Quotes: MENA   Enter Symbol: NewsLetter: Search: advanced

Weekly Commodity Update: March unlikely to repeat February's surge in commodities  Join our daily free Newsletter

MENAFN - The Peninsula - 04/03/2014
No. of Ratings : 0
Add to Mixx!



(MENAFN - The Peninsula) February was a strong month for commodities, with the broad-based DJ-UBS Commodity index returning more than 5 percent. This was more than the S&P 500 Index, which reached even a new record high thereby moving in the opposite direction of bond yields and the macro data. Some of the major themes and factors behind this performance were



Adverse weather in Brazil and the US supporting multiple commodities from coffee and sugar to soybeans and WTI Crude



Concerns that growth in the world's two biggest commodity consuming nations, US and China, are losing momentum



Risk adversity related to turmoil in emerging markets, not least Ukraine



Traders having to deal with the implications of the biggest weekly drop in China's Yuan on record



Several of these themes will continue to drive commodities into March but as the US winter steps aside to allow spring to take hold, some of the weather-related factors may ease. US and Chinese economic data continue to be important variables, together with worries over the wider implications of the situation in Ukraine



The agriculture sector rose by more than 10 percent, not least driven by a spectacular rally in Arabica coffee. Sugar had a double digit return as the extreme drought in Brazil threatened crop yields from the world's biggest producer and exporter of the two commodities.



In the US, the cold weather lifted the price of wheat after concerns that the winter crop could be damaged while brisk export demand for soybeans was driven by a delay to the Brazilian harvest



Precious metals continued their strong performance from January with many traders being forced to change their negative expectations, not least when resistance at the important technical 200-day moving average on both metals was broken. Falling bond yields on the back of disappointing US economic data and the first, albeit small, monthly rise in ETP holdings since December 2012 are lending support. The energy sector was mixed, with natural gas receiving much of the attention considering the extreme volatility witnessed during February. In the end, the price ended up almost unchanged on the month but not before jumping by more than one quarter and then collapsing the most it has ever done in one week since 1996.



WTI Crude received support from the unseasonable cold weather, which raised refinery demand above the seasonal norm. Improved pipeline infrastructure from the US Midwest to the Gulf of Mexico led to a 14 percent reduction in inventories at Cushing, the delivery hub for WTI Crude futures in New York, and this supported the relative outperformance over Brent with the spread narrowing by more than 2



Copper struggled and ended near the lowest in more than two months after concerns over China's slowing growth. The recent weakness of the Yuan may reduce demand for the metal, both from commercial buyers and those using the metal to obtain finance from sources other than regular banks from which lending has become much more difficult to obtain




The strong performances and multiple technical breakouts during February triggered a rush into commodities by hedge funds. Since the first week of January, bullish bets on 24 US traded commodities have risen by 59 percent.



The strong buying may eventually leave several commodities exposed to long liquidation on any signs of falling momentum or changing fundamentals, not least WTI Crude where the net-long is just a few thousand contracts short of the record from last summer.



As a percentage of total open interest, the position becomes even more extreme as we have reached levels not seen since recent periods of geopolitical risk, such as the Libyan war in 2011, Iran nuclear sanctions in 2012 and last summer's Syria chemical war crisis and Libyan supply disruptions



The yellow metal reached a four months high this past week before taking time off to consolidate after a second monthly gain. The metal has been supported this year firstly by strong physical demand out of Asia and then by the investment community, such as hedge funds who found themselves underweight the metal on the expectations that gold would fall even farther this year.



The recent move above the 200-day moving average, currently at 1,300/oz, triggered a one-third weekly rise in net-long futures position held by hedge funds. Although it is showing signs of slowing momentum, it remains positive and some further support could arise from the current crisis in Ukraine.



On the flip side, we have seen physical demand from China and Japan begin to slow following the recent rise above 1,300/oz and this confirms the continued price sensitivity when it comes to physical demand. The Chinese Yuan saw the biggest weekly drop on record this past week and that may also dent what, up until now, have been very strong Chinese gold imports.



The speculative community is happy to hold onto long positions at the moment, and it would probably require some renewed weakness below 1,300 to change that sentiment.



Crude oil prices on both sides of the Atlantic eased ahead of month end. The elevated demand for heating during the past couple of months should begin to ease as milder weather approaches and this should help ease the pressure on refineries which can now begin their seasonal period of maintenance.



This period normally sees lower demand for crude oil and as a result the upside potential seems limited to 110.5/barrel and 104.0/barrel on Brent and WTI crude as we move into March.



As mentioned earlier the speculative positioning in WTI Crude has reached levels only seen last September when the world was battling worries about the western air strikes against Syria and the sharp drop in supplies from Libya as strikes began.



On that basis the risk of a deeper correction has risen especially when the impact of the US winter begins to fade.


 


The Peninsula




  MENA News Headlines
 May 6 2016 - Kuwait pledges to invest USD106b over 2016-19MENAFN
(MENAFN) Unlike prior investment initiatives, Kuwait has been implementing a strategic Development Plan whose aim is to develop infrastructure across a number of divisions through the wide use of the ...

 May 6 2016 - Saudi wages jump by 4.5 percentMENAFN
(MENAFN) Saudi wages have grown by an average 4.5 percent through the previous year, while the forecasted rate was set at a bit higher 5 percent, based on recent reports.Regardless to the economic ...

 May 6 2016 - Omani new rail-network to surge exports considerablyMENAFN
(MENAFN) As the aspiring Omani national rail network currently under development connects prodigious mining sites with the Sultanate's maritime gateways, gypsum exports along other minerals will ...

 May 6 2016 - Air strikes on Syria displaced c killing 28 as Aleppo truce holdsThe Peninsula
(MENAFN - The Peninsula) Syrians carry a giant pre-Baath Syrian flag as they shout slogans during an anti-regime protest in the rebel-held Bustan al-Qasr district in eastern Aleppo on May 5 2016. The ...

 May 5 2016 - Qatar- Ronaldo hails Zidane as Real reach Chions League finalThe Peninsula
(MENAFN - The Peninsula) Real Madrid's Portuguese forward Cristiano Ronaldo controls the ball during the UEFA Champions League semi-final second leg football match Real Madrid CF vs Manchester City ...

 May 5 2016 - Qatar could host Summer Olympics says CoeThe Peninsula
(MENAFN - The Peninsula) President of the International Association of Athletics Federation (IAAF) Sebastian Coe (L) and Presdient of the Qatar Athletics Federation (QAF) Dahlan Al Hamad (R) speak ...

 May 5 2016 - Qatar Aquabike chionship to begin on FridayThe Peninsula
(MENAFN - The Peninsula) DOHA: The third round competitions of Qatar’s Local Aquabike Championship 2016 organized by the Qatar Sailing and Marine Sports Federation (QSMF) will get underway ...

 May 5 2016 - Gulf Air's FalconFlyer and Europcar in dealThe Peninsula
(MENAFN - The Peninsula) Gulf Air and Europcar officials signing the agreement. Manama: Gulf Air the Kingdom of Bahrain’s national carrier yesterday announced a partnership between the ...

 May 5 2016 - Visitors from Qatar to Dubai increase by 26 in Q1 2016The Peninsula
(MENAFN - The Peninsula) Doha: Dubai welcomed 4.1 million overnight visitors in the first three months of 2016 a 5.1% increase over the same period last year backed by strong double digit ...

 May 5 2016 - Joyalukkas wins Best Service Performance Brand awardThe Peninsula
(MENAFN - The Peninsula) Sheikh Mansoor bin Mohammed bin Rashid Al Maktoum honouring Joy Alukkas Chairman Joyalukkas at a function in Dubai. Dubai: The eponymous Joyalukkas Jewellery received ...

 May 5 2016 - Qatar- Real estate deals at QR580.6m in last week of AprilThe Peninsula
(MENAFN - The Peninsula) DOHA: The combined value of Qatar’s real estate transactions during the fourth week of April (from 24-28) amounted to QR580.6m showing over 57 percent growth compared ...

 May 5 2016 - Qatar- SP affirms QIB's long-term ratingThe Peninsula
(MENAFN - The Peninsula) DOHA: S&P Global Ratings has affirmed Qatar Islamic Bank’s (QIB) “A-/A-2” long and short term counterparty credit ratings. QIB’s rating reflects ...

 May 5 2016 - Qatar bourse and Goldman Sachs launch London roadshowThe Peninsula
(MENAFN - The Peninsula) DOHA: Qatar Exchange (QSE) in coordination with Goldman Sachs yesterday commenced in London a roadshow that aims to promote investment in the Qatari companies listed on QSE ...

 May 5 2016 - Vodafone Qatar unveils Connect Plans schemeThe Peninsula
(MENAFN - The Peninsula) Vodafone officials at the launch of the company’s ‘Connect Plans’ scheme at the Four Seasons Hotel in Doha yesterday. Pic: Baher A / The Peninsula ...

 May 5 2016 - Qatar for joint efforts to rejuvenate global economyThe Peninsula
(MENAFN - The Peninsula) Minister of Economy and Commerce H E Sheikh Ahmed bin Jassim bin Mohammed Al Thani with Chairman of the Presidential Council of the Republic of Bosnia and Herzegovina Bakir ...

 May 5 2016 - Philippines' leading airline Cebu Pacific boosts direct service to DohaThe Peninsula
(MENAFN - The Peninsula) DOHA: The Philippines’ leading airline Cebu Pacific (CEB) will add a frequency between Manila and Doha beginning July 9. The only Philippine carrier flying non-stop ...

 May 5 2016 - Qatar Today announces second edition of business excellence awardsThe Peninsula
(MENAFN - The Peninsula) DOHA: Qatar Today has announced the second edition of its Business Excellence Awards. The event being held under the auspices of Qatar Stock Exchange will identify ...

 May 5 2016 - Qatar Chamber participates in food security meetThe Peninsula
(MENAFN - The Peninsula) Sheikh Khalifa bin Jassem bin Mohammed Al Thani (left) Chairman Qatar Chamber at the Food Security Conference held in Fujairah. DOHA: Qatar Chamber (QC) participated ...

 May 5 2016 - KidzMondo set to open at Mall of QatarThe Peninsula
(MENAFN - The Peninsula) Ali Kazma (left) KidzMondo Founder and Nabil Barakat General Manager during a press conference and groundbreaking event of KidzMondo Doha at Hilton Hotel yesterday. Pic: ...

 May 5 2016 - Four wounded after rockets hit Turkey's KilisThe Journal Of Turkish Weekly
(MENAFN - The Journal Of Turkish Weekly) >Four people including a police officer were wounded after rockets fired from Islamic State of Iraq and the Levant (ISIL)-controlled territory hit the ...

more...


 






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country

Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Economic Calendar
Financial Glossary


Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2014 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help