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OIL STABILIZES ON PREDICTIONS OF EXTENDED OUTPUT CUT, BUT US CRUDE EXPORTS DRAG

Oil prices stabilized on Thursday on expectations that Saudi Arabia and Russia would extend production cuts, although record US exports dragged on the market.

Brent crude futures, the international benchmark for oil prices, were at $55.89 per barrel, up 9 cents, or 0.16 percent, from their previous close. Russian President Vladimir Putin said on Wednesday that a pledge by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, including Russia, to cut oil output to boost prices could be extended to the end of 2018, instead of expiring in March 2018. The pact on cutting output by about 1.8 million barrels per day (bpd) took effect in January this year. In the United States, West Texas Intermediate (WTI) crude futures were weaker, trading at $49.97 per barrel, down 1 cent from their last close.

GLOBAL TEA PRODUCTION TO SEE A FALL IN 2017

Global tea production is likely to record a decline in calendar 2017, primarily on the back of crop losses in Kenya, which accounts for around 16 percent of the total black tea production globally. Given Kenya’s status as one of the world’s largest exporters of black tea, production levels from the country are likely to have a considerable impact on global demand-supply dynamics for the year.

TIGHT SUPPLIES PROPEL ZINC RATES TO HIGHEST SINCE 2007

Zinc prices hit their highest in more than 10 years on Wednesday as tight supplies created by mine closures and healthy demand from top consumer China boosted the market.

Benchmark zinc on the London Metal Exchange was bid 1.2 percent higher at $3,304 a tonne after failing to trade in official open outcry activity. Earlier the metal, used to rust-proof steel, touched $3,306.65, its highest since August 2007. There is tightness mine closures from a few years ago are feeding through. But mine supply has picked up this year, which suggests tightness will start to fade as we move into next year. China has pledged to cut average concentrations of airborne particles known as PM2.5 by more than 15 percent year-on-year in the winter months in 28 northern cities to meet key smog targets. This means curbing activity in polluting industries such as steel production and zinc smelting. China’s zinc imports at 65,609 tonnes in August are up nearly 160 percent over the same month last year. But the year-to-date total at 314,086 tonnes is down nearly six percent.

CBOT CORN CLOSES LOWER ON STRONG US YIELD REPORTS

Chicago Board of Trade corn futures ended lower Wednesday as better-than-expected anecdotal yield reports fueled expectations that the US Department of Agriculture might raise its US crop estimate later this month.

CBOT December corn settled down 1-1/4 cents at $3.48-1/4 per bushel, paring losses after dipping to $3.46, its lowest since Sept. 12. It is noted that chart support at the contract low of $3.44-1/4, set on Aug. 31. Ahead of the US Department of Agriculture’s weekly export sales report on Thursday, it is expected that the government to report corn sales in the week to Sept. 28 at 500,000 to 700,000 tonnes.

SOYBEANS UP FOR 2ND DAY

Chicago soybean futures rose for a second session on Thursday as rains delayed the harvest in parts of the Midwest United States and dry weather slowed the pace of planting in Brazil, underpinning prices. Wheat edged higher after dropping 1.3 percent on Wednesday when the market came under pressure from lack of demand for US cargoes.

The Chicago Board Of Trade (CBOT) most-active soybean contract added 0.6 percent to $9.63-3/4 a bushel by 0248 GMT, after firming 0.3 percent on Wednesday. Wheat gained 0.3 percent to $4.43-1/2 a bushel and corn rose 0.6 percent to $3.50-1/4 a bushel. Rains crossed parts of Iowa, Minnesota and Wisconsin with light showers crossing areas of Missouri, Illinois and Indiana.

MALAYSIA PALM OIL STOCKS SEEN INCREASING TO 19-MONTH HIGH

Malaysian palm oil end-stocks likely reached the 2 million tonne mark in September, their highest since February 2016, a Reuters poll showed, with production forecast to come in at its strongest monthly level in nearly two years. Inventories at end-September are estimated to have risen 3.2 percent to 2 million tonnes from August, up for a third straight month. This could pressure benchmark prices of palm oil, the world’s most widely used edible oil, found in a wide range of products from soap and cooking oil to food products.Palm oil prices fell to their lowest in a month and a half earlier this week, but were up 1.2 percent at 2,715 ringgit ($642.45) a tonne at the close of trade on Wednesday evening. September output is expected to have risen to 1.84 million tonnes, up 1.5 percent from 1.81 million tonnes in August, which would be the strongest level since October 2015. Malaysian output usually sees peak production in August or September, but industry players say it will be pushed back to October this year due to the lingering impact of last year’s El Nino dry spell.

GOLD, SILVER RATES SEE CORRECTIVE BOUNCE

Gold and silver prices are firmer in early US trading Wednesday, on some short covering in the futures markets and perceived value-buying in the cash markets, following recent selling pressure that drove both markets to seven-week lows earlier this week. A weaker US dollar index on this day is also a supportive outside market element working in favor of the precious metals bulls.

December Comex gold was last up $6.60 an ounce at $1,281.30. December Comex silver prices were last up $0.155 at $16.805 an ounce. The US ADP national employment report for September was just released and showed a gain of 135,000 jobs. This was below the median forecast for a rise of 150,000. The precious metals markets did not show significant reactions to the news.

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