Commodity Wrap - Silver, Soybean, Oil, Coffee

Silver

• Break below the level marked with an equality of downward corrections and a dive below the $17 handle could invalidate the upward scenario

• Trump sounded less optimistic about Sino-US trade talks at the end of the previous week. However, the US President may use today’s speech to boost market sentiment

• Rising US yields hint at improving sentiment

• Precious metals trade under pressure as odds for another US rate cut look smaller

• The biggest weekly pullback on the precious metals market since the previous US presidential elections

ETF demand continues to stabilize. Rebound in the number of short and long positions. Investment demand does not flash any particular signal right now. Source: Bloomberg

A break below the level marked with equality of downward corrections (green boxes) suggests invalidation of the bullish scenario. Source: xStation5

Soybean

• In spite of an expected decline, the latest WASDE report showed a surprising increase in end stocks

• US soybean production forecast was upheld at 3550 million bushels

• US harvest progress lags 5-year minimum but no major changes in seasonality can be spotted

• Price declined from 950 cents per bushel to 915 cents per bushel over the past few weeks

• Short positions hint at slight overvaluation

Number of short positions dropped to extremely low levels, what could hint at overvaluation. Source: Bloomberg

Harvest progresses in line with seasonal pattern but lags 5-years lows. Source: Bloomberg

Oil

• US oil stocks have moved in line with seasonal patterns

• Oil traders wait for revelations from a trade front

• There have been some market chatters the OPEC may have to cut output more aggressively

• OPEC revises down its output forecast for 2024 to 32.8 mbpd from 35 mbpd

• OPEC expects a peak in demand in OECD countries next year and a lower demand from non-OPEC countries

• OPEC output below 30 mbpd, US output stabilizes at around 12.6 mbpd

• Lack of bullish news suggests that any price rallies could be limited

US stocks have been slightly above their 5Y average. Source: Bloomberg

OPEC output remains below 30 mbpd. Source: Bloomberg

Coffee

• Global stocks begin falling again, they are close to their 5Y average

• The largest Brazil’s coffee producer Cooxupe said it has no more coffee to sell this season

• Coffee prices have risen above 110c per pound despite no new information regarding supply

• Coffee remains in contango, 10% in 1Y ahead, 20% in 2Y ahead

• A notable fall in shorts suggests a possible end of the price rally

A notable fall in shorts suggests a possible end of the price rally. Source: Bloomberg

Coffee stocks remain close to their 5Y average. Source: Bloomberg