The purpose of this bi-weekly posting is to share with our readers some interesting articles regarding developments in commodities markets.
May 4, 2018
This week from Fundamental Analytics: DOE Insights, by Joel Fingerman
The DOE reported total crude inventories increased by 6.2 million barrels to 436.0 million barrels for the week ending April 27, 2018. Total Distillates stocks decreased by 3.9 million barrels, while average expectations was for a build of .3 million barrels.
“China opens iron-ore futures market to foreigners,” Financial Times.
China opened trading in Dalian iron ore futures to foreign investors today in order to increase its pricing influence over the commodity. China is the world’s largest importer of iron ore. This is the second Chinese futures contract to open to foreign investors after Shanghai launched crude oil futures in March.
“Soybeans give back surprisingly late rally,” Farm Futures.
After a strong performance across grain markets on Thursday which saw corn and wheat reach new multi-month highs, soybeans gave back gains as worries about trade and rising acreage curbed enthusiasm. A lack of breakthrough after the first round of trade talks between the US and China left the soybean market unsettled.
“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.
“Oil hits highest since November 2014 as Iran tensions mount,” Reuters.
Oil prices rose roughly 2 percent today as US crude hit its highest in more than three years. Global supplies remain tight and markets remain concerned about the possibility of the US withdrawing from the Iran deal on May 12 and renewing sanctions. U.S. light crude peaked at $69.88 per barrel today hit a session high of $69.97 – the highest since November 2014.
“Goldman Tells Investors: No Need To Fear Commodities Anymore” Bloomberg.
Goldman Sachs assures investors that it is safe to invest in commodities again, arguing that the “strategic case” for buying commodities from has never been stronger. Goldman sees oil peeking at $82 per barrel this summer and copper at $8,000 a ton by December, stating that weak returns are behind us.