The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.
1212 ET - OPEC+ is expected to agree to raise output by an additional 188,000 barrels a day at its meeting Sunday, completing the unwinding of 1.65 million b/d in voluntary cuts made in 2023. While it may look like a big shift on paper, "right now we're living in a physical market where quotas and actual barrels that make it to market are two very different things," says Baron Lamarre, co-founder of Index Litro and former head of trading at Petronas. Some members are already producing below quota, and the group maintains the flexibility to pause, roll it back, or even deepen cuts again, he adds. "So this is more of a signal that they see the market as manageable for now--not some big, game-changing flood of supply." (anthony.harrup@wsj.com)
1154 ET - Taco Bell sales look like they'll maintain their momentum as the chain puts its food safety issues behind it, UBS analysts say in a research note. Yum Brands just reported a 7% jump in same-store sales for 2Q at its taco-slinging subsidiary, reflecting solid product innovation, compelling value offerings, strong operational execution and gains in its digital channel and loyalty program, the analysts say. The near-term impact of cyclospora-related illnesses linked to lettuce it served was meaningful, hitting the July 18 weekend the hardest, they say. But trends have steadily improved, with a roughly 50% recovery in average sales from the worst levels, showing the pressure is transitory, the analysts say. (dean.seal@wsj.com)
1107 ET - Rainfall is moving through the Midwest, crossing into the eastern side of the Corn Belt, according to the latest daily forecast from the USDA. Temperatures are hot on the Plains, but the precipitation is staving off heat stress on crops. This combined with an end-of-month technical correction is pressuring the grains complex. "In a bull market, we need to feed the bull fresh new news every day, or we take the risk of a correction," says Cory Bratland of AgMarket.net in a note. "We still have a lot of volatility ahead in my mind." CBOT corn is down 0.6%, and wheat falls 3.7%. Soybeans are slightly higher, up 0.2%. (kirk.maltais@wsj.com)
1056 ET - CBOT wheat is leading the grain complex lower, with the most-active contract shedding 3.4%. This is seen as end-of-month profit taking, says Matt Zeller of StoneX in a note, coming after wheat posted big gains in reaction to the ongoing escalation in the Russia-Ukraine conflict. Shipping on the Kerch Strait is tangled up and wheat shipments aren't making it out of the Sea of Azov. Corn is down 0.5%, while soybeans are up 0.3%. (kirk.maltais@wsj.com)
1030 ET - The USDA's Animal and Plant Health Inspection Service website says a new case of New World screwworm was confirmed in cattle on Wednesday in Brewster County, Texas. The USDA recently announced plans to gradually reopen the U.S.-Mexico border for Mexican feeder cattle. Cattle futures have been rebounding from what's seen as a "technically oversold" condition, says Naomi Blohm of Total Farm Marketing in a note. The most-active cattle contract is virtually unchanged, while lean hogs are up 0.3%. (kirk.maltais@wsj.com)
1017 ET - U.S. natural gas futures are returning gains that followed a below-estimate weekly storage injection, while weather-driven demand from the power sector is seen strong over the coming week. "Cooling demand may build into the end of next week--but as shown by yesterday's lackluster response to a bullish EIA surprise, higher gas prices are more likely in the medium term," Eli Rubin of EBW Analytics says in a note. The premium in January 2027 over October 2026 prices gives marketers an incentive to fill regional storage, he says. "This demand for injection could support pricing into the fall--particularly if producers eyeing the same contango shape production to better capture higher realized pricing." Nymex gas for September delivery is off 1.1% at $2.729/mmBtu. (anthony.harrup@wsj.com)
1003 ET - The USDA announces a new flash sale of soybean exports, with 252,000 metric tons sold for delivery to unknown destinations in the 2026/27 marketing year. It follows a notice yesterday of fresh sales to China. "Unknown destinations" is an alternative moniker that is often used by Chinese buyers, although it's not necessarily used only by Chinese sales. CBOT soybean futures are flat, while corn drops 0.8% and wheat is down 3.3%. (kirk.maltais@wsj.com)
0951 ET - Oil futures turn higher in early U.S. trading and are on track for hefty gains for July, which saw the U.S.-Iran Memorandum of Understanding fall apart and Iran resume attacks on shipping in the Strait of Hormuz. "All things held equal, the market should go a lot higher and led by diesel and gasoline as refinery run rates arejust too low on a lack of crude," Scott Shelton of TP ICAP says in a note. "The reality is that we areback to a very small amount of crudeversus what is needed." WTI is up 2.2% at $85.42 a barrel. September Brent is 1.5% higher at $90.36 ahead of today's expiry, while the October contract gains 1.8% to $88.47.(anthony.harrup@wsj.com)
0854 ET - Treasury yields edge higher, alongside the dollar, as Middle East tensions linger while central banks struggle to curb inflation. WTI crude rises 2%, after falling yesterday. The Bank of Japan holds rates, as expected, while indicating a hike may be upcoming. U.S. employment costs rise 0.9% in 2Q, beating WSJ consensus of 0.8%. The July University of Michigan Consumer Sentiment Index is forecast to increase. The WSJ Dollar Index rises 0.3% as the greenback strengthens 0.5% against the yen. The 10-year yield is at 4.696%, up from yesterday's settle of 4.662%. The two-year rises to 4.283% from 4.227%. (paulo.trevisani@wsj.com; @ptrevisani)
0835 ET - The current heatwave in Europe is increasing risks of inflation, Felix Schmidt at Berenberg says in a note. "Very low water levels in German rivers are causing supply-chain problems, and the ongoing drought could lead to lower harvests and thus cause food prices to rise," he says. Eurozone inflation increased in July, driven by higher energy prices, and is unlikely to alter the European Central Bank's policy outlook. "The ECB will focus on whether energy prices ease in coming weeks before its September meeting, with August inflation data likely to be more important," Schmidt says. (don.forbes@wsj.com)
0607 ET - Palm oil ended lower, tracking softer soybean oil prices on the Chicago Board of Trade, says David Ng, a trader at Kuala Lumpur-based Iceberg X. Prices were also weighed by concerns of output rising in the coming weeks and expectations of increasing stock levels in Malaysia, he adds. Ng sees prices of crude palm oil supported above 4,600 ringgit a ton and pegs resistance at 4,780 ringgit a ton. The Bursa Malaysia Derivatives contract for October delivery dropped 41 ringgit to 4,642 ringgit a ton. (amanda.lee@wsj.com)
0336 ET - Gold prices slip on Friday, but are headed for their first monthly gain in five months as investors closely monitor developments in the Middle East. "Precious metals recovered as the dollar weakened after the softer GDP print, but the move was not fully convincing given the lack of a clear decline in Treasury yields," analysts at Sucden Financial say. Meanwhile, the Federal Reserve left interest rates unchanged at its July meeting, with Chairman Kevin Warsh offering little clarity on the central bank's next policy move. Markets are now pricing in a 63% chance of a rate hike in September, according to CME's FedWatch tool. New York gold futures fall 0.7% to $4,132.50 a troy ounce in early European trading, but are up 1.5% on the week.
Comments