Commodity Wrap - Corn, Oil, Gold, Emiss

In this week’s commodity wrap we present you 4 markets that look interesting or/and have posted some major price moves: Corn, Oil, Gold, Emiss.

Corn:

• WASDA report expected to show a huge build in the ending stocks what can be to some extent ascribed to uncertainties surrounding trade issues - chance for improvement in the months to come due to the agreement signed with Mexico and Canada

• Donald Trump announces sales of E15 fuels throughout the whole year (fuel containing 15% of ethanol that is mostly produced from corn) - potential support for corn prices

• Global stockpiles reduced significantly throughout current season - even with expected build there is space for corn prices to rise

• Stocks-to-use ratio should remain low

WASDE report is expected to show significant build in the corn stocks. Source: Bloomberg

Stocks-to-use ratio points to higher prices. Source: Bloomberg, XTB Research

Corn prices still remain under selling pressure. A break above the downward trendline may lead to reversal in moods. Source: xStation5

Oil:

• Maintenance works in the US refineries lead to higher inventories

• Declines on Wall Street forecasting global slowdown may hurt oil prices

• IEA calls for higher OPEC output, Barkindo says that high prices may result from potential deficit

• Hurricane Michael threats oil production facilities in the Gulf of Mexico

According to seasonality oil inventories should rise in line with maintenance works in the refineries. Oil prices may find themselves under pressure. Source: Bloomberg. XTB Research

Gold:

• Gold prices unimpressed by the turmoil on the stock markets

• Rise in TNOTE leads to just slight rebound on gold

• Significant divergence between gold and copper, further turmoil on the markets may lead to convergence

• ETF holdings begin to rise after the long time but scale of build does not point to trend reversal

• Net speculative positioning on gold remains at very low levels, long positions at extreme lows

Net speculative positioning on the lowest level in history. ETF holdings begin to rise. Source: Bloomberg

Copper prices may decline due to global growth fears, gold could gain on the back of its safe haven features. Similar divergences closed at the end of 2017. Source: xStation5

EMISS:

• CO2 emission prices drop along with coal prices

• Relatively high temperatures in Europe lead to smaller energy production in the coal power plant

• Good weather may exert pressure on the EMISS prices

• Strong technical support in the vicinity of €14.12 handle

CO2 emission prices move in tandem with coal prices. Source: Bloomberg

Higher temperatures lead to smaller energy production in Europe and therefore smaller demand for CO2 emission contracts. Source: Bloomberg