Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

The Commodities Feed: Black Sea Grain Deal Suspended

www.investing.com/analysis/the-commodities-feed-black-sea-grain-deal-suspended-200631725
The Commodities Feed: Black Sea Grain Deal Suspended
By ING Economic and Financial Analysis   |  Oct 31, 2022 06:54AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
Copper
-0.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
LCO
-2.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
+0.14%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

It’s not surprising that wheat and corn opened higher this morning after Russia suspended the Black Sea grain deal over the weekend. Meanwhile, markets will be focused on the outcome of the FOMC meeting later this week and looking for any hints or signals that the Fed may slow the pace of rate hikes in upcoming meetings

Energy - Oil Set To End The Month Higher

The oil market has seen quite a bit of strength over October and is set to finish the month higher, after four consecutive months of declines. Announced OPEC+ supply cuts have provided support to the market at a time when there is plenty of demand uncertainty. OPEC+ supply cuts are set to start tomorrow which should see 1.1MMbbls/d of supply taken off the market. In addition to this, there is still plenty of uncertainty over the full impact of the EU ban on Russian seaborne crude oil, which comes into force on 5 December. Clearly, it is constructive for the market, but how constructive will depend on how much more Russian oil the likes of China and India can absorb.

Speculators have been more positive on the market over the last month. The latest positioning data shows that speculators increased their net long in ICE (NYSE:ICE) ICE Brent by 28,574 lots over the last reporting week - to leave them with a net long of 205,451 lots as of last Tuesday, which is the largest position speculators have held since June. Looking further at ICE Brent positioning data and focusing on commercial positioning shows that producers have been fairly active in hedging over the last couple of months. The gross producer short in ICE Brent stood at 1.21m lots as of last Tuesday, up from 978k lots in early September. This increased producer hedging could be driven by growing uncertainty over the demand outlook. Although, it is worth pointing out that the gross producer short is still well below levels seen pre-2022.

As for the calendar this week, ADIPEC kicks off in Abu Dhabi today, which will continue through until Thursday. Speakers at the event will include a number of OPEC oil ministers and so expect plenty of noise around the market outlook and also more comments and views on the recent OPEC+ supply cuts. However, the event this week which could have the biggest impact on the oil market is the FOMC meeting. Expectations are that the Fed will hike interest rates by 75bps. However, the market will also be eager for any signals on what the Fed could do at its December meeting. There is a growing expectation that the Fed could slow the pace of hikes In December. Any hints from the Fed of a slowing in the pace of hikes would likely provide some support to risk assets, including oil.

Metals – Glencore’s Production Falls, Cuts Guidance

Glencore (OTC:GLNCY) reported lower production in Q3 for half the commodities it mines and lowered full-year guidance on zinc, nickel and coal. The company cited extreme weather in Australia, industrial action at nickel assets in Canada and Norway, and supply chain issues in Kazakhstan caused by Russia’s war in Ukraine. Glencore’s copper production fell 14% YoY to 770.5kt, while zinc output fell 18% YoY to 699.6kt in the first nine months of the year. The company reduced zinc production guidance to 945kt for the year, compared to its previous guidance of 1.01mt due to the emerging supply-chain issues due to Russia-Ukraine war.

In ferrous metals, the most active contract for iron ore trading on SGX is on course for five consecutive sessions of declines with prices trading down to an intra-day low of US$75/t this morning- the lowest levels since September 2020. The raw material prices are already down more than 50% from the recent highs of US$171/t seen in March this year. The extended weakness in China’s property sector along with the nation’s COVID restrictions is weighing on steel consumption at a time when ex-Chinese demand is also bleak due to tighter monetary policy and a worsening energy crisis in Europe. Over the coming weeks, potential winter output curbs in China would result in rising stockpiles of iron ore, further weighing on the prices. Meanwhile, Baoshan Iron & Steel Co., the world’s largest steelmaker, highlighted a weak outlook for the steel industry in China last week and forecasts that steel demand in the country could fall 5% this year. Chinese manufacturing PMI data for October, which was released this morning will certainty not help with the PMI falling from 50.1 to 49.2 - leaving it in contraction territory.

Agriculture - Russia Suspends Black Sea Grains Export Deal

It’s no surprise that CBOT wheat and corn opened significantly higher this morning after Russia suspended the Black Sea grains export deal, following attacks on Russian navy vessels in the Black Sea. The latest data from the UN shows that a little over 9.3mt of grains and foodstuff have been exported from Ukraine under the deal since August. However, around 2.65mt of this is still awaiting inspection and its unclear what will happen to these cargoes now. The deal was originally set to expire on 19 November, but there was hope that it would be extended. We will need to see if involved parties can somehow put the deal back on track, but clearly there is the very real risk that Ukrainian grain exports see a significant slowdown due to these latest developments. Previously, Ukraine’s Grain Association had said that Ukraine could export 50mt of grains if the deal was prolonged, without it the maximum volume would likely be around 35mt.

Disclaimer: This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

Original Post

The Commodities Feed: Black Sea Grain Deal Suspended
 

Related Articles

The Commodities Feed: Black Sea Grain Deal Suspended

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email