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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Commodity wrap - Wheat, Coffee, Gold, Oil

13:21 5 June 2019

Wheat:

  • Wheat prices remain high despite the mixed data regarding supply

  • High quality of spring wheat crops, an increase in case of winter wheat

  • Quality of spring wheat in the US has reached the highest level since 2010, there is a possibility to see a further rally

  • Rainfall in some EU countries helps improve crops quality

  • Despite relatively dry weather quality of crops in France has been rated at 79% recently

Quality of spring wheat crops in the US is rated at 83%, the highest for many years. Source: Bloomberg

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Wheat prices are falling back in response to the above-mentioned data. Another WASDE report, due next week, should not offer to many reasons to cheer for bulls. Source: xStation5

Coffee:

  • A strong increase in coffee prices in response to changes in the BRL as well as rumours regarding possible freezes

  • The hurricane in Brazil has halted the harvest there and it may also some losses

  • Coffee consumption reached the highest level on record but it has failed to translate into higher prices

  • Farmers are supposed to get only 10% of the final coffee selling prices, thus they do not benefit from an increase in global demand for coffee

  • Coffee processors like Nestle or Starbucks benefit from higher margins

  • ICO, the International Coffee Organization, cut its coffee surplus forecast by 7.5% to 3.4 million bags, production forecasts were reduced, consumption forecasts were slightly trimmed

  • A slight rise of speculative long positions and a fall in shorts

  • Coffee inventories have fallen in US ports, the same scenario took place in 2013 and led to a huge price rally

Farmers are supposed to get only 10% of the final coffee selling prices. This could encourage them to leave the business. In the medium to long-term outlook this is the positive information for prices. Source: FT

A slight increase in longs and a moderate fall in shorts. Source: Bloomberg

After many months of a consolidation in coffee inventories in US ports we have seen a more notable decline of late. This could resemble the situation taking place at the turn of 2013 and 2014. Source: Bloomberg

Gold:

  • A huge price rally in reaction to trade war fears

  • New duties on Mexico encourage US investors to purchase US bonds but also gold

  • TNOTE, US500 as well as JPY keep rebounding

  • A clear rebound in ETFs holdings

  • Gold prices remain in the overbought area relatively to RSI

A clear increase in ETFs holdings has taken place of late. Source: Bloomberg

Gold prices begin testing its latest highs. Source: xStation5

Oil:

  • Oil prices have declined recently over concerns regarding the global economic slowdown

  • The latest two consolidation phases resulted in further drops

  • A possible rebound could be on the cards, it could reach the 50% retracement

  • The pivotal support might be found nearby the 61.8% retracement of the latest downward move

Oil prices try to rebound in the face of improved market sentiment. Source: xStation5

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

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