The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.
The disconnect between oil market fundamentals and prices is reducing oil's appeal as an investment asset class, says David Russell, global head of market strategy at TradeStation. The closure of the Strait of Hormuz came when the market was oversupplied, "so in some ways you had one of the most bearish and one of the most bullish things happening at the same time," he says. Before oil was understood as one market, now traders have to consider the different moving parts, such as where tankers are going, which refineries are offline. "These are conversations we never had even a year ago." Unexpected and aggressive government interventions destroy the speculative desire to go long oil or even short oil, Russell adds. "And why get speculative bullish about oil when you can get speculative bullish about AI stuff?" (anthony.harrup@wsj.com)
1026 ET - Live cattle futures are lower following Thursday's announcement from Tyson Foods of a closure of a beef plant, as well as selling another. Tyson pulling back from the beef business amid a stubbornly-small cattle herd appears to be injecting more pessimism into the outlook for cattle prices. "The bears have the clear edge and the market appears to be on track to retest last month's lows on technical weakness and lower cash trade," says the Hightower Report in a note. Most-active live cattle on the CME is down 0.8%, while lean hog futures are off 0.6%. (kirk.maltais@wsj.com)
1021 ET - Next week's Midwest Crop Tour by Pro Farmer will see crop scouts surveying corn and soybean fields across seven states to see how crops have handled a hot July and a considerably wetter August. Analysts will be looking for the commentary from the tour, especially when it comes to observations about corn. "If the Pro Farmer crop tour next week finds significant issues in the western belt, buyers may quickly return on the assumption ending stocks could fall even further next month," says the Hightower Report in a note. CBOT corn is up 1.5%, while soybeans rise 0.6% and wheat is up 2.7%. (kirk.maltais@wsj.com)
1012 ET - CBOT wheat futures are up 2.7%, with fighting in the Black Sea the driving factor behind fears of constricted world supply. "As long as the mutual attacks continue, wheat prices are likely to keep rising," says Commerzbank in a note. "This is because Russia and Ukraine together account for more than a quarter of global wheat exports." Attacks this week have hit major grain ports, while the USDA revised its outlook for U.S. wheat production down in its WASDE report. Corn up 1.5% and soybeans rise 0.6%. (kirk.maltais@wsj.com)
0955 ET - The USDA confirms another flash sale of U.S. soybeans to China, with 136,000 metric tons sold for delivery in the 2026/27 marketing year. That's the fourth straight day the government reported a new flash sale of soybeans to China--the seventh day since the start of the month. The influx of export demand is supportive for futures, although farmers are still seen having sizable crops growing in their fields. "The rains that we've seen over the past couple weeks will likely push national yield ideas higher, which is the main bearish input for beans right now," says Doug Bergman of RCM Alternatives in a note. (kirk.maltais@wsj.com)
0948 ET - U.S. natural gas futures advance in early trading with recovering LNG demand and hot weather keeping some support under the market after yesterday's slightly bearish storage report. "To the extent the solar power boom was a key driver of early-to-mid summer power burn weakness, narrowing daylight hours may detract from non-thermal generation," Eli Rubin of EBW Analytics says in a note. "While the combination of these factors is not an outright bullish signal, it does suggest that the natural gas market may find more support in late August and early September." Nymex natural gas is up 1.3% at $2.762/mmBtu. (anthony.harrup@wsj.com)
0944 ET - Oil futures are hovering around yesterday's levels as the market sees little movement toward settling the dispute over control of the Strait of Hormuz. News that more oil is making it through the strait, while still only a fraction of normal, is keeping oil in choppy trade, Dennis Kissler of BOK Financial says in a note. The estimates of higher crude flows and the EIA's report of a 17.4 million barrel weekly build in U.S. crude stocks "is keeping the long side of the trade nervous," he says. Tight global diesel supply remains the most bullish aspect of the market, he adds. "Even though more crude oil has moved, refined products not so much." WTI is up 0.1% at $81.31 a barrel and Brent is off 0.2% at $86.91. (anthony.harrup@wsj.com)
0844 ET - Antofagasta shares have limited room to rise after a recent rerating, UBS analyst Daniel Major writes. The copper miner's shares have outperformed peers after investors rewarded its copper growth story, he says. Antofagasta is likely to meet its 30% volume growth target over the next three years but its near-term outlook is mixed, he says. It has limited growth momentum over the next year and a mixed near-term operational performance, he adds. There are better opportunities buying Anglo American, Teck Resources and Freeport-McMoRan, he adds. Antofagasta shares fall 4.2% to 3,590 pence. (adam.whittaker@wsj.com)
0612 ET - Palm oil fell during Asian trading, tracking weakness in rival vegetable oils ahead of the weekend, Kenanga Futures says in a note. Strong export demand from India ahead of the festive season may be limiting losses, it adds. The Bursa Malaysia Derivatives contract for October delivery falls 13 ringgit to 4,711 ringgit a ton. (kimberley.kao@wsj.com)
0405 ET - Risks to Zambia's copper mining industry are easing after Thursday's peaceful presidential vote in Africa's second-largest producer of the industrial metal, says Zaynab Hoosen, head of Africa Risk Forecasting at Pangea-Risk. Investors have committed as much as $10 billion to Zambia's copper mining industry since President Hakainde Hichilema came to office five years ago, although pressure is mounting on the government to ensure that the mining boom delivers economic benefits amid surging global copper demand. "Zambia's election comes at a critical point as global powers compete for a foothold in Africa's critical mineral supply chains," Hoosen says in a note. "President Hakainde Hichilema entered the vote as the favorite for a second term."(Nicholas.Bariyo@wsj.com;@Nicholasbariyo)
0350 ET - London's miners fall as gold trades lower and heads for a small weekly loss. New York gold futures fall 0.8% to $4,385.90 a troy ounce after a rally this week, with the dip suggesting there has been some profit-taking, MUFG's Soojin Kim writes. Copper miner Antofagasta continues to slide, having fallen nearly 7% Thursday on a copper guidance cut. It trades down 4.2%. Glencore falls 2.5% while precious metal miners Hochschild Mining, Fresnillo and Endeavour all fall over 2%. (adam.whittaker@wsj.com)
0328 ET - Gold prices are headed for a modest weekly loss as investors took profits after this week's rally. In early European trading, New York gold futures fall 0.8% to $4,385.90 a troy ounce. Prices surged above the $4,400 mark this week as softer inflation data reduce expectations of a rate-hike by the Federal Reserve in September. "The broader uptrend remains intact, but both markets have now failed to hold recent highs, suggesting some profit-taking after the sharp rally," analysts at Sucden Financial say. According to the CME's FedWatch tool, traders are now pricing in only a 32% chance of a rate hike next month. A lower interest-rate environment tends to support gold by reducing the opportunity cost of holding the nonyielding asset.
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