The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.
1539 ET - Oil futures end July with hefty gains as the month saw renewed Iranian attacks on shipping in a dispute with the U.S. over control of the Strait of Hormuz. Concerns that a return to negotiations could quickly reduce risk premium and lead to oversupply have kept prices from reaching the lofty levels seen in March and April. "Traders are essentially betting on two very different geopolitical outcomes, and neither one is a safe assumption right now," says Baron Lamarre, co-founder of Index Litro and former head of trading at Petronas. "My base view is we won't end up with either a massive glut or a full-blown supply crisis by the end of the year," he adds. "Instead, we're in for a period of stubbornly tight, volatile conditions that will stick around longer than the optimists are hoping." WTI settles up 1.3% at $84.67 a barrelfor a 22% monthly gain. Brent for September delivery goes off the board at $90.12 a barrel, up 1.2% on the day and up 24% from the end of June.(anthony.harrup@wsj.com)
1532 ET - U.S. natural gas futures inch down in rangebound trade, with the Nymex front month settling down 0.4% at $2.747/mmBtu for a 16% monthly loss. Demand firmed with power-sector use near 49.5 Bcf/d and exports to Mexico rising to 8.4 Bcf/d,while LNG held steady around 18.1 Bcf/d, Gelber & Associates says in a note. "That pickup in demand is running into a supply side that's still comfortably ahead of it, though," the firm adds. (anthony.harrup@wsj.com)
1505 ET - Lean hog futures finished the last day of the month up 1.6% to 84.7 cents a pound, cutting off a two-day losing streak. Poor performance in product prices, such as wholesale cutout prices, have been under pressure, says StoneX in a note. That's why futures have been down, although they spent most of July trending higher. "At the root, we believe, has been disappointing product markets this week and a realization from the marketplace that our seasonal cutout rally very well has already run its course," says StoneX. Live cattle futures settle down 0.2% to $2.27/lb today. (kirk.maltais@wsj.com)
1438 ET - Gold futures managed to finish July on a positive note, although today's slide left gold closer to flat for the month. Front-month gold futures climbed 0.7% in July to $4,049.10 a troy ounce, after closing down 1.2% on the day. The July gain broke a 4-month losing streak. In 2Q, the World Gold Council says gold ETFs showed 45 metric tons of outflows. Silver lost 3.2% in July to $57.591/oz. Silver fell 2.1% on the day. (kirk.maltais@wsj.com)
1416 ET - President Trump is aiming to shore up the security of America's scrap metal industry. In a memorandum for the Secretary of Commerce published by the White House on Thursday, Trump directed Commerce to implement measures "including by issuing regulations, rules, guidance, and procedures," to secure the supply of recoverable critical minerals and materials [CMM] including scrap metal containing CMM. The White House says the actions are covered under the Defense Production Act of 1950, as Amended, on Recoverable Critical Minerals and Materials. The American scrap market is one of the more viable segments of industrial metals in the U.S., with the recycling of aluminum often used for feedstock for new metal. LME 3-month aluminum prices are down 2% today, to $3,190 per metric ton. (kirk.maltais@wsj.com)
1333 ET - The number of rigs drilling for oil in the U.S. rose by one this week to 451 and was up by 41 from a year ago, oil services company Baker Hughes reports. Higher crude oil prices stemming from the conflict in the Middle East have prompted this year's increase in drilling. In Canada, which tends to see greater week-to-week swings, oil rigs rose by 12 this week to 150 and were up 26 from a year ago. Rigs drilling for natural gas were unchanged at 127 in the U.S. and up by one in Canada at 63. (anthony.harrup@wsj.com)
1315 ET - CBOT wheat is down 4%, even with Ukraine and Russia continuing to clash. It may represent a shift in how traders assess the risk affecting grains in the Black Sea, says Jim Wiesemeyer of Ag Bull in a note. "The selloff is not a verdict that the bullish story is wrong," says Wiesemeyer. "It is a verdict that traders have stopped paying for it in advance." He adds that the pullback seen in wheat is demonstrating that the war-related risk premium that was added to wheat futures was overdone. "Traders have decided a war/geopolitical premium of about 20 to 25 cents is enough--until reduced shipments out of Russia, not just more headlines, prove them wrong," says Wiesemeyer. (kirk.maltais@wsj.com)
1231 ET - Soybean futures are now down 0.1% for the day, but appears to be getting dragged down by the stronger pressure of corn and wheat versus its own fundamentals. Underlying soybeans appear to be resisting the downward pressure more than soymeal or soyoil. "It feels like the end of month liquidation is over," says Charlie Sernatinger of Marex in a midday note. Meanwhile, wheat is completely gripped by end-of-month liquidation. "We are cleaning out the longs for the end of the month, leaving the market 'clean' to start August," says Sernatinger. Wheat is down 4.3%, and corn drops 1.2%. (kirk.maltais@wsj.com)
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%.
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