The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.
1205 ET - Questions remain about the overall size of the U.S. corn crop and national yield, but funds aren't willing to hold on to their record net-long positions, Cory Bratland of AgMarket.net says in a note. "The feeling is they think the corn crop is still big enough to meet the U.S. demand, and the corn global stocks are still in good shape." Adding to that is a strong U.S. dollar and the slide in the Brazilian real that gives the U.S. a hard time competing on the global market, he adds. Corn is off 0.5% on CBOT. (anthony.harrup@wsj.com)
1020 ET - The depreciation of the Brazilian real following President Luiz Inacio Lula da Silva's surprise re-election victory is pushing soybean futures down as a weaker Brazilian currency makes the country's exports cheaper. Friday's Commitments of Traders report showed funds still very long on beans, "and the move lower in the Brazilian real following their election added fuel to the fire," Doug Bergman of RCM Alternatives says in a note. Soybeans are down 1.8% on CBOT. Corn is off 1% and wheat is 1.1% lower.(anthony.harrup@wsj.com)
0955 ET - The transition by Gulf states from oil and gas dependency to knowledge-based economies has not been fully successful, says Qatar Financial Centre Chief Economist Kamal Naji. During a panel at the World Investment Forum in Doha, he says that the region has seen some success in transitioning but no state can say that it has achieved all of its aims. "Whether or not we can totally wean ourselves off oil and gas is an open question," he adds. (joseph.wilkins@wsj.com)
0933 ET - Oil futures start the week cautiously lower with the market unsure whether the Middle East will see a renewed major conflict between the U.S. and Iran. "At its core, this is a binary outcome: war, or no war, and the market has not resolved which way it falls," Aaron Kildow of Sparta Commodities says in a note. He adds that while stronger flows through the Strait of Hormuz are helping keep a lid on regional differentials "we doubt that Asian buyers are putting cargos into storage, especially at these high price levels." WTI is down 1.2% at $101.99 a barrel and Brent is off 0.8% at $115.81 a barrel. (anthony.harrup@wsj.com)
0903 ET - U.S. natural gas futures start the week lower, extending losses ahead of this week's November contract expiration amid a milder outlook for weather-driven demand. "With the November contract about to expire the focus is firmly on December, which is now struggling to hold the $3 level," Gary Cunningham of Tradition Energy says in a note. Gas prices are in a range where their impact on electricity prices is negligible, so power prices are firm and even slightly higher in some regions, he adds. "Once the key fuel becomes this cheap, other factors take over and electricity markets hold their ground." Nymex natural gas for November is down 4% at $2.534/mmBtu.(anthony.harrup@wsj.com)
0718 ET - Coffee, soybean and sugar prices fall after President Luiz Inacio Lula da Silva's surprise election victory prompted a selloff in the Brazilian real. Brazil is the world's largest exporter of soybeans, sugar and coffee, analysts at Peak Trading Research note. "A weaker Brazilian real makes Brazilian exports more competitive globally and encourages farmer selling, as producers receive more local currency for their crops," they say. As a result, dollar-denominated contracts for major Brazilian commodities fall. Sugar futures slip 2% to 19.84 cents a pound, while coffee contracts drop 1.7% to trade just above $3 a pound. Soybean contracts drop 1.2% in Chicago to $12.41 a bushel.(josephmichael.stonor@wsj.com)
0615 ET - Palm oil prices ended lower, pressured by concerns over elevated Malaysian inventories and expectations for strong October production, while uncertainties surrounding export demand continue to weigh on market sentiment, says David Ng, a trader at Kuala Lumpur-based Iceberg X. Ng expects CPO futures to find support around 4,650 ringgit a ton and face resistance at 4,850 ringgit a ton, with traders closely monitoring soybean oil and crude oil prices for further direction, he adds. The Bursa Malaysia Derivatives contract for January delivery ended 25 ringgit lower at 4,793 ringgit a ton. (jiahui.huang@wsj.com; @ivy_jiahuihuang)
0415 ET - Gold futures tick higher in early European trading, supported by softer oil prices and as investors await the Federal Reserve's policy decision and remarks later this week. "A pullback in oil prices in early trade is helping to limit some inflation pass-through expectations though energy futures still remain elevated," says Soojin Kim, analyst at MUFG. "The next major catalyst for gold markets will be the FOMC decision this week and whether the Fed shifts its tone to more overtly hawkish." According to CME's FedWatch tool, traders broadly expect the U.S. central bank to leave interest rates unchanged this week, but they see a nearly 80% probability of a hike in December. New York gold futures are up 0.5% to $4,027.40 a troy ounce. (giulia.petroni@wsj.com)
0320 ET - Malaysia's consumer sector could face rising competition from Chinese merchants expanding overseas with low prices, potentially squeezing local retailers' margins, AmInvestment Bank analyst Heng Yii Paul says in a note. Consumers' growing focus on value is expected to favor essential goods and discount retailers, while discretionary businesses face greater pressure from price competition and rising costs, he reckons. However, government aid and steady demand should support defensive players. Heng prefers businesses with strong value propositions, resilient demand and limited exposure to competitive pressures, such as his sector's top picks 99 Speed Mart Retail, Nestle (Malaysia) and Eco-Shop Marketing. AmInvestment Bank maintains an overweight rating on Malaysia's consumer sector. (yingxian.wong@wsj.com)
0106 ET - Singapore-listed plantation stocks under OCBC's coverage could potentially face regulatory and reputational overhang, analyst Ada Lim says, referring to the forest fires in Indonesia. Regional agribusinesses could face higher funding costs and steeper sustainability risk premiums in the long term, Lim adds, as Singaporean and Indonesian authorities could expand investigations into possible illegal land clearing and slash-and-burn practices. However, weather-related risks are expected to temper palm oil production growth and yields heading into 2027, Lim writes in a note. Against this backdrop, palm oil prices will likely remain well-supported. OCBC maintains hold ratings for Bumitama Agri, Wilmar International and Golden Agri-Resources.(amanda.lee@wsj.com)
2302 ET - While BlueScope Steel highlights better-than-expected U.S. steel spreads in upgrading its 1H earnings estimate, it is a solid performance by the steelmaker's Australian business that has caught RBC Capital Markets' eye. "Of particular interest for us was the upgrade provided for the Australian assets, which have faced a deterioration in East Asian spreads over the recent weeks," says the broker. BlueScope spoke of "resilient domestic demand and stronger demand for 'value-added' products for which we had taken a more conservative view in our estimates," it says. RBC reiterates an outperform rating on BlueScope. It has a price target of 38.00 Australian dollars a share. The stock is up 3.4% at A$33.46. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
2253 ET - Iron ore prices are lower in early Asian trade amid steel mills' poor profitability. China's steel mills have a strong inclination to control production volume and purchase on an as-needed basis, say Tongguan Jinyuan Futures analysts in a research note. The blast furnace operating rate across 247 Chinese steel mills last week stood at 80%, down 4.3% from the same period last year, they note. With overseas iron ore arrivals at Chinese ports remaining elevated, supply-side pressure persists, they add. The most actively traded January iron ore contract on the Dalian Commodity Exchange is down 0.4% at 668.5 yuan a ton.
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