Last week was overall very good for commodities supported
with both weak dollar and fundamentals as the Bloomberg commodity index
rose1.8%. However there are emerging speculations that the bull had run a
littlebit too fast and some correction could be ahead, which was supported with
the price action in the beginning of this week in most of the US traded
commodity futures
Crude
The sharp
drop in oil inventories reported Tuesday by API and confirmed by EIA next day
were the main mover behind the rally last week. On Thursday API also added data
about rising demand in July to the highest level this year pace since. Additionally
the announced Russia – Saudi oil meeting regarding deteriorating OPEC compliance
with output cut agreement helped also the bulls. After the US announced
possible sanctions on Venezuela the WTI touched $50 and managed to close above
this important level on Monday however yesterday it gave up these levels with a
strong reversal technical pattern after API crude oil stocks increased by
1.78mil barrels.
Corn
In Brazil
the corn prices paid to farmers in the central regions are at record low and
the government announced export subsidies that will make harder for corn
futures in Chicago to recover. From EU corn import forecast are at record high
when last week upgraded by 3mil tonnes to 15.3mil tonnes and there is also a robust
demand from swine and cattle industries. EU “usable” Corn production estimates were
cut by 3.6mil tonnes due to heatwaves in Europe.
Colder
weather is expected along the Corn Belt the next 10 days that can limit dryness
and heatwaves, and this is a price-negative news. In the Crop Progress report
the percentage of corn in excellent and good conditions declined just 1% so
USDA doesn’t see any huge damage to the crop so far. Overall grain positioning
of hedge funds is supporting concerns that further gains are limited (net long
in corn is almost 105k lots… but still far from record lvls)
Sugar
There are
rumours that only one month supply was left in India and that the government is
considering another tranche of tariff free export to ease the shortage. While
an increased demand is expected from India the next couple of months, the
normal monsoon rains support sugar cane growers.
The Brazilian government cut biofuel tax which makes biofuels more competitive.
Therefore demand for ethanol is expected to be higher ethanol which push higher
sugar prices to as ethanol parity is will be rising. Current calculations shows ethanol parity
above 14 cents in sugar price terms and it’s expected to rise until the year
end.
Good Luck and remember to watch your risk and be consistent
Mr. Tech Man
DISCLAIMER: This material was created for informational purposes
only and represents the Land of Trading team’s view of the past and current
economic and capital market environment. It is not an investment advice and
should not be viewed that way at all, and the creators of this material cannot
be held liable for any potential losses resulting from trading, where despite
this disclaimer someone would consider this material as an investment advice.
All rights reserved ©2016.
Contact:
landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com
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