Commodity Wrap - Silver, Oil, Sugar, Corn (23.03.2021)

12:49 PM March 23, 2021


  • Silver has been outperforming gold recently, thanks to an earlier short squeeze as well as better outlook for the global industry

  • On the other hand, ongoing rebound on the gold market continues while silver breaks below an important support at $25.50

  • Seasonal pattern suggest that silver as well as other precious metals should be experiencing a local low at the moment

  • ETFs bought more silver in Q1 2021 than in Q1 2020. On the other hand, ETFs have been sellers of silver since mid-February

  • Interestingly, silver stockpiles on COMEX exchange remain relatively high but have experienced the biggest decline in years, what may hint a major physical deliveries

Silver has been outperforming gold at the beginning of 2021. Key support for silver can be found at $23 per ounce. Seasonal patterns hint at potential price rebound. Source: xStation5

ETFs bought more silver at the beginning of 2021 than at the beginning of 2020. Nevertheless, last month has been marked with sell-off and has put investment demand in Q2 2021 under question. Source: Bloomberg

Silver stockpiles on COMEX exchange have dropped significantly recently, what may hint at more physical deliveries. In case stockpiles continue to fall, it may be an important signal for buyers. Source: Bloomberg


  • Latest report from EIA and OECD signalled demand recovery in the second half of 2021

  • China stops buying Iranian crude amid threat of US sanctions (at least officially)

  • It shows that there is still a long way to go until Iranian oil returns to the markets

  • US oil rigs rebound but production remains muted

  • It means that OPEC and Russia remain key players on the oil market at the moment

  • OPEC+ must be careful not to allow to large deficit as it could sent prices too high

  • India responds to high prices of oil from Arab countries by increasing imports from the United States

Number of active oil rigs in the US is rebound while shale production returns to post-pandemic highs. Nevertheless, production still remains around 1.5 mbpd lower than pre-pandemic highs. A point to note is that while the number of oil rigs is rebound, it is a new well production that is rising the most. Taking it into account, shale production alone should stand at around 8.5 mbpd. Source: Bloomberg

Brent has found a support at the 78.6% retracement of the upward impulse started in spring last year. Comparing the current situation to the one from 2010, we can assume that we are past the first upward wave and probably in the middle of a deeper correction. Key support to watch can be found at $50 per barrel, while key resistance is marked with a long-term downward trendline. Source: xStation5

Fundamental situation starts to look similar to 2006-2008 period. However, high demand was the major cause of the oil market deficit back then. This time deficit is related to limited supply. According to Bloomberg, current deficit may be as high as 4 million barrels per day. Source: Bloomberg


  • Logistics issues in Brazil and India have been resolved

  • Large soybean deliveries of Brazilian soy should take place in May. Seasonal patterns for sugar also hint at rebound at that time

  • Soy deliveries should be large amid very high demand from China. Brazilian soybean is relatively cheaper than US soybean

  • Triple top on the USDBRL - real is strengthening a bit but fails to provide a support for soy and sugar prices

  • Oil is more important driver of sugar prices than real - the higher the oil price, the higher demand for biofuels (and less available sugar for consumption)

Real rebounds but remains weak taking into account the past dozen or so months. Oil fails to provide support for sugar as price is dropping. Nevertheless, stockpiles ready to use data give some hope for continuation of price gains, especially as soybean exports from Brazil to China will limit port availability for sugar exports. Source: xStation5

Sugar stockpiles ready for consumption dropped significantly. Interestingly, drop was driven by returning demand. Source: Bloomberg


  • Corn price remains more or less in the middle of the potential range of the upward impulse (based on 2007-2008 and 2010-2011 periods)

  • Corn stockpiles around the world, except for China, are very low. In spite of huge demand from China and big jump in imports, Chinese corn stockpiles sit below last year's levels

  • China has increased imports of the US corn, what may drain already low US stockpiles

Corn price is in the middle of the potential upward move. Fundamentals for the agricultural goods market remain solid but a lot will depend on China. Source: xStation5

Demand from China has jumped significantly compared to last year's levels. As China experienced a big drop in domestic stockpiles, increased imports from the United States should not come as a surprise. Source: USDA

If China continues to import large quantities of US corn, it may lead to drainage of the US corn stockpiles. Source: Bloomberg


Forex and CFDs are leveraged products and can result in losses that exceed your deposits. Please ensure you fully understand all of the risks.

Losses can exceed deposits