WORLD COMMODITIES TRADING
World oil slips toward $60 on demand worries
Oil slipped to around $60 a barrel on Friday as concern about a slowdown in the global economy and oil demand outweighed hints of progress in the US-China trade dispute.
OPEC and the International Energy Agency (IEA) both issued reports this week pointing to an oil surplus next year, despite a pact by OPEC and its allies, a producer alliance known as OPEC+, to limit supplies. The deal runs until March.
Benchmark Brent crude LCOc1 was down 20 cents at $60.18 a barrel in early trade on Friday, while US West Texas Intermediate CLc1 fell 27 cents to $54.82.
Hopes of progress in the US-China trade dispute lent support. The world’s two largest economies are preparing for a new round of talks aimed at curbing the spat and have been making conciliatory gestures, cheering investors.
Brent has traded in a range of nearly $5 this week and is heading for its first weekly loss in five weeks. The US benchmark, similarly volatile, was on track for the first weekly drop in three weeks. Brent is up 12% in 2019, helped by the deal between the Organization of the Petroleum Exporting Countries and allies including Russia to cut output by 1.2 million barrels per day.
Oil production growth in US grinds to a halt
Lower oil prices and ongoing financial stress in the U.S. shale industry are creating headwinds for drillers, and it appears increasingly likely that supply growth could undershoot forecasts. US oil production fell in June to 12.082 million barrels per day (mb/d), according to new data released by the EIA on Friday. That is a decline of 33,000 bpd from May – not a huge drop off, but a decline nonetheless. In previous months, maintenance at offshore oil fields made up a big chunk of the declines.
While the overall figures for the entire US appeared to disappoint, temporary declines offshore masked ongoing growth in the Permian. But this time around, blame cannot simply be pinned on offshore maintenance. Remarkably, production in Oklahoma fell by a rather substantial 58,000 bpd, a sign of problems in Oklahoma’s SCOOP and STACK plays, which have proved to be somewhat of a disappointment.
Gold rangebound, set for third weekly drop
Gold prices were rangebound on Friday in Asian trade as monetary easing uncertainties by major central banks supported demand while trade talk optimism lifted other assets, curbing gold’s gains.
Spot gold rose 0.4% to $1,503.93 per ounce. Prices are down about 0.3% so far this week in what could be their third straight weekly drop. US gold futures rose 0.3% to $1,511.40 per ounce.
Palladium fell 0.6% to $1,612.56 per ounce, after hitting an all-time high of $1,621.55 on Thursday as possible labour issues in South African mines stoked supply concerns. Palladium was on track for a sixth straight weekly gain, its longest winning streak since 2016.
Silver rose 0.3% to $18.15 per ounce, while platinum inched 0.4% higher to $954.78. Platinum was set to gain for a fourth week.
Ukraine expects 2019 wheat harvest to rise
Ukraine’s agriculture ministry on Thursday issued its first forecast for the country’s 2019 wheat harvest, saying that output could rise to 27.8 million tonnes from 24.6 million tonnes in 2018. The ministry’s statement said the overall grain harvest could rise to 71.1 million tonnes from 69.8 million tonnes.
Ukraine, a leading global producer and exporter of grain, harvested a total of 39.2 million tonnes of grain from 66 percent of the sown area as of Aug. 27, ministry data shows. The volume included about 28 million tonnes of wheat. The ministry has not issued its grain export forecast for the 2019/20 season, which runs from July to June. Ukraine exported a record 50 million tonnes of grains in 2018/19. It said on Wednesday that Ukraine has exported 7.6 million tonnes of grain, including 4 million tonnes of wheat, so far in the current season.
Nickel rises on signs of near-term tight supply
Nickel prices rose on Thursday amid signs of near-term tight supply on the London Metal Exchange (LME), while other base metals moved in tight ranges as the demand outlook remained clouded by the US-China trade dispute. LME nickel, which has jumped nearly 50 percent this year amid worries about supply disruption from top producer Indonesia, advanced 0.5 percent, while Shanghai nickel (ShFE) rose 1.8 percent. The premiums of LME cash nickel over the three-month contract rose to a decade-high of $97 a tonne, indicating a shortage of nearby supply. One party holds 50 percent to 80 percent of available LME inventories, data showed.
Corn, soy rise from multi-month lows
US corn and soybean futures pushed higher on Wednesday as traders worried that prices had dropped too low while there is still great uncertainty about the size of the autumn harvests. The gains came after the most actively traded corn contract earlier in the session dropped to its lowest price in more than three months and after soybeans fell to their lowest in more than two months.
The most-active corn contract on the Chicago Board Of Trade was up 1.5 percent at $3.71-3/4 a bushel. The most-active CBOT soybean contract rose 0.8 percent to $8.65-3/4 a bushel. The markets are going to concentrate on the risk of frost for the next six weeks and react to forecasts that reach out into late September and early October, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage in Iowa.
Raw sugar bounces off 11-month low, coffee climbs
Raw sugar prices on ICE climbed on Wednesday after earlier hitting an 11-month low, supported by higher energy prices and a firmer Brazilian currency, while arabica coffee prices also rose. October raw sugar settled up 0.13 cent, or 1.2 percent, at 11.37 cents per lb, after earlier falling to an October 2018 low of 11.09 cents per lb.
Prices were underpinned by higher energy prices, which can encourage cane mills to produce more biofuel ethanol, dealers said. Also supportive was a stronger Brazilian real, which on Tuesday had tumbled to its weakest levels in nearly a year. A stronger real discourages producer selling of dollar-denominated commodities. India will provide a subsidy of 10,448 rupees ($146.14) per tonne for sugar exports to encourage cash-strapped mills to increase shipments to 6 million tonnes. October white sugar settled up $3.10, or 1 percent, at $309.20 per tonne.
Canada sees canola harvest to be 9pc smaller on reduced plantings
Canadian farmers expect to harvest 9 percent less canola due to reduced plantings, according to a government report released on Wednesday amid a diplomatic dispute between Canada and China, the top importer of the crop.
The dispute, centered on the arrest of a Chinese executive in Canada and China’s decision to detain two Canadians, has curbed canola export sales since early this year and weakened prices just as farmers were deciding what to plant this spring. Dry conditions threatened crops earlier, but timely rains in June and July boosted crop prospects, Statistics Canada said in its first production forecast. Canola production looked set to reach 18.5 million tonnes, below the average trade estimate of 18.9 million tonnes.
Gold eases as investors book profits, dollar firms
Gold eased on Wednesday as the US dollar strengthened and as investors locked in profit following a more than 1 percent jump in the last session, but uncertainty over the US-China trade dispute and the global economy kept safe-haven bullion near a multi-year peak. Spot gold fell 0.1 percent to $1,541.20 per ounce. On Monday, it touched $1,554.56, its highest since April 2013. US gold futures settled down 0.2 percent at $1,549.10 per ounce. The dollar rose 0.2 percent, making gold more expensive for holders of other currencies, while US stock markets moved into positive territory. However, sentiment in wider markets remained fragile due to a sharper inversion in the US Treasury yield curve, signaling a possible recession, and the lack of clarity on the US-China trade front, which kept interest for safe havens intact. Spot platinum rose 4.8 percent to $907 per ounce, its highest since April 22, while palladium fell 0.8 percent to $1,469.60 per ounce.