The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.
0627 ET - Oil prices rise in afternoon trading, with WTI futures now above $101 a barrel, driven by Houthi attacks on Saudi Arabia and fears of further escalation between the U.S. and Iran before the midterm elections. The U.S. oil gauge is up 1.6% to $101.04 a barrel, while Brent crude rises 1% to $114.28 a barrel. "Market sentiment remains nervous," analysts at Commerzbank say. According to data from Kpler, oil flows through the Strait of Hormuz remain 26% below prewar levels, with the seven-day average at 12.65 million barrels per day versus a baseline of 17.15 million, as attacks on shipping keep the risk premium for freight and crude elevated. Still, Middle Eastern oil supplies--excluding Iran--that are reaching global markets are above prewar levels. (giuliapetroni@wsj.com)
0615 ET - Palm oil futures ended higher, supported by stronger export demand and firm energy prices, says David Ng, a trader at Kuala Lumpur-based Iceberg X. However, elevated Malaysian inventories continued to limit gains, he adds. Looking ahead to next week, Ng expects cautious, range-bound trading as traders monitor fresh export estimates, production prospects and movements in soybean oil and crude oil prices. Ng expects CPO futures to find support around 4,600 ringgit a ton and face resistance at 4,800 ringgit a ton. The Bursa Malaysia Derivatives contract for January delivery ended 25 ringgit higher at 4,817 ringgit a ton. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
0329 ET - Gold is headed for a weekly loss of more than 3.5% as elevated energy prices fueled concerns over inflation and interest-rate hikes. In early European trading, New York futures fall 0.8% to $4,026 a troy ounce. "A rising inflation backdrop along with selling pressure to cover losses in equity or bond market positions is a negative combination for gold in the short-term even as the Fed is looking assured to keep rates unchanged at next week's FOMC meeting," says Soojin Kim from MUFG. Bullion is seen as a hedge against inflation, though a higher interest-rate environment tends to diminish the nonyielding asset's appeal. According to the FedWatch tool, traders broadly expect the U.S. central bank to leave interest rates unchanged next week, but they see a nearly 80% probability of a hike in December. (giulia.petroni@wsj.com)
0150 ET - Nestle's real internal growth, a key measure of volume of products sold, got a lift from its food results, Warren Ackerman at Barclays says in a note. The Swiss consumer goods company's management didn't quantify the impact of its exceptional food and snacks performance over the quarter, he adds. Real internal growth could still have been a beat excluding food & snacks performance, but maybe only slightly above 2% rather than the reported 2.8%, Ackerman adds. (aimee.look@wsj.com)
0138 ET - A sustained gold rebound likely requires an unwinding of Fed tightening expectations and improved risk sentiment, says Pepperstone's Dilin Wu. The precious metal hasn't performed as one might expect amid risk-off sentiment. Rather than spurring safe-haven flows into gold, Wu thinks the selloff in U.S. equities may have prompted some investors to liquidate gold positions to cover losses or meet margin calls elsewhere. Gold also hasn't benefited from haven flows into U.S. Treasurys driving yields lower, suggesting that liquidity pressures and position unwinding may be outweighing the tailwind. A decisive break below $4,000/oz could trigger further long liquidation. To signal recovery, gold needs to reclaim $4,100-$4,110 an ounce, Wu says. Gold traded last at $4,012 an ounce after briefly falling to $3,986 an ounce. (fabiana.negrinochoa@wsj.com)
2334 ET - Aluminum falls in Asian trading amid expectations for weaker demand. A selloff across AI-related stocks has sapped risk appetite of the base metals sector, ANZ Research analysts say in commentary. This also "triggered concerns that spending on infrastructure such as power lines and data centers would impact demand for key metals such as copper and aluminum," ANZ says. The three-month LME aluminum contract is 0.25% lower at $3,003.50 a ton. (tracy.qu@wsj.com)
2245 ET - Palm oil rises in Asian trading, with firm market sentiment and expectations of improving export demand, says David Ng, a trader at Kuala Lumpur-based Iceberg X. However, elevated Malaysian inventories and robust October production continued to cap price gains, he says. Ng expects CPO prices to remain range-bound in near term, pegging resistance at 4,800 ringgit a ton and support at 4,600 ringgit a ton. The Bursa Malaysia Derivatives contract for January delivery is up 5 ringgit at 4,797 ringgit a ton. (yingxian.wong@wsj.com)
2234 ET - Iron ore prices rose in early Asian trade. Analysts remain concerned over steel demand, says Baocheng Futures analysts in a note. The outlook for Chinese steel production may also limit gains, they add. Iron ore prices are likely to trade with a firmer bias in the near term, while remaining sensitive to shifts in demand expectations and broader market sentiment, they say. The most actively traded January iron ore contract on the Dalian Commodity Exchange is 0.15% higher at CNY672.0 a ton. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
1950 ET - Gold holds steady in Asian trade. Selling pressure on the yellow metal has eased, but buying interest remains insufficient to establish a new direction, XS.com's Linh Tran says in a note. "The market is finding a balance between demand for gold accumulation and pressure from high interest rates," the market analyst adds. A higher interest-rate environment typically weighs on nonyielding assets like gold. She expects continued consolidation in gold prices in the near term, with the Fed's October meeting and a U.S. inflation report likely to test this view. Spot gold is flat at $4,025.56 an ounce.(megan.cheah@wsj.com)
1922 ET - Whitehaven Coal's share price falls 2.1% to A$7.49 early, underperforming Australia's benchmark S&P/ASX 200 index, as investors focus more on port disruptions than a strong quarter operationally. Whitehaven reported 1Q equity sales of 6.0 million tons of coal. That missed Ord Minnett's expectations by 8% and reflected port disruptions in Queensland and New South Wales. "These temporary port disruptions at third-party infrastructure are outside management's control, but we would expect these to resolve over coming quarters," Ord Minnett says. Whitehaven's inventory built by 1.0 million tons in 1Q. Management expects this to unwind in 2Q, improving cash flow. "Overall, this is a strong quarter operationally, though we expect the temporary logistics impacts and increase in net debt to weigh on sentiment today," Ord Minnett says. (david.winning@wsj.com; @dwinningWSJ)
Fortescue's unresolved talks with China's central iron-ore buying agency keeps Jefferies at neutral. "Cost headwinds, and the obvious downside risk to sales volumes and pricing for the year prevent us from turning more constructive despite the recent share price underperformance and net present value support," says analyst Mitch Ryan. Fortescue appears ready to reduce volumes in the short term to defend its long-term margins. The implication is the CMRG talks don't reflect a fair and proper market. "Time will tell who gives the most," Jefferies says. With most of the inventory build occurring in China at port, stockpiles can be run down relatively quickly if the dispute is resolved. Still, Jefferies lowers realizations to 80% for the remainder of the year to account for such a discount. (david.winning@wsj.com; @dwinningWSJ)
Coronado Global Resources mixed the good with the bad in its latest quarter. Coronado's Curragh mine in Australia achieved its strongest quarter for run-of-mine coal production since 2020, says Jefferies. That lifted 3Q Ebitda to US$44 million. However, Coronado cut its annual production target and raised estimates for mining costs on setbacks at its U.S. and Australian mines. It cited "recent Buchanan geology issues, slower than expected Mammoth ramp-up and CHPP throughput, as well as unfavorable FX and diesel cost year-to-date." Analyst Daniel Roden says Coronado needs to demonstrate better processing and underground execution. Jefferies stays at hold.
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