The purpose of this bi-weekly posting is to share with our readers some interesting articles regarding developments in commodities markets.

April 20, 2018

This week from Fundamental Analytics: DOE Insights, by Joel Fingerman

 

The DOE reported total crude inventories decreased by 1.1 million barrels to 427.6 million barrels for the week ending April 13, 2018. Total Crude imports dropped by .8 million barrels per day to 7.9 million barrels per day. Total Motor Gasoline inventories decreased by 3.0 million barrels to 236.0 million barrels.

“What’s behind the big commodities rally, and why it could just be getting started,”CNBC.

 

Prices in energy, gold, and base metals continue to rise, and traders don’t see prices dropping any time soon particularly given the possibility of a trade war, and continued signs of global growth. Aluminum prices have surged since the announcement of U.S. sanctions against Russian company, Rusal, one of the world’s largest metal companies. Oil prices continue to rise, up 15 percent for 2018, during record-breaking demand for gasoline.

“Agricultural Commodities Post April WASDE,” Market Watch.

 

The April World Agricultural Supply and Demand Estimates (WASDE) report did not have much of an impact on markets. The report indicated lower supplies of soybeans than expected, a record high in global inventories of wheat, and corn was in line with expectations. However, concerns remain that this year may not be the sixth year in a row of ample supplies of bumper crops.

“China tariffs spark shake-up of global soybean trade flows,” Reuters.

 

If China follows through on its threat of tariffs on U.S. soybean imports, it could end up paying more for oil-seed and also create a new buyer for American supplies. The threat of a trade war has caused prices of soybeans to rise in Argentina and Brazil. This rise in price has increased the competitiveness of U.S. soybeans in other markets in Europe, the world’s second biggest importer of soybeans.

“Trump accuses Opec of driving up oil prices ‘artificially’,” Financial Times.

 

President Trump has argued that oil prices are artificially high given the record levels of oil around the world. Saudi Arabia’s Crowned Prince Mohammed bin Salman needs a higher price in order to improve the Saudi economy, but also needs a strong relationship with the U.S.

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