OIL PRICES SPRING BACK
Oil prices climbed on Thursday after sharp losses the session before, buoyed by strong compliance with touted international production cuts, although a surge in US crude inventories continued to drag.
The Organization of the Petroleum Exporting Countries (OPEC) and other oil producers reached an agreement last year to cut output by almost 1.8 million barrels per day (bpd) in the first half of 2017, with investors paying close attention to levels of compliance with the landmark deal. Kuwait’s oil minister said on Wednesday that OPEC’s compliance with the cuts had exceeded targets, standing at 140 percent in February, while non-OPEC members’ compliance was 50-60 percent.
International Brent crude futures were up 50 cents, or 0.94 percent, at $53.61 per barrel. They ended the last session down 5 percent at $53.11 a barrel, hit by a record buildup in US inventories.
MALAYSIAN PALM OIL DIPS
Malaysian palm oil futures slipped on Thursday on a weaker performing soyoil, and as leading analysts presented mixed forecasts at an industry conference earlier this week.
Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange were down 0.2 percent at 2,870 ringgit ($643.93) a ton during the midday break. Traded volumes stood at 17,496 lots of 25 tons each at noon. Soybean oil on the Chicago Board of Trade fell as much as 0.2 percent, while the May soybean oil contract on the Dalian Commodity Exchange was slightly up by 0.1 percent.
Palm oil production in top growers Malaysia and Indonesia is still reeling from the impact of a crop-damaging El Nino in 2015-2016, as the dry weather phenomenon reduces palm’s fresh fruit yields.
MILK PRODUCTION WORLDWIDE
Last week, the latest figures from the Central Statistics Office (CSO) showed that Irish milk production was down 4.6 percent on January 2016. Irish creameries took in an estimated 140.9m litres in January. But how does Irish milk production compare to other milk producing countries around the world? The latest figures from the Dairy Companies Association of New Zealand (DCANZ) show that for January, New Zealand milk production increased 0.8 percent on the same month last year. Some 2.42 billion tons of milk were produced in January in New Zealand. In 2016, milk production closed out the year 1.6 percent lower than the year previous at 21.176 billion tons. This year milk production is forecast to be 2 percent below the 21.17m-tons mark and 3 percent below peak production of 2014 before the current milk price downturn began.
Meanwhile, the latest figures from the US Department of Agriculture (USDA) show that US milk production continues to increase. In January, milk production increased by 2.7 percent on the corresponding month in 2016. Overall in 2016, production was up 1.8 percent on the previous year.
INDIAN TEA PRODUCTION HIGHER IN JAN
India’s tea production in January rose nearly 6 percent from a year earlier to 19 million kg as plucking rose in the eastern state of West Bengal. West Bengal produced 4.47 million kg of tea in January, up 91 percent from the year-earlier period.
India, the world’s second-biggest tea producer, exports CTC (crush-tear-curl) grade mainly to Egypt, Pakistan and the UK, and the orthodox variety to Iraq, Iran and Russia.
CHINA TO CUTS STEEL AND COAL CAPACITY
Beijing has announced plans to cut another 150 million tons of coal capacity and 50 million tons of steel capacity this year as the world’s No. 2 economy deepens efforts to tackle pollution and curb excess supply.
This year’s targets come after the world’s top coal consumer and steel maker far exceeded its 2016 goals, eliminating 290 million tons of coal and 60 million tons of steel capacity.
INDIAN SUGAR PRICES ON DECLINE
Sugar prices remain volatile and on Tuesday they declined, extending the prior session’s losses on news that India may stall its decision to import sugar.
Raw sugar futures have been quite volatile this year with technical largely driving the market. With fundamentals providing a mere backdrop, chartists’ control of the market this has caused rapid price swings.
There was the expectation that the Indian Sugar Mills Association (ISMA) would signal the need for imports at their Monday meeting, but this expectation was not met. Even though the ISMA lowered its production forecast to 20.3 million tons from 21.3 million tons, more in-line with market expectation, it also reduced its consumption forecast and maintained India will not need to import.
EIA’S CHANGING OIL, NATURAL GAS PREDICTIONS
So far, EIA has had three monthly Short-Term Energy Outlooks in 2017, January, February, March.
WTI oil prices are projected to stick on Thursday’s mid-$50s range until at least the end of 2018, maintaining its few dollar discount to Brent, the international benchmark. Overly high inventories (US crude stockpiles just passed a staggering record of 528 million barrels) and rebounding US shale production should limit WTI from rising above $60 for now.
Opinions vary widely: as opposed to Citi’s projection of $70 by the end of this year, BP assumes $55 to $60 oil for the next five years.