their highest levels since the end of July. A pick-up in refinery activity would have helped with the crude draw. Higher refinery runs over the week, along with weaker implied demand for products meant that large builds were seen on the refined product side. Gasoline inventories increased by 3.1MMbbls, while distillate fuel oil stocks grew by 1.72MMbbls.   Metals – China Covid concerns weigh on metals LME aluminium and other major metals, traded lower yesterday as returning lockdowns and covid-related restrictions in China (just weeks after some restrictions were eased) dashed hopes for a demand revival in metals. The latest reports suggest that the ongoing virus controls are affecting operating rates at aluminium fabricators in Guangdong province. Aluminium rod inventories are building up, and demand in the copper market is also softening. Agriculture – Ukrainian wheat exports The Ukrainian grain traders union expects Ukraine to export 13mt of wheat and 20mt of corn in the 2022/23 season. This compares to wheat and corn exports of around 19mt and 27mt respectively in the previous season. The most recent data shows that Ukraine has exported around 6.3mt of wheat so far in the current season, compared to exports of 14mt during the same period in 2021/2022. TagsUkraine Russian oil price cap G-7 EIA China Covid 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  
Agricultural Commodities Markets Are Going To Remain Sensitive To Developments In The Russia-Ukraine War

Sanctions Against Russia And Risk To Supply Of Key Food Commodities Led To Price Spikes Across All Commodity Markets

Saxo Bank Saxo Bank 25.11.2022 14:46
Summary:  Commodity markets maintain a commanding lead over asset classes, such as bonds and stocks, as we head towards the final few weeks of trading in 2022. China lockdowns remain a temporary concerns for crude oil and other China-centric commodities while others like copper, silver and gold have enjoyed the softer dollar and the FOMC showing willingness to slow its pace of rate hike. We take a look at some of the key battlefields that may end up determine the direction commodities will travel into 2023. Commodity markets maintain a commanding lead over asset classes, such as bonds and stocks, as we head towards the final few weeks of trading in 2022. A year that, despite several headwinds, has yielded strong returns – with the Bloomberg Commodity Total Return index trading up close to 20% on the year. Following on from a strong finish to 2021 – driven by a post-Covid surge in demand for goods fuelled by a wall of fiscal stimulus and coordinated monetary support – the year started on tear. With demand rising strongly at a time of under-investments, the attention abruptly turned to supply worries following the Russian invasion of Ukraine. Sanctions against Russia and risk to supply of key food commodities from Ukraine led to price spikes across all commodity markets, not least energy, grains and metals. As a result of this, the Bloomberg Commodity Total Return index spiked by more than 25% during the first quarter before spending the following months slowly deflating. However, despite numerous headwinds, such as the strongest dollar rally in years, rolling Covid related lockdowns in China and central banks hiking rates in order to kill inflation at the expense of growth, the commodity sector has performed very well, as demonstrated by the near 20% year-to-date return. Heading into 2023, four major themes will help determine the direction of the market: The depth of an incoming recession currently being priced in by the market through the most inverted US yield curve since the early 1980s A recession forcing the US Federal Reserve to change its focus from rate hikes to economic support, potentially before inflation has reached a satisfactory low level, thereby supporting a reversal of the dollar and Treasury yields. A reopening in China leading to a stimulus fuelled recovery in demand for industrial metals and energy. The duration of the war in Ukraine and its potential impact on supply of key commodities from crude oil and gas to wheat and key industrial metals. Recession versus tight supply The risk of an economic downturn at a time of tight supply of several major commodities will be one of the key battlegrounds that, together with the strength of a post-Covid recovery in China, will help determine the direction of commodities in 2023. Following months of aggressive rate hikes, the US Federal Reserve is now signalling a slowing pace of future rate hikes – with the eventual peak rate being determined by incoming data. The US bond market is already telling the Fed that it may have overdone the monetary tightening, with the yield spread between the 3-month treasury bill versus the 10-year treasury note tumbling to a twenty-year low at minus 64 basis point. An inverted level of this magnitude has only been seen prior to three previous recessions. Short-term interest rates have been driven higher by the Fed’s actions to raise the overnight Fed Fund rates, while longer-dated bond yields are lower on the prospect of slower growth (or even a recession) together with anchored long-term inflation. You can read more in this fixed income update from my colleague Redmond Wong in Hong Kong. Source: Bloomberg & Saxo Commodities have seen a strong November so far as the Bloomberg Commodity index trading up 3.4%, with gains being led by industrial and precious metals. This is despite the daily news of a worsening situation in China, where local officials battling with a record number of Covid cases are once again under pressure to implement President Xi’s strict and increasingly unpopular Covid zero policy. In order to support the economy, the People’s Bank of China, stepped in Friday and cut banks reserve requirement ratio by 0.25%. While the energy sector has struggled amid a seasonal slowdown in demand that was increased by the developments in China, other markets, especially precious metals, have found support from the drop in long-end yields and a dollar which has softened by almost five percent this month. Driven by a lower-than-expected US CPI print earlier this month, emerging weakness in US economic data and the publishing of the minutes from the recent Federal Reserve meeting which discussed moderating the pace of future rate hikes. Cycle low in gold, silver and copper? Following developments that have supported a strong rebound in gold, silver and copper, as well as the 170 dollar rally from what increasingly looks like a cycle low around $1615, gold spent the past week consolidating before finding support in the $1735 area. Overall, Saxo maintains its long-held bullish view on gold, and with that more so for silver. This is primarily driven by a combination of an incoming economic slowdown and major repricing as the market realises long-term inflation will settle at a higher level than the sub 3% currently being priced in. However, with a continued lack of buying interest from ETF investor and increased competition from bonds as yields drop, a further gold extension above the important $1800 area will likely require further declines in the yields and the dollar or some other catalyst that sees a run to safety. A technical update from Kim Cramer, our Technical Analyst, can be found here. Grains sector weakness led by wheat At the bottom of the performance table, we find the grains sector. Grains are heading for a monthly loss, primarily driven by weakness in wheat prices in the US and Europe. The weakness is driven by a continuation of the Ukraine grains corridor and a bumper Russian crop looking for a home around the world. Speculators have responded to the general weakness by cutting the total net long across the six major grains futures contract to a three-month low at 430k contracts. According to the latest Commitments of Traders Report covering the week to November 15, speculators had the biggest one-week clear-out of corn longs since August 2019. Meanwhile, the wheat net short extended to a 27-month high at 47k contracts with soybeans and soymeal also suffering setbacks.   Crude oil troubled by China lockdowns and recession worries Crude oil trades lower for a third consecutive week as demand fears, especially from an increasingly locked down China, weigh on sentiment. A G7-sponsored price-cap plan on Russian oil looks dead in the water as EU countries struggle to agree on a level – the result being either no cap or a level so high that it will not have any meaningful impact on supply, led alone Russia’s response. The 12-month futures spread in WTI and Brent have both weakened to the lowest backwardation since last December, reflecting a market concerned about recession and a seasonal slowdown in demand hurting the front month contracts. In addition, the fact that the market is not pricing in a premium for oil ahead of the December 5 EU embargo on Russian seaborne crude exports highlights the impact of a sharp slowdown in China – the world’s biggest importer of crude oil. Middle East producers have seen spot premiums for key Persian Gulf graded oil, decline sharply after commanding elevated premiums since the invasion of Ukraine when many buyers started to look elsewhere than Russia, thereby lifting demand for Mideast crude. The slowdown in demand from China will be temporary but having unsuccessfully fought Covid outbreaks with lockdowns for months, the prospect for an improvement looks month away. This is unless Chinese officials start following the 20-point plan to ease Covid Zero policies that were issued earlier this month by the health authorities. Brent trades near the lower end of its established range, but with multiple uncertainties related to demand and supply, the prospect of a downside extension seems limited in our opinion. Source: Saxo   Source: https://www.home.saxo/content/articles/commodities/commodities-torn-between-recession-and-tight-supply-focus-25112022
Russia Look Set To Double Its Exports For The First Half Of 2023

Russian Wheat Continues To Be Offered At About The Cheapest Prices | The ECB Will Be Data-Dependent

Saxo Bank Saxo Bank 29.11.2022 09:13
Summary:  Markets have been on edge as we await further signs of the official stance in China on Covid restrictions after civil unrest on the issue at the weekend, with signs this morning from Chinese officialdom that a cautious easing will remain underway. This has inspired a comeback in some commodities and the Chinese renminbi after sharp weakening moves yesterday, but there is no profound sense of relief across markets as we also await incoming US data ahead of the December 14 FOMC meeting.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) S&P 500 futures are stuck in a tight range between 3,926 on the downside and 4,054 on the upside as the market is struggling to find a clear signal and direction. The noise is filled by the back-and-forth news stream out of China related to it Covid policies and backstop plans for its struggling real estate sector. Meanwhile, the US 10-year yield is also stabilising and earnings releases are minimal except for tomorrow with reports expected from Salesforce and Snowflake. Hong Kong’s Hang Seng (HISX2) and China’s CSI300 (03188:xhkg) Hong Kong and mainland China equity markets rallied strongly with Hang Seng Index and the CSI300 Index each rising more than 3%. The market sentiment was buoyed by new measures from the Chinese securities regulator to relax its restriction on property developers from equity financing. Leading Chinese developers listed in Hong Kong jumped by 5%-12%. In the mainland’s A-share markets, real estate names led the charge higher. Tourism stocks rose on speculation that pandemic control restrictions might be relaxed further. China’s pandemic control regulators are holding a press conference later today. USD firms, but then retreats overnight on hopes China’s reopening prospects Concerns surrounding China’s reopening status after civil unrest at the weekend sparked considerable volatility across FX yesterday, with a US dollar rally yesterday eventually emerging as the dominant development after choppy action. The USD was a bit weaker again overnight, particularly against the USDCNH, which dropped back below the important 7.20 area ahead of a press briefing in China thought to make clear the official central government position on Covid policies. Expect the most volatility in commodity currencies and the Japanese yen depending on how clearly China either a) signals that the path is open to easing restrictions on an accelerated time frame or b) that restrictions will remain in place and could even tighten if virus numbers don’t fall. Crude oil (CLF3 & LCOF3) made a sharp U-turn on Monday ...as one survey after another pointed to an elevated risk that OPEC+, partly depending on the price when they meet next week, will opt to agree on another production cut in order to stem the recent price drop. Having fallen by more than 15 dollars during the past two weeks, a downturn in Chinese demand has been more than priced in, with technical selling and momentum having taken over. Overnight Brent briefly traded $86 after Chinese health authorities announced they would hold a press conference at 7am GMT. At their last meeting OPEC+ cut output quotas by 2mb/d with Saudi Energy Minister Prince Abdulaziz bin Salman saying the group was ready to intervene with further supply reductions if it was required to balance supply and demand. Meanwhile, European talks on a price cap have stalled. Wheat (ZWH3) in Chicago dropped to a three-month low …on Monday on a combination of ample and cheap supply from Black Sea suppliers increasing competing with US origin wheat, and on concerns about the impact of protests in China on growth and demand. Following a bumper crop this summer, Russian wheat continues to be offered at about the cheapest prices in world export markets which is negative for the export prospects of U.S. wheat. In the week to November 22 speculators increased bearish bets on CBOT wheat to the highest since May 2019. Gold (XAUUSD) has recovered from another stronger dollar driven attempt to challenge support ...in the $1735 area after Fed speakers said more rate hikes are coming. pressed for higher rates. Investors will watch this week’s economic data, including ISM on Thursday and Friday’s nonfarm payrolls and US jobs report, for signs the US central bank may soon ease its monetary-tightening trajectory. Total holdings in bullion-backed gold ETFs rose 6 tons last week, the biggest weekly increase since April. During this time investors sold a total of 397 tons, still less than the 400+ tons bought by central banks during the third quarter. After finding support in the $1735 area last week, a break above $1765 may signal a return to key resistance at $1788. US treasury yields recovered after dip to local lows. (TLT:xnas, IEF:xnas, SHY:xnas) Weak risk sentiment after the weekend news of civil unrest in China due to restrictive Covid policies there saw a dip in the 10-year yield benchmark yesterday to new local lows below 3.65%. But there was little energy in the move as the market awaits important incoming US data starting with today’s November Consumer Confidence survey, but more importantly this Friday’s November jobs numbers on Friday. What is going on? The wave of takeover bids continues at the Paris Stock Market This is mostly happening in Euronext Growth – the market segment for small and medium-caps. Yesterday, Abeille Insurance (member of Aema Group, the fifth largest insurance player in France) acquired the small bank Union Financière de France (a bank mostly specialized in wealth management advisory). Abeille Assurance bought the company at a price per action of 21 euros. This represents a premium of 51 %. With the sharp drop in values that has happened since January, we have seen a wave of takeover bids at the Paris Stock Market. This will likely continue in the short-term, especially in the segment of wealth management advisory where there is an ongoing process of consolidation happening. Fed speakers press for higher rates James Bullard (2022 voter) said markets are underestimating the chances that the FOMC will need to be more aggressive next year, adding tightening may go into 2024. He also said that rates will need to be kept at a sufficiently high level all through 2023 and into 2024 even if the Fed reaches restrictive territory by Q1 2023. John Williams (voter) said "there's still more work to do" to get inflation down. He also hinted at “modestly higher” path of interest rates than what he voted for in September, sending another signal that December’s dot plot could see an upward revision, while also hinting at rate cuts in 2024. He provided some clear forecasts: unemployment rate rising from 3.7% to 4.5%-5.0% by late 2023; inflation declining to 5.0-5.5% by the end of 2022 and 3.0-3.5% by late 2023; modest economic growth this year and in 2023. The central bank isn't near a pause, Loretta Mester (2022 voter) told the FT. Richmond Fed President Barkin also spoke about higher-for-longer rates, despite moving slower China relaxes its restrictions on developers from attaining equity financing The China Securities Regulatory Commission (CSRC) fired the so-called “third arrow” to ease some of the restrictions previously imposed on property developers from attaining equity financing. While property developers are still barred from doing IPO in the domestic equity market, they are now domestically listed A-share developers and some Hong Kong-listed H-share developers to issue new shares to raise capital as long as the proceeds are used for restricting, M&A activities, refinancing, buying existing property projects, repaying debts, and project construction. However, proceeds are not allowed to be used in land acquisition. Pinduoduo shares rally 12% Strong Q3 results pushed the shares of the Chinese e-commerce platform to the highest level since November 2021. Q3 revenue was CNY 35.5bn vs est. CNY 30.9bn and adj. EPS at 8.62 vs est. 4.75 driven by tailwinds from the strict Covid policies in China. BlockFi – another casualty in the FTX saga The crypto lender BlockFi Inc. filed for Chapter 11 bankruptcy, the latest crypto-industry operator to seek court protection in the wake of FTX’s collapse. It sold $239 million of crypto ahead of its filing. ECB’s Lagarde maintains tightening stance ECB President Lagarde repeated her previous comments that the ECB will raise rates further but nothing on how much further, and on how fast they need to go. She said the bank will be data-dependent, adding the ECB may need to move into restrictive territory. She also said that she will be surprised if inflation in the Eurozone (due to be reported on Wednesday 30/11) peaked last month. Even if the November print cools slightly, most likely driven by lower energy costs, there is a possibility that inflation will likely remain high in the coming months as winter months progress and cost of living gets worse. Dallas Fed manufacturing signals job stress is building Dallas Fed manufacturing index came in less bad than expected at -14.4 for November, but the underlying metrics indicated a softening in labor markets. 16% of the factories surveyed indicated net layoffs in November, up from 9% previously, and comments suggested more layoffs may be coming as the backlog and holiday season get over. While it may still be early to see any significant signs of softening in Friday’s jobs report, the jobs data remains key to monitor to see if consumers may be vulnerable to a faster-than-expected pullback in spending. What are we watching next? US November Consumer Confidence, September home prices up today The Conference Board’s monthly Consumer Confidence survey has historically correlated most closely with the strength of the US labour market, although after a strong recover from the pandemic lows by mid-2021, confidence fall sharply, hitting a 95.3 local low in July of this year, likely due to steeply rising inflationary pressures (the other major US confidence survey, the University of Michigan sentiment survey, hit the lowest level in its 44-year history in July, likely as the survey contains questions more closely linked to inflation). Confidence then bounced strongly from that July local low, hitting 107.80 in September before dropping sharply to 102.50 last month. The November reading is expected at 100.00. With inflationary pressures easing relative to their peak, a weaker than expected confidence reading today could suggest rising insecurity in the labour market. The September S&P CoreLogic Home Price data is expected to show an ongoing drop in US home prices of some –1.2% MoM after 30-year mortgage rates rose 400 basis points this year to 20-year highs. Apple production risk is on the rise The protests in China and the unrest around Apple’s largest manufacturing hub for its iPhone could lead to a production shortfall of close to 6mn iPhone Pro which was a Morgan Stanley estimate and was published before the intensified issues at the Apple manufacturing site. Earnings to watch Today’s earnings focus is Crowdstrike with analysts expected FY23 Q3 (ending 31 October) revenue growth expected at 51% y/y with operating margin expected to demand as pricing power and demand remain robust in the cyber security industry. Today: Li Auto, DiDi Global, Bank of Nova Scotia, Intuit, Workday, Crowdstrike, HP Enterprise, NetApp, Shaw Communication Wednesday: Royal Bank of Canada, National Bank of Canada, Salesforce, Synopsys, Snowflake, Splunk, Hormel Foods, KE Holdings Thursday: Canadian Imperial Bank of Commerce, Bank of Montreal, Toronto-Dominion Bank, Marvell Technology, Veeva Systems, Ulta Beauty, Zscaler, Dollar General, Kroger Economic calendar highlights for today (times GMT) 0800 – Spain Nov. CPI 0930 – UK Oct. Mortgage Approvals/Consumer Credit 1000 – Eurozone Nov. Confidence Surveys 1300 – Germany Nov. Flash CPI 1330 – ECB's Schnabel to speak 1330 – Canada Sep. GDP 1400 – US Sep. S&P CoreLogic Home Prices 1500 – UK Bank of England Governor Bailey to testify 1500 – US Nov. Consumer Confidence 2130 – API's Weekly Crude and Fuel Stock Report 0030 – Australia Oct. CPI 0130 – China Nov. Manufacturing and Non-manufacturing PMI Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – November 29, 2022 | Saxo Group (home.saxo)
Analysis Of The NASDAQ 100 Index Movement

Saxo Bank Podcast: Electricity Prices Spiking In Europe, Crude Oil Rebounding And Wheat Falling And More

Saxo Bank Saxo Bank 29.11.2022 10:54
Summary:  Today we look at the market trying to recover its feet as it hopes that China will remain on the path toward reopening on fresh signs that it wants to avoid curbing activity excessively after recent civil unrest due to Covid restrictions. We also note, ahead of important incoming US data over the next couple of weeks and a Fed Chair Powell speech tomorrow, that the market is taking a very strong view on the path of Fed policy and the economy, assuming the Fed will succeed in its fight against inflation and will cut aggressively in 2024. Will Powell and/or the data challenge this pronounced view? We also look at electricity prices spiking in Europe, crude oil rebounding and wheat falling, stocks to watch and upcoming earnings reports and macro data. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Markets taking a strong view that Fed will succeed | Saxo Group (home.saxo)
Russia Look Set To Double Its Exports For The First Half Of 2023

Commodities Outlook: Part Of The Supply Gap In 2023 Will Remain

ING Economics ING Economics 03.12.2022 12:03
Fertiliser supply decreased in 2022 and prices rose to record highs causing a global drop in demand. High gas prices, sanctions, and export restrictions have resulted in a shift in trade which will continue into 2023. Meanwhile, the lower use of fertilisers will weigh on crop yield expectations for the upcoming season In this article High prices create ripple effects Considerable shifts in fertiliser trade Prospects for 2023 Impact on food production   High prices create ripple effects The war in Ukraine, Western sanctions on Russian and Belarussian exports, and Chinese export restrictions have created turmoil in fertiliser markets. The surge in fertiliser prices that started in 2021 led to deteriorating farmer affordability during 2022 and lower demand. Uncertainty about the amount of fertiliser that farmers are going to need for the upcoming season leads to a more muddied outlook for next year’s crop yields. This has an upward effect on commodities futures. Although the urgency of the situation for global food security is increasingly being recognised, there are reasons to be cautious about any quick improvements in the situation. History shows that unwinding sanctions often prove to be quite a sticky process against a backdrop of geopolitical tensions. Fertiliser prices are still high despite recent falls Monthly prices per metric ton Refinitiv, ING Research*DAP = Diammonium phosphate Considerable shifts in fertiliser trade Buyers have been busy this year finding alternative suppliers due to the sharp drop in fertiliser exports from Russia (nitrogen, potash), Belarus (potash), China (nitrogen, phosphate) and the EU (nitrogen). In the EU, lower local ammonia and urea production in combination with a reduced inflow of Russian products has been partially offset by imports from other countries such as Egypt and Algeria. This is also happening with potash where Belarussian exports to the EU have ceased and Russian imports dropped by more than 70% up until September. Those decreases are partially made up by a 25% increase in potash imports from Canada. In the process, European buyers are crowding out other buyers, similar to what has been happening in liquefied natural gas (LNG) markets. Meanwhile, other large importers, including Brazil, China, India and the US, have not turned away from Russian fertilisers and absorbed some of the flows that have become available, as they have generally worked out how to deal with any additional red tape. The EU is turning to other countries for ammonia imports Import volume in tonnes, 3-month average, January 2020 to September 2022 Eurostat, ING Research Prospects for 2023 High prices drive producers across the globe to ramp up production at existing sites and increase investments in new capacity which has a downward effect on prices. Still, it’s likely that part of the supply gap in 2023 will remain. Geopolitics is a major factor in how the market will evolve in 2023 as European sanctions on exports from Russia and Belarus are particularly influential. Both a de-escalation of the war in Ukraine and global pressure to reduce restrictions on fertiliser trade flows for the sake of food security could lead to a winding down in sanctions. This could, for example, result in the reopening of the Tolyatti-Odessa ammonia pipeline (output: 2.5 million tonnes, 1.5% of global production) and the release of fertiliser cargoes stuck in European ports. However, further tightening of sanctions cannot be completely ruled out in case the war in Ukraine escalates. Impact on food production In our view, the impact of the increase in fertiliser prices on crop yields has been soft this year as many farmers buy fertiliser ahead of the season and affordability was still quite favourable at the start of 2022 due to high commodity prices. But during the course of 2022 fertiliser imports in major markets such as India and Brazil have dropped below the levels of the previous year. The impact on yields could become more pronounced in 2023, especially in African and Asian countries where farmers have generally fewer means to adapt and get less government support compared to their counterparts in Europe, the US and China. Still, the process is likely to be gradual for two reasons. First, while the lower application of nitrogen fertilisers is directly affecting yields, the reduced use of phosphate and potash has a longer lag before it kicks in. Second, some of the impact can be mitigated by farmers and such mitigation can also be in the interest of food traders and manufacturers. Farmers could invest in the more precise application of (liquid) fertilisers, increase the use of organic fertilisers (like biochar) or opt to shift to crops that require less fertiliser (such as legumes or cassava). All of these have their drawbacks and limitations. Shifting to a different crop, for example, requires specific knowledge to be successful. So overall it will be hard to match the effectiveness of synthetic fertilisers. As always, favourable weather in the major growing regions during the season can ease some of the impact of under-fertilisation, while bad weather can cause more problems. TagsUS Food & Agri European Union Emerging Markets Commodities Outlook 2023 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
Russia Look Set To Double Its Exports For The First Half Of 2023

Global Wheat Production Is Still Expected To Edge Higher

ING Economics ING Economics 04.12.2022 09:51
Global wheat markets are likely to tighten over the 2022/23 season. Meanwhile, there are already several supply risks building for the next marketing year, which should support prices through 2023 In this article 2022/23 balance tightens Potential for lower output from key producers in 2023/24 What does this mean for prices?   2022/23 balance tightens Despite the fact that Ukraine has produced significantly less wheat in the 2022/23 season, global wheat production is still expected to edge higher in the current season. This is predominantly driven by a recovery in Canadian output as well as Russia producing a record harvest this season in excess of 90mt. However, even with supply growth, global wheat ending stocks for 2022/23 are expected to tighten to a little less than 268mt – the lowest levels since 2016/17. Given the significant amount of inventory carried in China, ex-China stocks are significantly tighter, standing at around 123mt – the lowest level since 2007/08. It is clear that Ukrainian wheat output this season has suffered. Due to the ongoing war, not all acreage would have been harvested. Ukraine planted more than 6m hectares of winter wheat for the 2022/23 season, but only around 4.6m hectares were harvested. As a result, Ukrainian wheat output is estimated in the region of 20mt, down from 33mt in the previous season. However, clearly the issue around Ukrainian supply this season is not just about production but the ability to export. The Black Sea Grain Initiative has allowed for larger export volumes. Although, wheat exports are still down around 55% year-on-year, whilst full season exports are expected to decline by 42% YoY to a total of 11mt. While the Black Sea grain deal was recently renewed, there is still plenty of supply risk from the Black Sea. However, Russian wheat output has performed strongly this year and farmers are expected to harvest a record crop in excess of 90mt. This is a result of good growing conditions. Russian wheat exports had struggled initially in the season, but the pace appears to have picked up recently. While there are no specific sanctions against Russian food product exports, there will be a fair amount of self-sanctioning and so potentially more difficult to get financing, shipping and insurance for this trade. It is estimated that Russia could export 42mt of wheat in 2022/23, up from 33mt last season. These exports would still be below full potential and so Russia is expected to carry a larger amount of stock into next season. The United States is expected to see the total wheat output in 2022/23 remain largely unchanged from 2021/22. This is despite a strong recovery in spring wheat output. Output in 2022/23 is estimated at 1.65b bushels (44.9mt), up 0.2% YoY, although this is still below levels seen in recent years. As a result, US ending stocks for 2022/23 are expected to be the tightest they have been since 2007/08. Drier weather in Europe has weighed on wheat yields in the European Union. These lower yields have offset larger acreage in the region. As a result, total EU wheat output in 2022/23 is estimated to have fallen by almost 3% YoY to 134mt. This lower output is expected to lead to a sizeable drop in EU ending stocks.   As for India, there had been a lot of noise around the government putting in place an export ban on wheat earlier this year. This was due to concerns over a domestic heatwave along with broader concerns over rising food prices following Russia’s invasion of Ukraine. While India is a large producer of wheat (in excess of 100mt), it is a marginal exporter. Therefore, regardless of the export ban, India would have not been able to play a significant role in offsetting Ukrainian supply losses. Australia is expected to see its second-largest wheat crop on record in 2022/23, with expectations of a 34.5mt crop. The harvest is currently underway. And while heavy rainfall for much of the year has seen crop prospects grow as we have moved through the year, this rainfall will raise some concerns over quality. In addition, whilst Australia is on course to produce a second consecutive large crop, there are export capacity constraints, which will limit how much of this volume can come out in a timely manner. Global wheat ending stocks USDA, ING Research Potential for lower output from key producers in 2023/24 As things stand, risks are skewed towards a tighter wheat balance in the 2023/24 marketing year. The key uncertainty is around Ukraine, not only in terms of how much wheat is produced, but also if this supply will be able to be exported. The Black Sea Initiative has been renewed for 120 days, but clearly risks to these flows remain. In addition, weather as usual will play an important role and right now there are already concerns for the next US winter wheat crop. It is also important to bear in mind the potential for lower fertiliser usage leaving crop yields more vulnerable next year. In America, the United States Department of Agriculture (USDA) expects that plantings for 2023 wheat will increase by 3.9% YoY to 47.5m acres. The general strength that we have seen in wheat prices this year should prove supportive for plantings. However, there are already concerns over US winter wheat. Winter wheat is in the worst condition it has been for this time of year in at least 20 years – a little more than 30% of the winter wheat crop is rated good-to-excellent. The poorer condition of the crop is due to drought conditions with 75% of the winter wheat area under drought at the moment, while more than 50% of the crop area is suffering from at least severe drought. This does suggest that we could see some downside to winter wheat yields, and this is key for total US output given that winter wheat makes up, on average, around 70% of total wheat output. However, this poor crop condition does not guarantee that yields will be lower, but the risks are certainly growing for the US domestic wheat balance to tighten further next season. Ukraine would have seen lower plantings of winter wheat for the 2023/24 due to the ongoing war. According to ministry data, the winter wheat area for next season is expected to total 3.8m hectares, which is down 38% from this year. Although, not all wheat areas this season would have been harvested. If we compared the projected planting for next season to the estimated harvested area for the current season, it would be a 17% decline. So, Ukraine will see a smaller wheat crop for next season. For spring crops, there is obviously much more uncertainty as this will depend on how the war evolves over the coming months. It appears as though it will be a challenge for Russia to repeat its current record harvest. Heavy rainfall has delayed winter plantings, whilst weaker prices in Russian ruble terms and export taxes do not help. Therefore, it is likely that area will shrink next season. Early estimates suggest that Russian wheat output could shrink between 10-15% next season. What does this mean for prices? Early estimates indicate that we could see a further tightening in the 2023/24 global balance, which suggests that wheat prices are likely to remain fairly elevated and well-supported. A key downside risk to this view would be de-escalation in the Russia/Ukraine war, as this would likely remove a fairly large risk premium in the market. ING wheat price forecasts ING research TagsWheat Russia-Ukraine Grains Commodities Outlook 2023 Agriculture Read the article on ING Economics 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  
The Gold Rally Is Continuing To Stall, This Could Be A Good Year For Crude Oil

Commodities: China Reported An Increase In Its Gold Reserves And The EIA Reported A Huge Build-Up In Product Stocks

ING Economics ING Economics 08.12.2022 11:32
Sentiment in commodities markets has mostly improved after China announced that it is further relaxing its Covid-19 measures, including moving from isolation facility quarantine to home quarantine. Energy – A mixed bag of data from EIA Crude oil extended its weakness yesterday, with ICE Brent settling at a fresh YTD low of US$77.2/bbl amid continued uncertainty over demand prospects although it has recovered marginally in morning trade today. The weekly inventory report from the EIA was largely constructive for the crude oil market and provided some support to oil prices, although stock build up of refined products continues to weigh on sentiment. Further helping crude oil prices this morning were expectations of a further easing in China’s zero-covid policy and a softer USD. EIA data show that US commercial crude oil inventories dropped by another 5.2MMbbls over the last week, following a huge 12.6MMbbls of draw over the preceding week. The drop in inventory withdrawals can be largely attributed to a slowdown in exports which dropped by around 1.5MMbbls/d WoW to 3.4MMbbls/d last week. Another 2.1MMbbls of crude oil inventory was withdrawn from the SPR, taking total withdrawals to around 7.3MMbbls for the week. US commercial crude oil inventory - at around 413.9MMbbls as of 2 December 2022 - now stands significantly below the 5-yr average of around 451.9MMbbls at this point in the season. For refined products, the EIA reported a huge build-up in product stocks as refinery utilization increased further to 95.5%, compared to 95.2% a week ago amid lacklustre demand for fuel. US gasoline inventory increased by around 5.3MMbbls to 219.1MMbbls whilst distillate inventory increased by around 6.2MMbbls to 118.8MMbbls as of 2 December 2022. Metals – China boosts its gold purchases Prices of most industrial metals traded higher yesterday, supported by optimism across risk assets along with a declining dollar. LME nickel 3M prices rose over 10% DoD to their highest level in seven months yesterday, leading the gains amongst base metals. The metals complex also benefited from China’s decision to ease its Covid restrictions further across major cities, brightening the outlook for metals consumption in the country. Indonesia is weighing resuming nickel ore exports, according to a report from Kompas newspaper, citing an official at the Fiscal Policy Agency at the Finance Ministry. The Indonesian government is considering a number of options, including imposing taxes on exports of nickel ore, while it appeals the WTO ruling against Indonesia for banning nickel ore exports, the official was quoted as saying. Indonesia banned exports of nickel ore in 2014, relaxed the ban in 2017, and reimposed it for good in January 2020 in a bid to attract foreign investment and to grow a domestic processing industry to produce downstream materials and products in the nickel and EV battery supply chain. A major global aluminium producer offered Japanese buyers a premium of $95/t for the coming quarter. This is the lowest level in more than two years, according to a report from Bloomberg, amid weak demand, particularly from the auto sector and concerns over the economic impact of US monetary tightening. The latest update from Vale SA shows that the company is estimating lower-than-expected iron ore production guidance for next year while also lowering its longer-term outlook. The company plans to stay below pre-disaster levels for the foreseeable future, as part of a shift toward higher-quality ore and value-added production. Vale is targeting output guidance of 310-320mt of iron ore for 2023, below market expectations of 325mt. In precious metals, China reported an increase in its gold reserves for the first time in more than three years. The People’s Bank of China raised its holdings by 32 tonnes in November from the month before, bringing its total to 1,980 tonnes as the country plans to further diversify away from the US dollar. Official gold holdings in China as part of total forex reserves are still at very low levels, which gives more room for further gold purchases over the coming months. Agriculture – Ukraine's grain shipments remain low The latest data from Ukraine’s Agriculture Ministry shows that the nation has exported around 18.5mt of grain so far in the 2022/23 season, a decline of 32.7% compared to the 27.5mt grains exported during the same period last year. Total corn shipments stood at 9.98mt (+38.6% YoY), while wheat exports fell 53.4% YoY to 6.98mt as of 5 December. Heavy rains in Brazil appear to have impacted sugarcane crushing in the country, with most mills reported to be ending the crushing season earlier than usual. Usually, sugar cane crushing in Brazil continues until the end of the first half of December - adverse weather this year has resulted in an earlier end to crushing. Prospects of some supply losses from Brazil have been supportive of sugar prices recently. 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
Russia Look Set To Double Its Exports For The First Half Of 2023

Commodities: Soft Wheat Shipments From The EU Rose 6% Year-On-Year

ING Economics ING Economics 14.12.2022 10:57
On Tuesday, gold jumped to its highest price since June after US consumer prices posted the smallest monthly gain in more than a year, sparking hopes that the US Federal Reserve will ease the pace of interest rate hikes Energy – OPEC left supply/demand forecasts largely unchanged ICE Brent was firm yesterday along with the broader commodity index as a softer CPI report from the US buoyed sentiment – lower inflation could push the Fed to slow down its rate hikes and support a recovery in commodities. The Fed is expected to hike rates by 50bp later today. Supply disruptions and the easing of Covid-19 curbs in China provided further support. The monthly oil market report released from the OPEC group yesterday was largely flat for the oil market. The group left demand growth estimates largely unchanged for both 2022 at around 2.5MMbbls/d and 2023 at around 2.2MMbbls/d although it made some adjustments to quarterly demand numbers. The group revised down demand estimates for the first quarter of 2023 from 101.3MMbbls/d to 100.9MMbbls/d and it revised higher demand estimates for the third quarter with similar numbers. Similarly, the group left non-OPEC supply growth estimates largely unchanged at around 1.9MMbbls/d for 2022 and 1.5MMbbls/d for 2023. The group maintained its estimates for OPEC crude oil supply requirements at around 29.22MMbbls/d for 2023 compared to around 28.59MMbbls/d for 2022. The weekly inventory report from the API was bearish for the oil market. The API reported that US crude oil inventories increased by 7.82MMbbls over the last week, compared to market expectations of roughly 3.9MMbbls of withdrawals. The API also reported that gasoline and distillate fuel oil stocks increased by 0.9MMbbls and 3.9MMbbls, respectively, over the week. The official EIA report will be released later today. Metals – softer inflation supports gold rally Yesterday's US inflation report helped gold prices to rally strongly, rising to a near six-month high of US$1,820/oz as a slowdown in rate hikes could increase the investment appeal of gold in the longer term. US retail inflation slowed from 7.7% in October to 7.1% in November whilst core inflation dropped to 6% compared to 6.3% in October. Whilst inflation is still higher than the Fed’s comfortable range, softening of inflation reinforces the view that the peak of the rate-hike cycle might be in sight. The interest rate hike this year has pushed investment money away from gold as investors chased higher returns (along with safety) in US treasuries. Total known gold exchange-traded fund (ETF) holdings have dropped by around 13.2mOz from the peak in April this year as the Fed hiked interest rates. A slowdown in rate hikes or the possibility of rate cuts later in 2023 could reverse the trend and help bring investment money back into gold ETF. Copper traded with high volatility yesterday as low inflation in the US boosted sentiments and pushed LME copper prices to above US$8,600/t at one point, although the rally was quickly followed by a sell-off with LME copper settling at US$8,497/t, still up 1.5% for the day. LME aluminium and zinc also witnessed similar price action as expectations of a slowdown in rate hikes led to optimism. The time spread of LME nickel contracts has widened significantly this week to US$280-290/t of contango as the illiquidity in the spot market makes it challenging for traders to roll-forward long positions without a huge discount. The spread was only around US$100/t at the start of the month. Weaker demand for nickel in the physical market and higher borrowing costs have further accentuated the issue. Agriculture – Russia targets 80mt-85mt of wheat harvest next year The Russian Agriculture Ministry said that the nation is aiming for an 80-85mt harvest target for wheat next year and a total grain harvest of around 125-127mt. These initial targets from Russia are lower compared to the harvest in 2022 and may tighten the global market if realised. The Ukraine Agriculture Ministry said that as the harvesting of grains is nearing completion in the nation, the farmers have harvested 17.2mt (66%) of corn as of 13 December, with a yield of 61.9 centners per hectare. Meanwhile, wheat harvest stood at 19.4mt (100%) during the abovementioned period, with a yield of 41.2 centners per hectare. Weekly data from the European Commission shows that soft wheat shipments from the EU rose 6% year-on-year and reached 15.4mt as of 12 December, up from 14.5mt for the same period last year. Morocco, Algeria and Egypt were the top destinations for these shipments. Meanwhile, given lower domestic output, EU corn imports increased to 13.1mt, compared to around 6mt last year. Read this article on THINK TagsMetals Gold Energy Commodities Agriculture 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
Analysis Of Crude Oil Futures, The Prices May Resume The Downtrend

COT: Bullish Bets Across All Five Crude Oil And Fuel Products Rose

Saxo Bank Saxo Bank 02.01.2023 12:36
Summary:  Our weekly Commitment of Traders update highlights future positions and changes made by hedge funds and other speculators across commodities and forex during the week to Tuesday, December 27. A week that saw speculators showing a continued and broad interest in adding exposure to commodities, led by oil, gold and corn. The dollar short extended further as the euro long reached a 23-month high Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities while in forex we use the broader measure called non-commercial. Link to latest report What is the Commitments of Traders report? The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class. Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and otherFinancials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and otherForex: A broad breakdown between commercial and non-commercial (speculators) The reasons why we focus primarily on the behavior of the highlighted groups are: They are likely to have tight stops and no underlying exposure that is being hedged This makes them most reactive to changes in fundamental or technical price developments It provides views about major trends but also helps to decipher when a reversal is looming   Financial Markets Daily Quick TakeSaxo Market Call Daily Podcast This summary highlights futures positions and changes made by hedge funds across commodities and forex during the week to Tuesday, December 27. A week that despite seeing activity grind to a near halt ahead of yearend saw speculators showing a continued interest in adding exposure to commodities, led by oil, gold and corn, while the yield on 10-year US Treasuries climbed. Developments both driven by an improved outlook for demand in China as the economy reopens following months of lockdown restrictions. The Nasdaq dropped 2.3% as it headed towards a 33% annual slump while continued selling of the dollar primarily benefitted the euro and the Japanese yen. Commodities The Bloomberg commodity index traded higher by 1.3% during the reporting week as it headed for another strong yearly gain, not least driven by tight markets keeping most futures contracts in a state of backwardation. While the Bloomberg Spot index ‘only’ delivered a 6.8% return last year, the tightness and with that elevated backwardations especially during the first half of the year helped drive the BBG Total Return index, which included the positive carry of selling (rolling) an expiring contract at a higher price than where the next month was bought, to an annual return of 16%. During the reporting week all but one of the 24 major commodity futures tracked in this saw net buying, resulting in the combined net long rising by 16% to 1.4 million lots, a six-month high. Two-thirds of the increase was driven by fresh longs being added while the remaining third was driven by traders cutting back on short positions. With all sectors getting bought with natural gas the only exception, the driver behind these developments has to be found in overall macroeconomic developments, most notably the weaker dollar and emerging optimism about the demand outlook in China.   Energy Bullish bets across all five crude oil and fuel products rose, driven by a combination of fresh longs being added and reduced short positions. Biggest change was seen in Brent where a 44% jump, the biggest in 17 months, lifted the net long to 144k lots, a seven-week high. The continued collapse in natural gas, despite the pre-Christmas winter freeze, helped boost the net short by 63% to 59k.Crude oil futures ended a volatile 2022 close to unchanged after having traded within the widest range since 2008. Another volatile year undoubtedly lies ahead with multiple uncertainties still impacting supply and demand. The two biggest that potentially will weigh against each other in the short term remain the prospect for a recovery in Chinese demand being offset by worries about a global economic slowdown. Covid fears, inflation fighting central banks, lack of investments into the discovery of future supply, labour shortages and sanctions against Russia will also play its part in the coming months. Metals   The gold long reached 67.3k contracts, and highest since early June, primarily driven by short sellers scaling back exposure in frustration over the yellow metals ability to weather a fresh rise in US bond yields. While gold has yet to make a decisive break to the upside the sentiment has nevertheless changed from a sell-into-strength to a buy-into-weakness market.Having closed 2022 near unchanged despite massive headwinds from a stronger dollar and surging treasury yields, the outlook for 2023 looks more price friendly with recession and stock market valuation risks, an eventual peak in central bank rates combined with the risk of inflation not returning to the expected sub-3% level by yearend all adding support. In addition, the de-dollarization seen by several central banks last year, when a record amount of gold was bought, look set to continue, thereby providing a soft floor under the market. As always, the dollar and yield movements will be a key focus while in the short term the market will look ahead to Wednesday’s FOMC minutes and Friday’s US job report.  Read next:Twitter Did Not Pay $136,260 Rent, Microsoft Reported Its Worst Quarterly Results In Years| FXMAG.COM Agriculture The prospect of a reopening in China giving demand a boost helped drive continued demand for key crops with speculators raising bullish bets across the six main grain and soy contracts to a four-week high at 429k contracts, well below the April peak at 819k contracts when panic buying in the aftermath of the Russian invasion of Ukraine saw prices surge higher. The change was primarily driven by a 40% boost to the corn net long to 159k contracts while the soymeal long reached 130k contracts, just shy of the 2018 record at 134k. In softs, the sugar net long jumped to 258k contracts to a 16-month high and not far from the peaks in 2016 (286k) and 2021 (270k) which both ended up signaling months of subsequent selling. The cocoa position flipped back to a small net long after 19k contracts were added in a week that saw the price jump 5.4%.   Forex Speculators was leaving 2022 behind holding the biggest dollar short since July 2021. Against nine IMM futures and the Dollar Index, the gross dollar short reached $7.4 billion with a $19.6 billion equivalent long in the euro being partly offset by short, albeit reduced, positions in JPY, AUD, CAD and MXN. The additional length being added to the euro long occurred ahead of Thursday’s Golden Cross when the 50-day simple moving average crossed above the 200-day. The 3% increase lifted the net long to a 23-month high at 146k contracts.    Source:COT: Funds loaded up on commodities ahead of yearend | Saxo Group (home.saxo)
Russia Look Set To Double Its Exports For The First Half Of 2023

Russia Look Set To Double Its Wheat Exports For The First Half Of 2023

Saxo Bank Saxo Bank 05.01.2023 09:00
  Summary:  Equity markets managed to keep an even keel yesterday, with a lack of direction in US equity markets continuing well into its third week. Late yesterday, the minutes from the last FOMC meeting offered the latest pushback against market expectations for rate cuts as soon as year-end, while gold and especially the JPY eased back lower from their recent strength on treasury yields halting their slide. Tomorrow’s US jobs report for December offers the next test for global markets.   What is our trading focus? Nasdaq 100 (USNAS100.I) and S&P 500 (US500.I) The US equity market once again chopped back and forth yesterday as the action has been bottled up in a range in the S&P 500 for nearly three weeks. The market may be waiting for the next batch of US data and the impact on treasury yields for choosing a direction, with tomorrow’s batch of data the next important hurdle for markets. The technical focus for S&P 500 traders is the range low and the 61.8% Fibonacci retracement near 3,780 for the March futures contract. For Nasdaq 100 trader, the cycle low near 10, 750 and the nominal intraday lows from last October a bit lower still are the key focus. Ironically, strong US economy data may be the most negative for equity markets in the short run if yields jump. Hong Kong’s Hang Seng (HIF3) and China’s CSI300 (03188:xhkg) Hang Seng Index climbed more than 1% and CSI300 surged nearly 2% as China continue to roll out additional reopening measures and supports to the economy. On Thursday, China announced the much-anticipated gradual reopening of the border between Hong Kong and the mainland starting from January 8, 2023. Internet platform giants Alibaba (09988:xhkg) and Meituan (03690:xhkg), China restaurant chain Haidilao (06862:xhg), beer brewers China Resources Beer (00291:xhkg) and Budweiser (01876:xhkg) were among the top gainers within the Hang Seng Index. In A-shares, baijiu (Chinese white liquor) surged in anticipation of rebound in consumption. Electric equipment, household electronic appliances, and logistics stocks also outperformed. FX: JPY rally reversed, USDCNH testing key levels The US dollar found a modicum of support yesterday as treasury yields stabilized and as the Fed delivered the expected message in its latest set of meeting minutes – a pushback against market expectations for the Fed to cut rates as soon as this year. The next important step for the USD will be on tomorrow’s December jobs report and next Thursday’s December CPI release. USDJPY bounced well above 132.00 after its recent test below 130.00 on signs that the yen’s recent surge may need more support from new developments (a larger drop in global yields in particular) after resetting from 150.00+ in USDJPY terms. The Chinese yuan continued its resurgence on hopes for a boost to Chinese growth on the other side of the current Covid trauma, with USDCNH testing its 200-day moving average near 6.87 for the first time since April. Crude oil (CLG3 & LCOH3) Crude oil found a bid on Wednesday following a two-day tumble of more than 9% tumble on China demand and global growth worries. The bounce has so far primarily been driven by short covering while also signalling an end to selling from funds who bought the market aggressively ahead of yearend. For now, a surge in Covid-19 cases across China is clouding the near-term demand outlook, overshadowing optimism and delaying the timing of when commodity consumption in the world’s top importer will eventually rebound. The API reported a 3.3-million-barrel increase in US crude stocks with gasoline stocks also rising while distillates dropped. The EIA will release its weekly report later today. Gold (XAUUSD) sees increased two-way action after hitting fresh six-month high Gold’s run of gains extended to a fourth day on Wednesday but after touching $1865 some two-way actions emerged potentially signalling traders have started to book profit. Gold, silver and platinum have been favoured by traders during the first days of trading, with momentum from last year being carried over. Driven by recession and stock market valuation risks, an eventual peak in central bank rates combined with the prospect of a weaker dollar and inflation not returning to the expected sub-3% level by yearend. It is worth remembering that traders' conviction at the beginning of a new year always tends to be low for fear of catching the wrong move. At the same time, however, the fear of missing out can also drive a rapid build-up in positioning which subsequently can be left exposed should a change in direction occur. Focus on Friday’s US job report with resistance at $1865 & $1878 while the current strong uptrend may not be challenged unless the price breaks below $1800 Europe’s gas price (TTFMc1) slump continues Europe’s gas prices have fallen by more than 50% during the past month and on Wednesday the Dutch TTF futures contract closed at €65/MWH ($20/MMBtu), the lowest since October 2021. The slump has been driven by a combination of mild weather and at times strong production from renewables as well as reduced industrial consumption resulting in an unusual seasonal increase in inventories. Gas held in storage across Europe is currently 164 TWh above the five-year average and close to a full month of peak winter withdrawals. With LNG imports still strong and demand down by more than 10% the continent has now ended up in a situation, unthinkable just a couple of few months ago, where prices need to stay low in order to divert LNG shipments away from Europe in order not to overwhelm storage facilities. Wheat (ZWc1) tumbles on ample Black Sea supply. The Chicago wheat contract has lost more than 5% during the first trading days to trade near a one-month low. Forced lower by an abundance of low-price wheat from Russia and Ukraine providing stiff competition to U.S. exporters where production has been hit by drought, and recently, by severe cold. Russia, the world's largest wheat exporter, look set to double its exports to a record 21.3 million tons for the first half of 2023. This following a record grain crop of 151.0 million tons last year, including 102.7 million tons of wheat. In addition to strong Russian shipments, European Union soft-wheat exports are running about 6% higher than a year earlier, and Australia’s top shipper loaded a monthly record 2.18 million tons of grain in December. Yields on US Treasuries (TLT:xnas, IEF:xnas, SHY:xnas) stabilized after their steep fall to start the year US Treasury yields arrested their descent yesterday after the 10-year benchmark hit 3.66%, rising a few basis points. At the short end of the curve, yield pulled back slightly higher as well, perhaps lifted at the margin by a strong JOLTS survey for November and the ISM Manufacturing survey showing a stronger employment sub-index. The price action was little affected by the FOMC minutes release, which saw the Fed continuing its pushback against market expectations for easing as soon as year-end. Tomorrow’s US data, including the December jobs report and ISM Services Index, offer the next test for the treasury market. Read next: The EUR/USD Pair Is Trading Above 1.06 Again, The USD/JPY Pair Is Close To Level Of 131| FXMAG.COM What is going on? France’s inflation is cooling down BUT… Inflation is cooling down in several eurozone countries. France is the last example. In December, the EU-harmonized CPI rose 6.7 % year-over-year versus expected 7.3 %. On a monthly basis, inflation decreased 0.1 % versus expected +0.4 %. This is positive, of course. But it will likely not be sufficient for monetary policy to shift out of tightening mode just yet. There is a high risk that inflation will increase again in Spring/Summer this year due to higher energy prices. This could be fueled by a deficit in the oil market due to OPEC+ cuts and EU ban on Russian oil and difficulties filling gas inventories for next year in the EU. Therefore, it is too early to believe the peak in inflation is effectively behind us in the eurozone. The FOMC minutes sent out mixed messages FOMC participants worried that the downshift from a 75bp hike to a 50-hike would be interpreted by the market as the signal of a pivot and warned that “an unwarranted easing in financial conditions, especially if driven by a misperception by the public of the committee’s reaction function, would complicate the committee’s effort to restore price stability”. Nonetheless, the minutes showed that “many” participants argued for balancing two risks: the risk “insufficiently restrictive monetary policy could cause inflation to remain above the Committee’s target for longer than anticipated” and the other risk of “the lagged cumulative effect of policy tightening could end up being more restrictive than is necessary to bring down inflation to 2 percent and lead to an unnecessary reduction in economic activity”. That points to a data-dependent risk management approach going forward. Separately, Minneapolis Fed President Kashkari said in an article that he saw rate hikes “at least at the next few meetings”, leading to a terminal rate of 5.25-5.50%. UK Mortgage Approvals plunged in November A clear sign that higher interest rates are impacting the UK housing market, approvals plunged to 46.1k in November, a stunning drop from 59k in October and for wider perspective, a sign of very weak activity relative to the average of well over 60k approvals per month in the years before the pandemic outbreak. Amazon to lay off over 18k employees This was more than previously expected as the company over-expanded its warehouse and logistics infrastructure after the wild increase in demand from pandemic-era stimulus. Shares rose some 1.7% after hours yesterday. US House of Representatives still has no speaker The narrow Republican majority in the House after the mid-term elections last November means that nearly all Republicans must agree on a candidate, with a small cabal of Trumpist-leaning Republicans continuing to block the candidacy of Keven McCarthy, who failed three more votes yesterday in his effort to become the next Speaker of the House. This issue could gain considerable importance for the debt ceiling issue in the US if a more confrontational figure acceptable to the GOP extremists is eventually found. What are we watching next? US data today and tomorrow Today we will get the latest weekly US jobless claims number as this data series has yet to show material weakening in the US labour market, market bets of Fed cuts by year-end notwithstanding. The December ADP Private Payrolls data is also up today, with that data series showing a rather persistent decline in payrolls growth since Q2 of last year. It is expected at +150k after +127k in November. Tomorrow’s calendar is important as the Fed has clearly expressed the most uncertainty on the inflationary pressures from the employment-intensive services side of the economy. This could make the market sensitive to strong surprises in the Nonfarm payrolls change number (expected around +200k, with considerable recent attention on the divergence in this survey relative to the far weaker household survey used to calculate the overall unemployment rate) and average hourly earnings. Ninety minutes after the jobs data, we’ll have a look at the December ISM Services survey after November saw a surprising improvement in the survey to 56.5 after the cycle low of 54.4 in October. Earnings to watch The earnings calendar is light in the first week of the new year, but in a couple of weeks the first Q4 earnings releases will begin to be released. The Q4 earnings season will continue its focus on margin pressures related to input costs on employees and raw materials including energy. Today’s earnings focus is Walgreens Boots Alliance (WBA) and Conagra Brands, with WBA expected to -3% revenue growth y/y for the quarter that ended on 30 November adding to the series of quarters with negative revenue growth. Conagra Brands is expected to deliver 7% revenue growth y/y for the quarter that ended on 30 November as the manufacturer of packaged foods is able to pass on inflation to its customers. Today: Walgreens Boots Alliance, Conagra Brands, Lamb Weston, Constellation Brands, RPM International Friday: Naturgy Energy Economic calendar highlights for today (times GMT) 0900 – Poland Dec. Flash CPI 0930 – UK Final Dec. Services PMI 1000 – Eurozone Nov. PPI 1000 – Italy Dec. CPI 1230 – US Dec. Challenger Job Cuts 1230 – US Fed’s Harker (2023 FOMC voter) to speak 1315 – US Dec. ADP Private Payrolls change 1330 – Canada Nov. International Merchandise Trade 1330 – US Nov. Trade Balance 1330 – US Weekly Initial Jobless Claims 1400 – Poland National Bank Governor Glapinski press conference 1530 – EIA Natural Gas Storage Change 1600 – EIA Weekly Crude and Fuel Stock Report 1830 – US Fed’s Bullard (non-voter) to speak 2330 – Japan Nov. Labor Cash Earnings Follow SaxoStrats on the daily Saxo Markets Call on your favorite podcast app: Apple  Spotify PodBean Sticher Source: Financial Markets Today: Quick Take – January 5, 2023 | Saxo Group (home.saxo)
Corn Prices Recorded Their Biggest Weekly Gain, Gold Demand In India May Suffer A Temporary Setback

WASDE News: The Global Corn Balance Saw A Marginal Tightening And The Global Soybean Balance Saw Some Easing

ING Economics ING Economics 13.01.2023 08:53
The USDA’s latest WASDE report was constructive for grain markets with US ending stocks for corn, soybeans and wheat all coming in below expectations. Global balances were less supportive, with stocks mostly in line or above market expectations US corn balance tightens The USDA revised US corn production estimates lower by around 200m bushels to 13.73b bushels for 2022/23. This revision lower was primarily due to lower acreage. Both domestic and export demand were lowered, which saw total use lowered by 185m bushels. However, weaker demand was not enough to offset lower supply. US ending stocks for 2022/23 were reduced from 1.26b bushels to 1.24b bushels, which was also below market expectations of around 1.31b bushels. In addition to these supportive WASDE numbers, the USDA also released its quarterly grain stocks report yesterday, which showed that US corn stocks stood at 10.8b bushels on 1 December 2022, down 7% year-on-year and also below what the market was expecting. The global corn balance saw a marginal tightening. 2022/23 global ending stocks were lowered from 298.4mt to 296.4mt. Meanwhile, the market was expecting a number closer to 298mt. Lower opening stocks and revisions lower to global production numbers were the reasons for the lower ending stocks. Global corn production estimates were lowered to 1,156mt (-5.9mt) with poor weather conditions in both Argentina (-3mt) and Brazil (-1mt). Meanwhile, global demand estimates were also revised down to 1,165.5mt from 1,170.6mt. Corn supply/demand balance Source: USDA, ING Research US soybean stocks below expectations The USDA decreased production estimates for US soybean by 70m bushels to 4.28b bushels because of lower yields. Yield estimates were cut from 50.2 bushels/acre to 49.5 bushels/acre. Lower output and little change in demand meant that 2022/23 ending stocks were cut from 220m bushels to 210m bushels. This was a surprise for the market, with expectations that ending stocks would exceed 230m bushels. As for the separate quarterly grains report, the USDA reported that soybean inventories on 1 December 2022 stood at 3.02b bushels – 4% lower YoY. This was also lower than the more than 3.3b bushels expected. However, the global soybean balance saw some easing. The USDA revised up its 2022/23 global ending stocks from 102.7mt to 103.5mt, largely due to higher beginning stocks. Expectations in the lead-up to the report were for ending stocks to come in below 102mt. The increase comes despite expectations of lower global output. This was driven by Argentina, where crop estimates were reduced by 4mt to 45.4mt, due to lower area and early season heat and dry weather conditions. Soybean supply/demand balance Source: USDA, ING Research Fewer surprises for wheat The USDA decreased its US wheat ending stock estimates for 2022/23 from 571m bushels to 567m bushels as higher domestic use offset the sharp rise in beginning stocks. The number came in below the 580m bushels expected. Output estimates were left unchanged. There were two other USDA releases which were also important for the wheat market. Firstly, the quarterly grains report showed that US wheat stocks stood at 1.28b bushels on 1 December 2022, down 7% YoY and also below the 1.34m bushels expected. Secondly, the winter wheat and canola seedings report from the USDA estimates the 2023 winter wheat area at 37m acres, up 11% YoY and also above the roughly 34.5m acres expected. This appears to have been enough to dampen some of the more bullish numbers in the other two reports. Although, it is important to note that crop progress reports at the end of last year showed that the condition of this planted US winter wheat was not great.  Looking at the global market, the USDA left both production and demand estimates largely unchanged. Global ending wheat stocks for 2022/23 increased slightly from 267.3mt to 268.4mt, leaving it slightly above market expectations of around 268mt. Wheat supply/demand balance Source: USDA, ING Research Read this article on THINK TagsWASDE Grains Agriculture 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
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

Saxo Bank Saxo Bank 23.01.2023 11:41
Summary:  Today we look at Friday's strong resurgence in US equities, which came after a seeming strong rejection of the rally into pivotal levels in the US S&P 500 index. This leaves market technicals in limbo ahead of the blast of earnings reports from large US companies this week and next. We also discuss confusing macro signals as financial conditions continue to ease, although treasury yields have pulled back from their recent slide. Also on the pod: the latest positioning data in commodities markets, natural gas on colder weather, wheat and coffee under pressure, JPY weaker, a look ahead at this week's busy earnings and less busy macro calendar and more. Today's pod features Peter Garnry on equities, Ole Hansen on commodities and John J. Hardy hosting and on FX. Listen to today’s podcast - slides are available via the link. Follow Saxo Market Call on your favorite podcast app: Apple  Spotify PodBean Sticher If you are not able to find the podcast on your favourite podcast app when searching for Saxo Market Call, please drop us an email at marketcall@saxobank.com and we'll look into it.   Read next: There Have Been Concerns That Tesla Price Cut Could Trigger A Price War| FXMAG.COM   Questions and comments, please! We invite you to send any questions and comments you might have for the podcast team. Whether feedback on the show's content, questions about specific topics, or requests for more focus on a given market area in an upcoming podcast, please get in touch at marketcall@saxobank.com.   Source: Podcast: Mixed signals ahead of US earnings blast | Saxo Group (home.saxo)
OPEC+ Are Expected To Keeping Oil Production Unchanged, AUD/USD Trades At Its Highest Levels

OPEC+ Are Expected To Keeping Oil Production Unchanged, AUD/USD Trades At Its Highest Levels

Saxo Bank Saxo Bank 25.01.2023 09:54
Summary:  Equity markets lose steam and trade cautiously ahead of the Fed’s preferred inflation gauge. The S&P500 closes above it 200-day average for the second day - a sign there are more bulls in the market than bears, but Tesla's results could rock the boat. Australian and NZ CPI blow hotter than expected. Gold is on the cusp of a bull market. Oil slides, investors buy the dip ahead of the EU ban on Russian oil. Oil prices make their biggest drop in 3 weeks; some investors see this as opportunity Equity markets lose steam and trade cautiously ahead of the Fed’s preferred inflation gauge   US equity markets were a bit dull on Tuesday with investors weighing up mostly stronger than expected Microsoft earnings results, vs a weaker than expected earnings from chipmaker giant, Texas Instruments. The S&P500(US500.I) fell 0.1% but closed above it 200-day average for the second day (a sign there are more bulls in the market than bears), while the Nasdaq 100 (NAS100.I) lost 0.2%. Still markets are waiting for the next major catalysts; Tesla’s results on Wednesday, then later in the week the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) price index for December to gauge if the Nasdaq’s rally of 11% from its low can be sustained, especially as the PE for the Nasdaq is about 54.6 times earnings; meaning tech stocks are still quite expensive compared to their averages. The risk is if Core PCE doesn’t fall as expected from 4.7% QoQ to 3.9%, then we could see a selloff in equity markets, while the US dollar would be bought as hotter inflation supports the Fed keeping rates higher for longer. However, the S&P500 is seemingly bullish for now, until the next tests (some of which we mentioned), click for an in depth Technical Analysis on what the next levels could be for the S&P500. Mixed Microsoft (MSFT) result has shareholders relived as cloud sales rise more than forecast; a sign the business could stand tall amid the murky year ahead After hours Microsoft (MSFT) shares gained 4.3% with investors relieved its revenue in constant currency rose 7% in the quarter, versus the 6.59% estimate. Microsoft’s closely watched Azure cloud-computing business, sales gained 38%, compared with predictions for a 37% increase, excluding the impact of currency fluctuations. This underscores Azure’s ability to help drive the company forth, even as sales of Windows software to PC makers plummeted amid a slumping market. Adjusted earnings per share came in at $2.32, slightly better than the $2.30 estimate, thanks to the cost cutting. Capital expenditure was $6.27 billion, less than Bloomberg estimated ($6.63 billion), while revenue slightly missed expectations hitting $52.75 billion vs the $52.93 billion estimate. Commodities see red on profit taking, while gold nudges up on the cusp of a bull market   Oil dropped, with WTI falling $1.8% below $81 after as OPEC+ are expected to keeping oil production unchanged when they meet next week as they await clarity on Chinese demand and the impact of EU’s ban on Russian supply (from Feb 5). Copper declined 0.2% with investors booking profits after the copper prices gained 32% from their low. Traders bought into Wheat, lifting the Wheat price up 2% as its trades at year lows. While Gold nudged up 0.4%, taking its total rally off its low to 19.5%, meaning gold is on the cusp of a bull market. Be mindful that we also think gold could also face profit taking, or a consolidation. Ole Hansen, head of commodity strategy discusses that here.  Australia CPI came out hotter than expected. Focus is on oil’s biggest drop in 3 weeks with some investors buying the dip  After Australia’s ASX200(ASXSP200.I) rallied for five straight days, the market fell like a knife on Wednesday after CPI came out hotter than expected supporting the notion that the RBA can keep rates higher for longer, despite the services sector remaining in contractionary phase. You have to remember Australian CPI has now on numerous occasions been hotter than expected. So given the market is up 16% from its low, we are seeing traders and investors book in profits ahead of the public holiday tomorrow and ahead of next week's RBA decision. Oil stocks such as Santos, Woodside, WorleyParsons, Ampol trade lower but some longer term investors would be seeing this pull back as an opportunity to buy the dip. Why? Oil prices remain supported ahead of EU’s ban on Russian oil coming up (Feb 5), which will restrict oil supply, plus we’re seeing APAC air travel rev up and this is expected to continue over the medium term; which is also driving demand for diesel and underpinning oil demand. In FX the Aussie dollar is on the cusp of a key event   The Aussie dollar vs the US (AUDUSD) trades at its highest levels since August, 70.64 US, after AU CPI came out showing prices are up 7.8% YoY, vs 7.6% expected. Core mean CPI rose 6.9% YoY, also hotter than the 6.5% expected. This means the RBA has more fire power to keep rising rates, despite the services sector remaining in a contraction (with a reading of under 50). If the AUDUSD's 50 day simple moving average crosses above the 200 day, marking a ‘golden cross’, we could see a quick run up to 0.7137, the August peak. It’s also worth watching the AUDEUR as bullish momentum could see the pair on the weekly chart cross over its 100-day moving average. - Stay tuned to Saxo's inspiration page for trading and investing ideas, as news breaks.  For a global look at markets – tune into our Podcast. Source: Video: Oil prices drop, some investors buy the oil dip. AU & NZ CPI hotter than expected | Saxo Group (home.saxo)  

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