Oil falls to lowest level since conflict in Ukraine
Oil prices fell to their lowest levels since before the Russia-Ukraine conflict, as traders fear a recession later this year could dent energy demand.
Ending the session on August 4, Brent fell $2.66, or 2.75%, to $94.12 per barrel, the lowest closing level since February 18. WTI crude fell $2.34, or 2.12%, to $88.54 a barrel, its lowest close since Feb. 2.
Falling oil prices provide relief to heavy consuming countries such as the US and countries in Europe, which are calling on producers to increase output to make up for scarce supplies and combat raging inflation.
The selling on August 4 followed an unexpected increase in US crude inventories last week. Gasoline stocks also unexpectedly increased as demand slowed by the impact of gasoline prices near $5 a gallon.
The demand outlook remains clouded by growing worries about an economic slowdown in the US and Europe, debt problems in emerging market economies and a strict zero Covid-19 policy in China. China is the largest oil importer in the world.
The Bank of England raised interest rates on August 4 and warned of the risk of recession.
Sources familiar with the matter said that Saudi Arabia and the UAE are also ready to provide a significant increase in oil production if the world faces a serious supply crisis this winter.
Gold hits new one-month high
Gold prices rose more than 1% to fresh one-month highs, as the dollar and US Treasury yields retreated, and investors closely watched US-China tensions.
Spot gold rose 1.6 percent to $1,792.19 an ounce, before hitting its highest since July 5. US gold for December delivery closed up 1.7 percent at $1,806.9 an ounce.
Investors are now eyeing the US nonfarm payrolls report due out on Friday.
Recovery uniform
Copper and industrial metals prices recovered as the USD weakened, forcing speculators to scramble to buy back.
Three-month copper on the London Metal Exchange rose 0.7 percent to $7,729 a tonne before trading in the red after three consecutive losses.
Buying is largely based on technical levels as the short-term trend in copper has turned bullish.
A weak dollar makes goods denominated in this currency cheaper for buyers using other currencies and often boosts commodity markets.
The LME has lost nearly 30% of its value since hitting a record high of $10,845 a tonne in March, but has recovered from a 20-month low hit on July 15.
However, the price increase is only temporary in a large downtrending market. The main drivers of industrial metals remain bearish, including a decline in the world’s top metal consumer, China.
Zinc was the metal with the strongest gain of 5.5% to $3,457/ton, the highest since June 24, due to worries about supply as smelters limited operations amid rising electricity prices and due to commodity shortages. reserves decrease.
Iron ore drops to one-week low
Iron ore prices in Dalian and Singapore fell to one-week lows on worries about an unsustainable recovery in demand in China and a potential increase in supply.
On the Dalian Commodity Exchange, China’s January 23rd iron ore futures closed down 5.2 percent at 688.5 yuan ($101.96) a tonne after hitting its lowest level since May 28. 7 at 688 CNY.
The September iron ore contract in Singapore fell 2.5% to $107.2 a tonne, down for the fifth consecutive session.
Analysts say China’s real estate sector is struggling, Covid-19 restrictions, carbon emissions targets leading to steel production cuts, and US-China tensions The increase in Taiwan all put pressure on sentiment.
Bar steel in Shanghai fell 2.9%, hot rolled coil decreased 2.4%. Stainless steel rose 0.4%.
As iron ore demand is expected to decline in the coming months amid steady exports from key suppliers Australia and Brazil, iron ore inventories in China could continue to grow.
Imported iron ore stored at Chinese ports has increased steadily over the past five weeks, reaching a 10-week high of 135.5 million tonnes as of July 29, according to data from consulting firm SteelHome.
Japanese rubber fell
Japanese rubber prices fell in line with the trend in the Shanghai market, as renewed concerns about slowing demand in China after the announcement of new blockade measures affected sentiment.
Rubber contract for January 2023 on the Osaka exchange closed down 2 JPY to 227.6 JPY (1.7 USD)/kg.
Rubber prices in Shanghai for September delivery fell by 95 CNY to close at 11,960 CNY (US$1,771)/ton.
There have been concerns over the past few weeks about slowing rubber demand in China as the lockdown is extended due to Covid-19. Foreign investors further cut their holdings of Chinese bonds in July and dumped stocks for the first time in four months, the Institute of International Finance reported.
Arabica coffee continues to increase
September arabica coffee futures closed up 2.2% to $2,1930/lb.
Stocks of ICE certified coffee continued to decline steadily, to 695,135 60 kg bags, the lowest level in more than 20 years.
Dealers have also seen a sharp drop in output from clean arabica producers such as Honduras and Colombia.
Rabobank warned that if the weather situation in Brazil is good in mid-August, Arabica coffee will face some pressure.
Robusta coffee for November futures rose 0.9 percent to $2,041 per ton.
In Vietnam, coffee prices are near a 4-year high this week due to a stronger USD and no stock at the end of the season.
Farmers in the Central Highlands sold coffee at 44,500 – 46,000 VND (1.9 – 1.97 USD)/kg, the highest level since the beginning of the crop year and since the end of August 2017.
Traders offer grade 2 robusta with 5% black and broken beans at a discount of $20-40/ton compared to November futures.
According to a Reuters poll, Vietnam will harvest 30 million bags (60 kg/bag) in crop year 2022/23, down slightly from the previous crop.
Coffee exports from Vietnam are estimated to increase by 18.4% in the first seven months of this year year-on-year to 1.1 million tonnes, or 19 million bags.
Meanwhile, in Indonesia, exports of Sumatra robusta coffee in June increased 45.98% year on year to 16,551.68 tons.
Sumatra coffee is offered at a discount in the range of 50-60 USD compared to the August and September contracts.
Opposite road
Raw sugar for October delivery closed down 1.2% at 17.55 US cents/lb, falling back towards a one-year low hit on Aug.
Dealers said the drop in crude oil prices had put downward pressure on sugar prices.
Low energy prices will lead to less cane being used to produce ethanol biofuel, increasing the supply of cane for sugar production.
Tereos, France’s largest sugar organization, said it expected France’s sugar beet production this year to exceed the five-year average despite little rain.
October white sugar futures rose 0.1% to $528/ton.
India’s export rice prices rise
India’s export rice prices rose this week as low rainfall in key growing areas raised concerns about supply.
India’s 5% broken parboiled rice sold at $364 to $370 a tonne, up from $362 to $368 last week, also due to clues from the rupee’s appreciation.
Indian farmers planted 23.16 million hectares of rice this season, down 13.2% year-on-year due to low rainfall.
Meanwhile, output from Bangladesh could fall 1% to 35.6 million tons in the year to April compared with the same period last year, according to the latest US Department of Agriculture report.
The shortfall could hamper the country’s efforts to rein in soaring domestic prices, a recent scheme to allow merchants to import specialty rice from India, but has failed to attract many. due to the devaluation of the local currency against the USD.
Thailand’s 5% broken rice price increased to $412-425/ton from $400/ton last week as FOB prices increased amid increased demand. New supply is expected to arrive next week.
In Vietnam, the price of 5% broken rice was sold at $395-400/ton compared to $395-413/ton a week ago.
Corn, soybean, wheat increase
U.S. soybeans and wheat rose as traders considered hot and dry weather forecasts for August, an important month of growth for the crop. Corn increases with soybeans and wheat
November CBOT soybean contract closed up 49-1/4 US cents to 14.19 USD/bushel.
December CBOT corn futures rose 9-3/4 US cents to $6.06/bushel.
CBOT red soft winter wheat for September delivery closed up 18 US cents to 7.81-3/4 USD/Bushel.
Prices of some key items in the morning of August 5
