Commodity wrap - Oil, Gold, Corn, Copper (20.03.2019)

Oil:

• OPEC decides to extend the current production cuts until June, then another OPEC/non-OPEC meeting will take place

• Price rises might be capped after a Trump-Xi meeting has been postponed

• China’s Vice President is expected to visit Washington

• A sizeable increase in demand from US/European refineries is expected to due to new regulations which will come into effect from 2020

• A planned production stoppage in Europe is likely to be two times shorter compared to the previous year

The amount of crude flowing to US refineries should rebound in the coming weeks based on the seasonal analysis. Source: Bloomberg

Oil prices may experience a profit-taking wave soon. The underlying trend should stay bullish though. Source: xStation5

Gold:

• ETF funds remain a key indicator for gold prices

• ETFs have begun purchasing gold again, the trend is likely to continue

• Today’s rate decision of the Fed - if US yields keep declining, it could support gold prices

• Technically gold prices have broken out of the bullish sequence

We should experience a continuation of rises in the short-term. Source: Bloomberg

The Fed’s meeting could push gold prices a bit lower but the medium-term outlook remains positive. Source: xStation5

Corn:

• Investors remain bullish as for corn prices

• Recent rainfalls in the US may bring about a delay of planting

• Demand for pigs in China rises which could increase demand for feed

• Possible rises in corn prices could be limited due to abundant supply in Ukraine

• AgriCensus points to a 70% likelihood of El Nino occurrence this year, up from 50%, it could exert pressure on corn price in the short-term

• Short positions in corn have shot up recently - it could be a short-term bullish signal

Investors remain bullish as for corn prices. Source: Bloomberg

The strong increase of speculative shorts may be a contrarian bullish signal for prices. Source: Bloomberg

Copper:

• Copper prices seem to overbought

• Copper prices hover at around the key technical resistance

• Bloomberg’s model being based on fundamental factors as well as the FX market indicates at overvaluation of copper prices

Short positions have decreased recently and as a result the net positioning has jumped. Source: Bloomberg

Bloomberg’s model points to overvaluation of copper prices roughly by 500 USD per ton. Source: Bloomberg

Copper prices hover around the important technical resistance. A divergence with aluminum prices could be observed as well. Source: xStation5