Commodity Wrap - Oil, Wheat, Corn, Platinum

Oil:
- Developments concerning sanctions on Iran saw mixed response on the oil markets
- Trump called OPEC to boost output in order to mitigate lack of Iranian crude
- China is the biggest importer of the Iranian crude (around 600k barrels per day). It seems highly unlikely that China will slash its imports to zero
- Venezuelan oil exports declined below 1 million barrels per day
- Russian exports declined on the back of contamination in the northern pipelines
- Saudi Arabia wants to see output cut agreement extended until the end of 2019
- Saudi Arabia does not want to hike production above its limits but is ready to do so in case situation requires it

Saudi Arabia needs an oil price of $84 in order to balance its budget. On the other hand, Russia needs only $40. Source: Bloomberg

Chinese imports of Iranian crude are low in comparison to the past 5 years. Source: GAC

Wheat:
- Production outlook is improving all around the world
- World Grains Council lifted output forecasts for 2019 to 762 million tonnes (735 million tonnes earlier)
- European production should be 10% higher this year and reach 141.3 million tonnes
- Russian output should reach 79.5 million tonnes this year, a 2.5 million increase against previous year
- Significant price declines on the European markets
- Crop quality of the US winter wheat keeps improving
- Solid planting season in the US
- Wheat trades near the local support level at 430-450 cents per bushel

Crop quality of winter wheat improved for another straight week. Planting in line with schedule. Source: Bloomberg

Wheat prices declined towards key support level marked by multi-year demand zone. Moreover, the range of the previous corrective move was matched. Source: xStation5

Corn:
- Corn plating in line with trend but still below 5-year average
- The last 2 major floodings in the US were followed by rallies on the corn market
- In case moisture on fields upholds, planting acreage may shrink by 1-2 million acres
- Previous post-flood rallies occured in May-June period
- Corn price is rebounding off the key demand zone

Corn plantings are in line with trend but below 5-year average and last year’s values. Source: Bloomberg

Corn rebounded strongly what can be related to uncertainty surrounding further progress of the US corn plantings. Source: xStation5

Platinum:
- Price is consolidating around the 900 USD handle
- Bulls still linger below the 50% Fibo level of the latest upward impulse
- Range of the upward wave fulfilled in 80%
- ETF ceased buying platinum after significant pick-up in reserves during Q1
- Significant speculative demand for platinum
- Goldman Sachs prefers pallad to platinum

Net speculative position on platinum is very high, mostly due to the decline in the number of short positions. Source: Bloomberg

Platinum has been trading around the 900 USD handle for the past month. In the very same period of time gold took a major dive lower. In turn, divergence between gold and platinum moves has been closed. Lower gold price could encourage more gold buying in India at the cost of platinum buying. Source: xStation5