World oil prices soar
Oil prices rose on Thursday as a pipeline outage in Britain continued to support prices despite forecasts showing global crude surplus in the beginning of next year.
US West Texas Intermediate futures settled up 44 cents, or 0.8 percent, to $57.04 a barrel. Brent crude futures settled up 1.4 percent, or 87 cents, at $63.31 a barrel. Prices have been supported by an outage on the Forties crude pipeline that was expected to last several weeks.
The Paris-based International Energy Agency (IEA) expects the oil market to have a surplus of 200,000 barrels per day (bpd) in the first half of next year before reverting to a deficit of about 200,000 bpd in the second half. That means 2018 overall should show “a closely balanced market”.
The IEA said US crude output next year would increase by 870,000 barrels per day, up from its November forecast of 790,000 bpd.
Copper rises as metals brace for likely US rate hike
Copper rose on Wednesday as prices extended a correction from last week’s sharp fall, but moves were muted ahead of an expected interest rate increase from the US Federal Reserve.
Global shares reached another record high as the Fed geared up to raise rates for the third time this year. However, the US dollar weakened after consumer price data showed sluggish inflation, adding to concerns the bank will be less able to execute multiple rate increases next year.
Copper plunged 4 percent on Dec. 5, its biggest one-day drop in two years. It has since recovered some but not all of those losses.
Some upbeat data out of China last week has helped allay concerns over Chinese demand, Julius Baer analyst Carsten Menke said, while moves on Comex had also improved the technical picture for the metal.
London Metal Exchange copper ended the day up 1 percent at $6,729 a tonne. LME copper may rise to $6,737 a tonne after breaking above resistance at $6,670, Reuters technical analyst Wang Tao said. The metal has broken a falling trendline which signals a further gain from current levels.
USDA drops milk production forecast
USDA’s World Agricultural Supply and Demand Estimates dropped the forecast for milk production in 2017. Trend could continue into 2018. The milk production forecast is lowered for 2017 on slower growth in milk per cow.
The slower growth in milk per cow is expected to carry into 2018 and combined with an expected slower rate of growth in cow numbers, the 2018 milk production forecast is lowered. The 2017 and 2018 fat basis import and export forecasts are unchanged from the previous month.
On a skim-solids basis, the 2017 and 2018 export forecasts are raised on higher expected whey exports. No changes are made to 2017 and 2018 skim-solids basis import forecasts. Price forecasts for cheese, butter, and nonfat dry milk are lowered for 2017 on current price weakness and slower demand.
Gold rally in wake of FOMC statement that sees tame inflation
Gold and silver prices were solidly higher on Tuesday, in the immediate aftermath of the FOMC statement that saw a US interest rate increase, as expected. However, market watchers were a bit surprised the Fed is projecting tame inflation prospects for the U.S. in the coming months, or longer.
Heavy short covering in the futures markets and bargain buying in the cash markets were featured in gold and silver, following recent selling pressure that drove both markets to five-month lows on Tuesday. February Comex gold was last up $15.20 an ounce at $1,256.90.
Malaysian palm hits 16-month low
Malaysian palm oil futures hit a 16-month low on Thursday, weighed down by low demand and high stockpiles, while weakness in edible oils on China’s Dalian Commodity Exchange also weighed on sentiment.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange dropped as much as 1.4 percent to its lowest since Aug. 8, 2016 at 2,424 ringgit ($594.70), before settling down 0.9 percent at 2,436 ringgit a tone at the midday break. Palm oil has been on a downward trend recently, shedding 6.4 percent so far this month after declining 7.5 percent in November. It has dropped 1.7 percent so far this week in what could be its seventh straight weekly fall.
Trading volumes stood at 23,763 lots of 25 tones each at the midday break on Thursday. Palm oil prices are affected by other edible oils as they compete for a share in the global vegetable oils market.
Wheat up on short-covering, US weather concerns
Chicago wheat futures rose for a second session on Thursday with short-covering by investors while concerns over cold weather hurting the US winter wheat crop underpinned the market. Corn and soybeans ticked higher although gains were capped by ample world supplies.
The most-active wheat contract on the Chicago Board Of Trade was up 0.4 percent at $4.18-1/4 a bushel, as of 0234 GMT, near the session high of $4.19 a bushel, the highest since Dec. 8. Soybeans climbed 0.1 percent to $9.79-3/4 a bushel, having firmed 0.4 percent on Wednesday, and corn was unchanged at $3.49 a bushel, having gained 0.4 percent in the previous session.
Rabobank sees global coffee surplus in 2018/19
The global coffee market could have a surplus of 4.1 million 60kg bags in 2018/19 as production in top growers Brazil and Vietnam rebounds, Rabobank said in its quarterly report on Wednesday. The bank forecast global coffee output for the 2018/19 season reaching 167.3 million bags, up from an expected 155.6 million bags in the current 2017/18 season.
A sharp increase in production is expected in top grower Brazil, which is currently in an off-year in its crop cycle. Output is seen at 59 million bags in 2018/19, up from 49.2 million this season. Production in Vietnam, the world’s biggest grower of robusta coffee, is expected to climb to 29.4 million bags, from 28.7 million bags in 2017/18. On the robusta side, we see a very small surplus in 2018/19 and this is likely to support robusta prices through 2017,” Rabobank said in its report.