Commodity wrap - Platinum, Coffee, Corn, Oil

Platinum:

• A gargantuan increase in investment demand in the first quarter of the year, mainly from ETF funds

• A quarterly balance was -550k ounces 

• Production is expected to improve in South Africa this year, however, there are weaker expectations regarding automobile and jewellery industries

• Possible strikes in mines located in South Africa mainly in companies such as Anglo American Platinum, Impala Platinum, Sibanye

• Platinum prices are relatively low compared to gold prices as well as other precious metals like palladium or rhodium 

• Demand from catalysts’ producers seems to be still pivotal, further developments from the trade front (the US, China) could be crucial in terms of the global growth outlook

ETFs have ramped up their platinum holdings recently to the highest level on record. Source: Bloomberg

The platinum/palladium ratio and the platinum/rhodium ratio are at their extremely low levels. Source: Bloomberg

Short positions have begun falling of late which could be a bullish signal. Source: Bloomberg

Coffee:

• High coffee prices recently have been caused by frost’s concerns

• Coffee prices still remain close to their historical lows

• Columbia wants the price the be at around $2 per pound

• A net short position has fallen

• Arabica coffee prices are much more volatile compared to Robusta prices

The net positioning is the highest since 2017, however, longs have yet to bounce back. Source: Bloomberg

Arabica prices are well above Robusta prices due to frost’s concerns. Source: Bloomberg

Corn:

• July’s WASDE report expected to show a decline in stockpiles, production and crop yields

• China cuts corn output and shifts towards soybean amid prolonging trade conflict

• Slight improvement in crop quality in the US but, still, it remains close to the lowest levels since 2013

Corn crop quality in the US remains at relatively low levels. Source: Bloomberg

Corn keeps trading close to the crucial supply zone. Key, short-term resistance zone is localized at 440 cents per bushel while support can be found at 420 cents (38.2% Fibo level of the latest bounce higher). Source: xStation5

Oil:

• Supply issues (declining production in Iran) boost oil prices

• Situation in the Persian Gulf remains tense

• Hurricane in the Gulf of Mexico may temporary limit oil output by as much as 600k barrels

• Significant drop in crude oil stockpiles but distillate inventories rise. However, rising distillate inventories are in-line with seasonal patterns following major drop at the beginning of the year

• Situation on the VIX index for oil prices resembles the one from January. Should we expect further gains?

Oil production in the Gulf of Mexico has been at record highs recently and close to 2 million barrels per day. Hurricanes are likely to disrupt production and may see region’s output shrink by as much as 600k barrels. However, any disturbances should be temporary. Source: Bloomberg

VIX index for oil prices dipped significantly. The situation resembles the one from January. Source: Bloomberg