Global Sunflower oil Market Research Report 2017-2022

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2017 Global and regional Sunflower oil market, providing information on major players like manufacturers, suppliers, distributors, traders, customers, investors and etc., major types, major applications from Global and major regions such as Europe, North American, South American, Asia (Excluding China), China and etc. Data type include capacity, production, market share, price, revenue, cost, gross, gross margin, growth rate, consumption, import, export and etc. Industry chain, manufacturing process, cost structure, marketing channel are also analyzed in this report.

This report provides valuable information for companies like manufacturers, suppliers, distributors, traders, customers, investors and individuals who have interests in this industry.

Read more on People Today 24

Confused by commodities? How to allocate to a market in flux

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Investors are rethinking their commodity allocations after the asset class recorded both the best, and worst performance in the first quarter of 2017.

Money has been pulled from the sector owing to slower growth in China, an unstable oil price and president Trump’s failure to deliver on pre-election inflationary rhetoric.

However ETFs tracking commodity indices saw estimated inflows of $997 (£78.5) 8million for the week ending June 7 compared to estimated outflows of $458 million in the previous week, according to the Investment Company Institute in the US.

Read more on City Wire

Is Now The Time To Invest In Commodities?

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The Forgotten Asset Class?

Commodities as an asset class are frequently overlooked by investors. Many investors and financial professionals view commodities as too speculative or too volatile, and they’re right. Investing in commodities is not for the faint of heart. But as a means of diversification within a long-term investment portfolio, commodities should certainly be considered.

To balance the risks and potential rewards of commodities, the rule to keep in mind is that commodities should only ever be between 5-10% of an investor’s overall portfolio. Any more than that, and your portfolio may be too speculatively weighted or volatile. Any less than that and you’re missing an opportunity to further diversify your portfolio and potentially augment returns.

What Makes Commodities Move?

Commodities are generally considered cyclical in nature, with commodity demand and prices generally rising when economic growth is good, and vice versa when the economic outlook turns soft. Sure, there are short-term periods of volatility, up and down, in individual commodities due to droughts/floods, production disruptions, and other one-offs, but they’re the exception over the long-run.

As a result, commodity prices can experience extended price trends, both rising and falling, based on longer-term economic cycles. Even more importantly, commodity prices can be leading indicators to larger economic cycles, as they’re very sensitive to changes in demand and are the leading edge of production. As a part of a portfolio, then, investor would be wise to undertake a bit of market timing, adding commodities after extended declines, and exiting commodities after extended gains.

In relation to other asset classes, commodities are positively correlated to stocks, as you might suspect given the cyclical nature of stocks and the overall economy. But that positive relationship, meaning they tend to move in the same direction, is at a relatively low level of about only 35% since 2000. Compared to bonds, commodities are negatively correlated, meaning they tend to move opposite to each other, but also at extremely low levels of correlation. These low levels of correlation are what make commodities a good choice to obtain diversification.

Commodities have a negative correlation to the value of the US dollar, and at more relevant levels (around -45%) since 2000. That means a strengthening US dollar will tend to weigh on commodities, while a weakening US dollar will tend to support commodity prices. In terms of inflation, commodity prices generally track inflation trends, as they are an underlying input to inflation indexes.

How to Invest in Commodities

The most obvious way to invest in commodities is to buy commodity futures contracts. But that entails multiple futures transactions to build a diversified portfolio of commodities, raising costs and increasing complexity and risk.

For most individual investors, the simplest and least expensive way to include commodities in their portfolio is through broad-based commodity index ETFs. (Please see an important ETF risk disclaimer at the bottom.) By investing in an index ETF, you typically gain exposure to the full range of the commodity complex (agriculture, energy, metals and materials), depending on the index the ETF follows. That allows you to take advantage of the broad cyclical change in commodities overall, and avoid the hazards of picking an individual commodity, such as oil or soybeans. A few widely available broad-based commodity index ETF’s to consider are DBC, GSG, and DJP. (Learn more about ETFs.)

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Source: Bloomberg; DriveWealth

Looking at a long-term history of commodity prices in the chart above, several long-term trends are evident, up and down. (The TR/CC CRB Commodity index is an index based on the futures prices of 19 different commodities and is presented as a proxy for broad-commodity indexes. The ETFs mentioned earlier may use different commodity indexes than the TR/CC CRB index.)

From about 2001 to 2008, there is a long-term trend higher, as global growth was solid and commodity demand from China was insatiable. The Great Financial Crisis of 2008-09 (GFC) put an abrupt end to that trend, but also quickly stabilized once markets recovered and stimulus measures in response to the GFC kicked in (mid-2009 to late-2011). As those stimulus measures faded-out in late 2011, commodities weakened as well. The most recent phase of commodity weakness (2014-2016) stems from multiple factors: Sluggish global growth, lower Chinese demand, widespread disinflation, and a strengthening US dollar all combined to hurt commodities.

Looking at the big picture again, it’s clear the commodities index as represented by the TR/CC CRB Index is near the lowest levels in over two decades. (Some individual commodities, such as gold, may actually be closer to their historical highs; the index is used as a proxy for all commodities lumped together.) While there’s no guarantee they won’t go lower, if you don’t have any exposure to commodities, now might be a good time to consider allocating a small portion of your portfolio to the commodity space. If economic activity picks up in the years ahead as the long-term effects of the GFC finally fade, or inflation begins to emerge, an investment in commodities might offer potentially enhanced returns.

 

SOURCE: Benzinga

How to Start a Precious Metal Portfolio

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It’s common knowledge to a lot of investors that gold and silver are an essential part of developing a precious metal portfolio. People invest in gold because it holds its value over the long term compared to fiat currency. Gold will never lose all of its value. The same thing cannot be said about some stocks. Gold and silver can act as a hedge when the market is in a high flux of volatility.

Although most of the spotlight is on gold and silver, there are other options and groups of metal that can be added to a precious metal portfolio. This includes lesser-known metals like platinum and palladium. All of these metals behave differently, although gold and silver are used interchangeably they differ in price fluctuations and uses for each respective metal.

Metal Portfolio Allocation

Gold is usually used in jewelry and silver is a staple metal used in industrial production. Platinum is a more diverse metal as it can be used in jewelry and other high-tech components and machines. Before starting a metal portfolio it’s best to lay the foundation in gold and silver. These markets are larger and more established. Platinum and palladium are not for the faint of heart. The markets are smaller and more volatile.

These two rare metals have been soaring in value the past couple years. They first began being refined in the 1800s. Metals should be held for at least a minimum of three years. Platinum and palladium should be half the amount of a gold and silver stake for stability’s sake.

During times of political stability and regular periods of the market, platinum is at a higher price than gold. Platinum is 10 times as rare as gold. In March of 2008 platinum was trending at over $2,200 per ounce. In 2015 platinum has been trading at around $830 an ounce. Platinum is an industrial metal and the largest demand for it comes from automobile catalysts. The demand for platinum is followed by the computing industry.

Most of platinum is mined in Russia and South Africa. This could be a cause for higher prices. These are all factors to take into account when adding platinum into a portfolio.

Palladium is a more uncertain metal. It’s growing in popularity and is driven by industrial demand as well. Palladium is essential for building catalytic converters in cars. In December of 2000 palladium was trending at $1000 an ounce, currently its at around high $400’s and low $500s.

The prices listed above are indicative of the possibilities for profiting on an intelligent precious metal portfolio.

Market swings should not be the main driving force behind a precious metal investing strategy. It’s all about setting a target price that an investor feels comfortable with before selling.  There are a few different ways to buy precious metals and they both have their own pros and cons.

Method of Ownership

Owning the actual physical metal used to be one of the only options for anyone who wanted to own precious metals. This can be costly due to expenses associated with transportation and storage. Also the markup for dealers could cut into profits as well.

Actually having the commodity in a physical form adds up additional costs and other risks that come with having something in possession.

One of the other options for owning precious metals is through commodity ETFs. By purchasing an exchange-traded fund, investors have a convenient way to both purchase and sell precious metals. Trading ETFs is a passive way of holding these assets allowing investors to follow the pricing in the market without needing the actual asset in their possession.

Commodities ETFs

SPDR Gold Shares (GLD) is an ETF that is an option for investors looking to invest in precious metals. 2016 is looking like a promising year for Gold. If this ETF can push forward past its $100 range then it will be a good investment option for anyone wanting to invest in Gold.

iShares Silver Trust (SLV)  is one of the leading ETFs for investing in silver. Silver’s demand hinges partly on China’s demand. SLV is trending in the mid teens at around $13 – 15.  This ETF is one of the most relevant and sturdy ventures for investing in Silver.

As gold and silver are tied closer with monetary policy, the other two metals, platinum and palladium are closely related to automobile sales. Vehicle sales are predicted to rise in the upcoming months and years. As stated earlier a lot of components in these cars rely on the two precious metals. This very reason is why it is imperative to add other precious metals along with gold and silver. They can outperform gold and silver during different market situations.

ETFS Physical Palladium (PALL)  is an ETF that focuses primarily on palladium and is an excellent entry point into investing into palladium, which can be an obscure metal to purchase in traditional ways.

ETFS Physical Platinum (PPLT) is a unique ETF for platinum as it is the only fund that holds the actual metal in the form of bullion and ingots. The platinum is stored in London and Zurich based vaults. They are overseen by JPMorgan Chase Bank and have roughly $850 million in assets under their control.

Common Stocks

Common stocks in mining companies can help track price movements related to the precious metal market. It’s good to look at the intrinsic value behind some of these stocks and their future plans. For example look to what country these companies are based in and the laws affecting them. As well as their expansion plans and management behind them.

Investing in the actual companies can be a speculative endeavor because the investor is reliant on how the company is performing as a whole regardless of the underlying commodities market conditions.

Bullion & Coins

Historically, coins and bars were primarily for people who could afford to invest large amounts and pay for secure storage.

However bullion dealers like BullionVault allow investors to purchase gold, silver and other precious metals online at low prices. Bars can then be stored in professional-market vaults in Zurich, London, New York, Toronto or Singapore. Because of their size (BullionVault manage over $2bn worth of gold for 55,000 clients worldwide), you benefit from low storage costs which always include insurance.

We recommend BullionVault because it is the world’s largest online investment gold service that is part-owned by the World Gold Council.

If you are specifically interested in coins then you may wish to consider the U.S. Mint or The Royal Mint. Both offer a range of gold, silver and collectable coins that can appreciate in value. The U.S Mint also issues American eagle platinum coins.

Overall, there are a few different ways to buy precious metals and begin a portfolio. In this new market it’s a good idea to have gold and silver as a baseline and foundation for a portfolio with the addition of platinum and palladium. In recent years they’ve gained traction on the market and this is shown through the new ETFs being traded to accommodate their growth.  Investing in precious metals is a great way to stay safe against inflation and be used as a hedge during unstable market conditions.

 

SOURCE: Alternative Investment Coach

Commodities Second Quarter Overview And Outlook For Q3 2016

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Summary

A big winning quarter.

Divergence with the dollar – Do currencies matter?

Energy rebounds, and soybeans soar.

History – Results from my best bets for Q2.

Best bets for Q3 2016 and beyond – Commodities.

The raw material markets had a great second quarter in 2016. The overall commodity sector consisting of 29 of the primary commodities that trade on the U.S. and U.K. exchanges rallied by 10.75% for the three months that ended on June 30 and is 12.67% higher over the first half of this year. The overall winner for the quarter was natural gas, posting a gain of over 49%. Two commodities not included in the composite, iron ore and lumber, moved up 12.7% and down 2.19%, respectively. If I add these commodities and the Baltic Dry Index, which gained 59.42% into my calculations, the sector rose by 12.94% in Q2 and 15.25% so far in 2016.

The U.S. dollar is a major factor when it comes to commodity prices as it tends to have an inverse value relationship with raw material prices. Commodities displayed strength even though the dollar index fell, appreciating 1.72% over the quarter. Economic conditions around the globe continue to present an uncertain landscape across all asset classes. The economic slowdown in China continues to plague demand for raw materials around the world. At the same time, the accommodative monetary policies of the world’s central banks continue to keep interest rates at historically low levels, which have been a supportive factor for commodity prices.

After the late 2015 and early 2016 lows in many raw materials, things turned around. Commodities posted a marginal gain in Q1 followed by a strong performance in Q2. Many commodities posted double-digit gains.

A big winning quarter

There were so many winners over the course of the last three months, so first I will outline the few commodities that dropped over the second quarter. The worst-performing commodity was live cattle that declined 13.62% on fears that rising feed prices will cause early processing of cattle, causing a temporary glut in the market. Feeder cattle futures lost 8.13% over the three-month period. The only other commodity that posted a loss was wheat. KCBT hard red winter wheat lost 15.12%, making it the worst performer of all raw material futures markets. CBOT wheat was down 8.92% while MGE wheat shed 6.47% of value. KCBT and CBOT wheat are down 13.71%, 8.24% for the first half of the year while MGE wheat is up 0.41% over the last six months. Wheat, cattle, and soybean oil, which was down just over 8%, were the only losers over the period.

One of the best-performing commodities of Q1 was natural gas, which gained 49.26% while NYMEX and Brent crude oil futures gained 26.06% and 26.93%, respectively. Luster returned to the yellow metal as it posted an increase of 16.41% in the quarter. Heating oil gained over 25% while gasoline posted a small gain of just under 4%.

While LME copper added only 0.31% in the quarter, zinc was up more than 17% and nickel gained over 13%. Aluminum moved around 9.5% higher, and lead was up more than 4%. The highly volatile tin market was up a little under 1%.

In the meats, cattle had a rough quarter, but Chinese demand for pork led to gains of 21.84% in the lean hog futures market over the three-month period. Soft commodities all rallied, with sugar leading the charge and moving 32.44% higher, followed by FCOJ futures adding 20.35% and coffee, which gained 13.06%. Cotton was up 7.49% in Q2 and cocoa gained 1.83%.

Grain markets picked up volatility. While wheat fell, soybean and soybean products exploded higher on drought conditions in Brazil and floods in Argentina. Soybeans were up 29.01%, but soybean meal rallied by 49.94%. After posting gains earlier in the year on palm oil shortages in Asia, soybean oil fell 8.3%. Corn was up by 2.06%, with oats rising 10.64% and rice adding 8.41% in value over the course of Q2.

Precious metals continued to add to gains in 2016. Silver led the sector with a 20.62% gain and gold followed adding another 7% in Q2. Platinum and palladium were 4.88% and 5.91% higher respectively. Fear and uncertainty in the global economy led to gains in all precious metal. While the dollar strengthened, the precious metals markets paid more attention to central bank accommodative policy, terrorism around the world and a growing trend of citizens rejecting the political status quo. The June 23 referendum in the U.K. resulted in a 52-48 vote to exit the European Union, which shocked markets, sent the pound reeling and caused the sitting Prime Minister to announce his resignation. This uncertainty has been highly supportive for precious metal prices, which continued to rally on the first day of Q3, taking silver $1 higher on the session, while all other precious metals prices added to gains in 2016.

Divergences continue to be a common theme in the precious metals sector. While the silver-gold ratio moved lower, platinum’s discount to gold increased over the quarter and traded at a new all-time low of a $345 discount to gold in June in the post-Brexit frenzy. While gold continues to be historically expensive against both platinum and silver, the price action in the markets over the quarter highlights that all precious metals have returned to bullish trends on a long-term basis.

Divergence with the dollar – Do currencies matter?

It is worth mentioning that the continuation of historically low interest rates around the globe has caused all currencies to fall in value over 2016. We are trained to measure currency value by looking at one currency against the other. We often refer to the dollar as strong or weak when it moves against other foreign exchange instruments like the euro, pound, yen, Australian dollar, Canadian dollar or other currencies. However, gold has had a dual role over the course of history. The yellow metal has been both a metal or a commodity and a means of exchange or currency for thousands of years. To that point, central banks classify their gold holdings as “foreign exchange reserves.” As such, the performance of gold in is a statement or better yet, a failing report card for global central bank policy as it tells us that all currency values are dropping against the precious metal. Moreover, the over 60% appreciation in bitcoin, a cryptocurrency, over Q2 is another sign that alternative means of exchange are attracting capital as faith in paper-fiat currencies has decreased around the world.

Therefore, even though the dollar strengthened over Q2, commodity prices shrugged off the greenback and rallied as the dollar and all paper currencies have declined as an asset class.

Energy rebounds and soybeans soar

It is worth taking a moment to talk about two important commodity sectors: grains, which are food and energy, which powers the world. These two raw material groups have one thing in common: people around the globe require them for daily life as necessities.

After almost two years of a brutal bear market in energy prices, crude oil and natural gas have both recovered. These energy commodities were in the late stages of a bear market that caused high-cost production to become uneconomic and output to slow at a time when demand started to rise due to low prices. The overriding reason for the price recovery in the energy sector was declining production and the cyclical nature of raw material markets from a supply and demand perspective.

In the grain sector, the action in soybeans over recent months should serve as an example of the fickle nature of weather and its effect on our food supplies. A smaller-than-expected South American crop due to weather and shortages of palm oil in Asia because of El Nino caused a vicious rally in the soybean and soybean product markets. Beans have gained over 35% in the first half of 2016.

The world’s population continues to grow; at latest count over 7.33 billion people share our planet. That means that more people are chasing finite raw materials, mainly food. In years where there are bumper crops and availability of agricultural raw materials is plentiful, like the years between 2012 and 2015, agricultural commodity prices moves lower. However, in years where supplies decline due to weather issues, crop diseases or logistical problems of bringing crops to market, we are likely to see dramatic demographic strains on the demand side of the fundamental equation for these commodities. Soybeans are not the only commodity teaching this lesson in 2016, the price of sugar has doubled during the period from August 2015 to June 2016.

Low interest rates via central bank monetary policy and political events around the world have increased the chances for a buoyant commodity market in the weeks and months ahead. Chances are we will see volatile trading conditions with many raw materials making higher lows and higher highs in Q3 and throughout the balance of 2016.

History – Results from my best bets for Q2

The results of my best bets for Q2 from my Q1 report are as follows:

I believe that buying copper scale-down so long as it remains above $2 will yield profitable opportunities over Q2. Copper did not trade below $2 per pound during Q2, but it came very close falling to $2.0180 on June 9. There were three significant rallies over the course of the second quarter. The first came at the beginning of March when copper moved from just over $2.10 to highs of $2.3295 on March 18. Copper then headed down to the lows of $2.0860 on April 7, only to recover to $2.3060 on April 22. Then, copper fell steadily to the June 9 lows and recovered to the $2.20 level at the end of Q2. Scale-down buying in copper and taking profits on rallies yielded positive results during the quarter.

Silver is cheap relative to gold; I like buying silver with a stop below $14.50 per ounce. Silver traded to the lows of $14.95 per ounce on the very first day of Q2 and never traded at that level again over the three-month period. Silver closed Q2 at over $18.60 – an increase of more than 24% for the period. On the first day of Q3, silver was closing in on the $20 per ounce level in explosive market action.

Platinum is cheap relative to gold. If you are looking to purchase physical precious metals, platinum offers the best value. Platinum gained 4.88% in Q2, closing the quarter at the $1,024 per ounce level. On the first day of Q3, platinum traded to $1,060 and made highs of over $1,092 during Q2.

Buying nickel scale-down for a recovery could be an interesting play in this volatile commodity. Stops are necessary. Nickel was one of the best performing base metals over Q2, posting a gain of over 13% in a volatile market action.

I continue to favor CBOT wheat and believe that the price will move higher over the course of the next few months. I was dead wrong on wheat; I should have recommended soybeans! CBOT wheat was down almost 9% during Q2, making it one of the few losers in the commodity markets.

Crude oil will move after the April 17 meeting in Doha; prepare for volatility. Crude oil moved following the Doha gathering, rising from $40 per barrel to highs of over $52 on the August NYMEX crude oil futures contract, an increase of 30%.

Equity prices continue to be expensive; I believe the market will try the downside again. Equity prices were volatile as they traded for most of the quarter on either side of unchanged because of central bank policies that are making interest rates artificially low. The DJIA was up 1.38% in Q2, with the S&P 500 up 1.9% and the NASDAQ down 0.56%. While I was wrong on a quarter-by-quarter basis on stocks, there were plenty of profitable opportunities for those holding short positions over the three-month period.

Sugar, coffee, cotton, and cocoa are interesting buys on price dips. If you do not trade futures or options on futures, look at SGG, CANE, JO and NIB EFT/ETN products for long positions, but use stops. All soft commodities rallied during Q2 with sugar leading the charge and coffee posting a double-digit gain. Cotton added to value, and cocoa was only up marginally over the period.

We had some winners and some losers in Q2; I will reiterate what I said at the end of Q1:

Market volatility means that we cannot look to hold positions for long periods. These are trading markets that require tight stops for protection. When profits present themselves, take them as there will always be an opportunity for another trade.”

Best bets for Q3 and 2016 – Commodities

So many issues facing the world are likely to drive commodity prices over the coming months. I expect volatility to continue to be the hallmark of all raw material prices and other asset classes for that matter. Economic weakness in China, currency volatility and economic weakness across the globe are likely to cause periods of extreme weakness and strength. The contentious presidential election in the U.S. kicks into high gear with the conventions and first debate in Q3 and the actual voting in Q4. Markets are a reflection of world events, and this election is likely to be a heated and volatile affair, which will influence market action across all asset classes. Always remember that commodities are very volatile assets. Often, the worst-performing commodities in one-quarter turn out to be the best performers in the next and vice versa.

My best bets for Q3 are:

  • I believe that precious metals will continue to make higher lows and higher highs. Initiate positions during periods of weakness or profit-taking and sell on new highs or rallies to capture gains.
  • I continue to believe that wheat and corn have limited downside risk and huge upside potential. Use options or ETN/ETN products to limit risk.
  • I believe crude oil is likely to trade in a $45 to $55 range on the active month NYMEX futures contract.
  • Platinum has explosive potential – I prefer platinum for physical precious metal purchases.
  • Equity prices continue to be expensive; I believe the market will try the downside again.
  • I believe cotton is building cause for an exciting move higher.
  • While I am friendly to sugar and coffee, I would only buy on price weakness using options for risk positions to protect capital.
  • Gasoline and heating oil crack spreads are likely to strengthen against crude oil.

Q3 2016 will probably see more volatility and opportunity in commodity markets. Keep your eyes on the dollar, against other currencies and gold and bitcoin as these alternative means of exchange. At the end of Q1 I wrote:

I believe that commodities will outperform the dollar in the future as raw material markets are starting to attract attention once again. Trading rather than investing on a medium or long-term basis is likely to yield the best results in these crazy markets.”

Be careful out there – we could be in for a wild ride in Q3 and the rest of 2016!

SOURCE: Seeking Alpha

Which Commodities Will Benefit From Brexit?

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Buy gold but be cautious around oil and copper, that’s the main takeaway from Deutsche Bank’s special commodities report entitled “commodities weathering the Brexit storm”.

Most commodity markets remain plagued by oversupply, but the gold market is set to see increased demand over the next 18 months. There are a number of political risk events set to unfold during this period, which are only set to add to the global economic uncertainty that’s been thrown up as a result of Brexit.

Gold Prices Extend Brexit Bombshell Surge

Deutsche points out that gold ETF inflows are already running at the fastest pace on record this year — annualized 29.7 million troy oz, above the previous high of 20.8 million troy oz in 2010 — and there is scope for this to increase. In fact, the ideal conditions are in place to drive further demand for the metal. It’s widely expected that interest rates will fall further from current levels, there are plenty of political risks on the horizon, GDP growth expectations are being curtailed, and the US dollar is weakening. Add all these four factors together and you have the perfect environment for higher gold prices.

What Brexit Means For Gold Exploration

Gold prices have shown a highly positive correlation to US real yields since 2007, and it’s unlikely this trend will break anytime soon.

Which Commodities Will Benefit From Brexit?
Which Commodities Will Benefit From Brexit?

 

“The sharp move in gold indicates that investors were too complacent about the risk of a Brexit vote. This will dent confidence and in our view reset the bar for gold. Simply put, investors will now be more willing to pay a premium for an insurance policy.” — Deutsche Bank on gold following Brexit

Commodities: Not much impact on oil

When it comes to oil, Deutsche believes that Brexit could lead to a -100,000 barrel per day decline in oil demand from current forecasts. The UK will account for the majority of this decline as weaker sterling will reverse the stimulative effects of lower oil prices. The impact to demand could be as high as 150,000 bod. Although, to put this decline into perspective, Deutsche points out that, global supply outages have increased by 140 kb/d in May alone and by 990 kb/d since the start of the year. Some of these outages will be back online by the end of the year, but it’s clear that any Brexit impact on oil demand will be negligible.

Gold, Bank And Pound Shorts Boost Odey Returns After Brexit Crash

What could have a greater long-term impact on the oil price is a change in investor risk perceptions, which could come along/have already arrived with the Brexit debacle. Deutsche believes that the change in risk perceptions could be detrimental to upstream investment, suggesting that a reversal of the sharp declines in 2015 and 2016 is still some way off. In other words, it’s entirely possible that Brexit could end up being supportive to long-term oil prices.

What about copper?  

The copper market is unlikely to be severely affected by Brexit. Deutsche’s economists estimate that Brexit could take as much as 0.2% off global growth forecasts this year pulling global GDP forecasts down to 3.4%. Historically, it is only when global GDP falls below 2.3% that copper demand goes negative, “so on current estimates, we still have some way to go to breach that level.”

Which Commodities Will Benefit From Brexit?
Which Commodities Will Benefit From Brexit?

Long-Term Weather Forecasts Favor Bullish Grain Market

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As we welcome in the first week of June we have an OPEC meeting, Unemployment number on Friday and the Fed meeting on Flag Day and the decision on whether to raise Interest Rates on the 15th. Which will make the markets trade volatile with all these different policies and government reports on tap the coming days and weeks.

On the corn front the grains have seemed to have crumbled. The South American Farmer soybeans squeeze seems to be in the rearview mirror. The weather should be the last thing breaking this market to the downside after all the bullish news driving prices higher. In this market expect the unexpected and remember key support in the corn is $4. In the overnight electronic session the July Corn is currently trading at 402 ¾ which is 2 cents lower. The trading range has been 405 to 401 ½ so far. Long term weather forecasts favor a bullish Grain market this summer.

On the ethanol front the July contract posted a trade at 1.619 which is .007 of a cent lower. This market is following the price movements in corn and energy prices.

On the crude oil front the market is edgy with the upcoming OPEC meeting which I expect to be a non-event as usual more talk and no substance to agreeing to production quotas. Later today we have the weekly API data which was delayed one day due to the Memorial Day Holiday and this should be an interesting number with the Canadian wild fires disrupting the flow of oil the past few weeks and the geo-political events that also caused shortfalls. Now we have floods in Houston that could even cast a further pall on movement of oil to gas at the pump. Smart money would be buying any dips in this market or just plain buying value. In the overnight electronic session the July contract is currently trading at 4847 which is 63 points lower. The trading range has been 4909 to 4823 so far. This market is destined for a bigtime rally.

On the natural gas front the market is rising on the same old song I have been preaching in the past. Once we are out of shoulder season, Hot temperatures, Coal Industry put on backburner and rig counts spiraling downward will only make this market wildly bullish. In the overnight electronic session the July contract is currently trading at 2.338 which is 5 cents higher. The trading range has been 2.344 to 2.277 so far. This market is looking more and more like a breakout to the upside.

 

by Dan Flynn

SOURCE: Investing.com

Sugar and Coffee Soar, Soybeans Fall Back

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Soybean futures turned a little lower on Friday, with some light end-of-week profit taking, but corn futures rallied on decent export demand, while wheat futures got support from the heavy rains in Europe, which are threatening crop production there.

And coffee and sugar both soared, thanks to rains in Brazil, and a weakening dollar.

Soybeans have been enjoying a rally thanks to fund buying, and the developing fears of dry weather in the US Midwest next month.

“Weather maps have added some heat and dry conditions for the near term forecast, adding fuel to the fund-led rally in grains,” said Paul Georgey at Allendale.

“Ags are already trading like a drought-market and its only June 3,” noted Tregg Cronin. at Halo Commodities.

But even before the day’s sell-off, traders were flagging some dangers to prices.

Mike Zuzolo, at Global Commodities Analytics, warned that markets would need to find new fundamental support in the June 10 Wasde to continue their rally, while Richardl Feltes, at RJ O’Brien, warned that the June 30 USDA crop sowings report, could show rising soybean acres.

Brazilian prospects cut

A major factor driving ideas of squeezed soybean supply has been the recent flooding Argentina.

Informa Economics left its forecast of the Argentine soybean crop unchanged from last month, at 55.0m tonnes.

This is well down from the 60m tonne expectations being circulated before the floods developed in April, but is still above some ideas of a 50m tonnes harvest.

But Informa cut its estimate of Brazil’s soybean crop by 1.6m tonnes to 98.5m tonnes.

Overbought market

Soybean export sales for the 2015-16 marketing year in line with expectations, at 309,400 tonnes.

Commitments for export sales in 2015-16 are already 100.7% of the US Department of Agriculture’s forecast for the marketing year, and there are still three months left to go.

Still, the front-month soybeans, which hit a near two-year early in the session, turned lower on a touch of light profit taking at the end of the week.

“There really hasn’t been much in the way of fresh new added to the equation,” said Kim Rugel, at Benson Quinn Commodities.

And technical signals suggest soybeans are “extremely overbought,” Ms Rugel said.

July soybeans finished at $11.32 a bushel, down 0.9% on the day, having reached two-year highs $11.69 a bushel.

New crop boost

But new-crop soybean prices rose, sustained by some good export sales, and the US weather concerns.

US export sales for the 2016-17 marketing year were better than expected, at 736,700 tonnes, the biggest so far.

New crop November soybeans finished up 0.6%, at a 22-month high of $10.85 ¼ a bushel.

Strong sales

Corn export sales were once again very strong. Sales in 2015-16 were 1.3m tonnes, where markets were expecting between 800,000 and 1.1m tonnes.

True, export sales for 2016-17 were 128,000 tonnes, below expectations of 200,000 to 400,000 tonnes, but the overall volume was still very high.

Informa cut its forecast for Brazil’s total corn harvest by 2.1m tonnes, to 78.9m tonnes.

July corn futures finished up 0.9%, at $4.18 ¼ a bushel.

French rains threaten crops

Wheat futures in Paris jumped to a five month high, as concerns gathered about the effects of recent heavy rain, that has seen a state of emergency declared in some regions.

“This increases the risk for disease,” Gautier Maupu, analyst at the French crop consultancy Agritel, told Agrimoney.

Mr Maupu noted that with some wheat in the flowering stage, there was a “big risk on the yields”.

FranceAgriMer, the French farm bureau, rated the condition of the country’s soft wheat crop at 81%, as of Monday, even before the worst of the flooding.

While still a strong number, it was down 2 points week on week, and well below the reading of 89% a year ago.

Paris wheat futures finished up 1.2%, at E169.75 a bushel.

Improving Australian prospects

In Australia, meanwhile, heavy rainfall is being welcomed.

“Abundant rainfall has been welcomed on Australia’s east coast as much of the area has experienced dry conditions,” said Jennifer Webster, at CHS Hedging.

Australia’s meteorological bureau cut its forecast

Up to 100mm is forecast to fall across Eastern Australia over the next eight days, the Australian Bureau of Meteorology said on Friday.

This would be about half the average amount of June rainfall.

Weak dollar gives support

Informa Economics, lifted its estimate of the US winter wheat crop to about 1.448bn bushels, from a previous estimate of 1.405bn bushels.

US wheat export sales came in in-line with expectations, at 107,400 tonnes in the 2015-16 marketing year, and 385,000 tonnes in the 2016-17 marketing year.

Extra support came across the commodity complex, as the US dollar plunged due to a very disappointing jobs report, the worst since 2010.

The dollar was down 1.6% against a basket of world currencies, lending support to dollar denominated commodities.

July wheat futures rose by 2.2%, to finish at $4.97 ¼ a bushel.

Brazil still driving sugar market higher

Raw sugar futures extended their rally to two-and-a-half year highs.

Strength in sugar was fuelled by rains in Brazil, which is threatening the harvest and exports there, as well as fresh support from a shift in the real/dollar exchange rate.

“The weather issues in center-south Brazil affecting crushing towards the end of May and so far at the beginning of June have spooked some shorts and a measure of panic has set in,” said Nick Penney, at Sucden Financial.

And the real was up 1.8% against the dollar in afternoon deals, fuelled in part by falling greenback.

A stronger real discourages producer selling and production in the world’s top exporter.

July raw sugar futures settled up 3.7%, at 18.75 cents a pound, the highest since October 2013.

Rains also support coffee

Brazil is also the world’s top coffee producer, so the real was supportive there, while fund interest also played a part in a rallying market.

Jack Scoville, at Price Futures group, noted fresh “buying from speculators”.

And rains in South Brazil are also threatening the arabica crop there, the CNC producers’ group said.

“Weather conditions in Brazil favoured the positive slope of the future prices of the commodity in recent days,” CNC said.

“The rains in the main Brazilian producing regions raised concerns about the possibility of loss of quality and yield of the 2016-17 crop.”

July arabica coffee settled up 3.3%, at 127.10 cents a pound.

July robusta coffee settled up 0.6%, at $1,641 a tonne.

Cotton rallies, amid sowing concerns

US weekly cotton export sales were reported at 125,000 running bales for the 2015-16 marketing year, while 2016-17 exports were 74,300 running bales.

There are some concerns about sowing prospects in the US, where planting has already been delayed by rain.

“Forecasters say rain will halt field work in some parts of the Southern Plains until the end of the week,” said Tobin Gorey, at Commonwealth Bank of Australia.

July cotton futures rose by 1.6%, to settle at 63.92 cents a pound.

Commodities Offering Investors A Rare Opportunity

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by Andrew Hecht

 

A dividend paying equity is usually not a candidate for huge price appreciation and a growth stock rarely offers a juicy yield. It is rare when a market sector offers both the opportunity for capital growth and yield at the same time. Often stocks offer one or the other.

It is also a rare occasion when an author gets the opportunity to write an article or work on a project with their favorite editor. Any of you authors out there know that it is our editors that make us look good and help us to achieve our potential. I am fortunate to have found such an editor at Seeking Alpha. Robyn Conti has generously agreed to author this piece together with me. Robyn’s talents transcend mine, and while I am a prolific contributor to the site, it is Robyn that always makes me look as good as possible – and that is not an easy job.

Robyn is a rare commodity and raw materials are finite assets. This piece focuses on an opportunity that is as rare as a complimentary, competent and talented editor and writer – all of those attributes describe Ms. Conti. As you may surmise, Robyn did not write this intro to the piece and will probably object to it as she is also humble, but she did a great deal of work and analysis on the piece for which I am grateful. The chance for both growth and yield in a sector that might be staring us in the face at this very moment is as just as rare as Robyn, and I have spent the last couple of days researching, debating and discussing the current state of the commodities market with her. We have come up with some compelling conclusions to share with you.

Commodities markets have bottomed

Raw material prices peaked in 2011/2012 with many commodities rising to all-time highs. Over the next almost five years, this asset class made lower highs and lower lows as it entered a cyclical bear market. During the fourth quarter of 2015 and first quarter of 2016, many commodities fell to multi-year lows, but in the middle of February, the market turned around dramatically. One of the most dramatic gains came from a shipping metric, the Baltic Dry Index.

The BDI is a measure of shipping rates for dry bulk cargos of raw materials. On February 10, it hit all-time lows at 290 and by April 27 it had increased to 715 – an increase of over 146% in just nine weeks. As of last Friday, the index was at the 634 level, still over 118% higher than the mid-February lows. This index is an excellent measure of global shipping activity and its rise from the lows is a good indication that demand for commodities has picked up over recent months.

Each commodity has its own idiosyncratic supply and demand characteristics that determine the path of least resistance for prices. However, as an asset class, we have witnessed some dramatic changes that have altered the bear market conditions that have existed over the past five years. The most closely followed commodity in the world, crude oil, is a perfect example.

As the weekly chart illustrates, the price of the energy commodity has rallied from lows of $26.05 per barrel on February 11 to highs of $48.95 last week – an increase of an incredible 87.9% in three months and one week.

The price of iron ore, the key ingredient in steel, rose from almost $33 per ton in January to over $60 per ton in April and was trading just under the $50 level last week.

Copper appreciated from lows of $1.9355 in January to over $2.30 per pound in March; last week it was trading around the $2.06 level.

Gold has moved from lows of $1,046 last December to highs of $1,306 in early May. Last week the yellow metal was at the $1,253 level.

Soybean prices have exploded from $8.49 per bushel in late February to highs of $10.88 last week.

Sugar has increased from 10.13 cents per pound last August to highs of over 17 cents last week. There are many more examples of commodities that have moved higher over recent weeks and months. The raw material asset class has had a very good year so far in 2016.

Commodities are the most volatile asset class of all and they are highly sensitive to moves in the U.S. dollar. The dollar is the reserve currency of the world and it is the benchmark pricing mechanism for virtually all commodities. Strength in the dollar in 2014 and 2015 helped push commodities to multi-year lows, and the recent decline in the U.S. currency is partially responsible for the rebound in raw material prices. Right now the dollar is above a crucial level on a technical basis.

As the monthly chart of the U.S. dollar index highlights, the greenback has dropped from the 100 level in late 2015 to lows of 91.88 on May 3. However, the dollar bounced off those lows and is now over the 95 level on the active month dollar index futures contract. One important thing to note about the currency is that if the dollar closes the month of May above the 95.21 level on the dollar index, it will mark a bullish key reversal trading pattern for the currency. The dollar made a new low this month and 95.21 was the April high. A close above that level could cause a follow through rally in the dollar, causing commodity prices to retreat from current levels.

Given the volatile nature of commodity prices, they tend to overshoot on the upside during rallies and on the downside during dips. This tends to be the case when it comes to short, medium and even long-term trends.

Therefore, the lows we witnessed in late 2015 and early 2016 were likely an over-extension of the long-term bear market. We view the bounce from those lows and upside trajectory of many commodity prices as a significant shift in momentum and direction. This does not mean they cannot retreat from current levels, but it does mean that a return to lows is unlikely.

The bottom line is that the optimal strategy for trading or investing commodities from 2011 through 2015 was to initiate trades by selling on strength and covering short positions on price dips or at new lows. Since February, that has changed and it now appears that price retreats will offer the opportunity for investors and traders to initiate long positions in commodities and raw material related vehicles. The beauty of the asset class is that when it comes to commodity-related equities, they continue to suffer from a bear market hangover, which means they remain cheap relative to the rest of the stock market that is very expensive these days.

The CAPE index as of last Friday stood at 25.64 times earnings – the long-term average is around 16 times earnings. There are some jewels out there in the world of commodity equities that are trading at P/E levels lower than the long-term average and also pay a dividend to boot.

A low-risk approach – Agriculture

Agriculture-based equities have been beaten with a stick over recent years. Three straight years of bumper crops of soybeans, corn, wheat and other grains and soft commodities have caused prices to swoon. However, the demand side of the equation in this volatile commodity sector is one of the most compelling simply because people need to eat and population keeps growing. Arable land for growing crops is a finite resource and the global population stands at over 7.32 billion people, and each second, there are 2.5-3 more people on the planet. This is a recipe for increasing demand each year. Additionally, a drought in 2011/2012 across the fertile plains of the United States and weather issues in other regions of the world caused the prices of corn and beans to rise to all-time highs. Wheat rose to the highest price since the global drought of 2008 and other agricultural commodities traded to highs – sugar was 36 cents per pound in 2011 and cotton, which current trades for around 60 cents per pound, rose to an all-time high of $2.27 per pound.

The prices of all agricultural commodities had dropped to levels that were close to production cost. However, recently we have seen an improvement in prices because of drought conditions in Brazil and floods in Argentina. The increase in global demand can be seen when looking at where the three major grain prices were back in 2000. Soybeans were at $4.61, corn at $2.045 and wheat was trading $2.49 per bushel on the first day of the new millennium. While prices appear low now, compared to where they were back in 2011/2012 – demand has taken them much higher than levels seen 16 years ago. The base price and production cost for all agricultural commodities has increased due to exponential demographic factors. Therefore, we believe that this sector is ripe for a rally and suggest three agricultural stocks that are cheap and pay a handsome dividend.

Potash (NYSE:POT) was trading at $16.53 per share last week. The company is a major producer of fertilizers and related industrial and feed products around the world. Agricultural crops need fertilizers to thrive and the market is growing with the population. POT has a P/E ratio of 14.16 times earnings and pays a dividend of 6.04%. The stock traded in a range between $2.33 per share in March 2000 and $80.54 in June 2008. POT is a cheap agriculturally-related stock and it pays a juicy dividend. It is a beautiful thing to get paid well for waiting for capital growth.

 

Archer Daniels Midland (NYSE:ADM) is one of the most respected and successful agricultural processing companies in the world. ADM procures stores, transports, processes and merchandises agricultural commodities. The company is an active crusher of soybeans into soybean meal and oil and it processes corn into ethanol, a biofuel. ADM was trading at the $39.83 per share level last week with a P/E ratio of 15.28. The company currently pays a 3.20% dividend. ADM traded to lows of $8.19 in September 2000 and highs of $53.91 in December 2014.

Deere & Co. (NYSE:DE) manufactures and distributes agriculture and turf, and construction and forestry equipment worldwide. Farmers need equipment to produce their crops and DE is a leading supplier of that equipment. DE was trading $77.74 last week with a P/E of 14.16. DE currently pays a dividend of 2.88% and it has traded in a range from $15.15 in March 2000 to $99.80 in April 2011.

We believe a balanced portfolio containing these three agricultural sector companies offers three things:

  • The potential for capital growth given a lower than market average P/E on both a current and a historical basis.
  • Dividend yields that are higher than the risk-free rate of return.
  • An investment in the growth of agricultural demand, which is a function of global demographics.

Therefore, we rate these three companies the low-risk case in the commodity equity sector today, allowing investors to earn while they wait for capital appreciation, which could come quickly if agriculture returns to bull market conditions over the coming months.

A medium-risk approach – Crude Oil

Crude oil prices have recovered dramatically since February 11. While the future prospects for crude oil probably do not include a return price appreciation above the $100 per barrel level seen in 2014, there are signs that stabilization over $40 and potentially higher is in the cards. Crude oil was fast approaching the $50 per barrel level last week. Natural gas continues to languish at the $2 per MMBtu level but inventory injections have slowed this spring as producers are not making profits at current prices. Over time, production output should slow and inventories will decline on a commensurate level with lower production, causing prices to eventually rise and providing profitable opportunities for low-cost producers as they naturally build market share from attrition in the industry.

BP (NYSE:BP) is an integrated oil and gas company involved in all aspects of the energy business on a worldwide basis. Over recent years, BP faced problems related to a massive oil spill in the Gulf of Mexico. However, the liabilities for that situation appear to be behind BP, and it has proper levels of financial reserves.

BP was trading at $31.93 last week with a negative P/E ratio. It pays a dividend of 7.45% – we rate this company as a medium-risk approach to the energy sector as the dividend compensates for the lack of earnings. We believe that the worst is in the past for BP and the prospects for the oil market have improved. While production is increasing in Iran, Saudi Arabia, Libya, and Iraq, it has fallen below 9 million barrels per day in the U.S. Production in Canada, Nigeria and Venezuela has decreased for a variety of reasons and there are signs that Russian production will move lower. The oil price likely overshot to the downside in February and the current price between $40 and $50 per barrel represents fair value for oil.

A high-risk approach – The 800 pound gorilla and others

The high risk approach to the commodities sector boils down to a bull bet on China. As the world’s largest and most influential consumer of raw materials because of both population and economic growth, China is the 800 pound gorilla in the commodities sector. There are three companies that will explode higher if the Chinese economy recovers and growth exceeds market expectations. The downturn in commodity prices has not been kind to the major mining and trading companies, but if prices can sustain recent gains, we could see a dramatic improvement for the prospects for these companies and a requisite rebound in their share prices.

Glencore (OTCPK:GLNCY) is a diversified trader and producer of commodities as a result of its merger with global commodity producer Xstrata. It is an active trader and producer of metals, minerals, energy and agricultural products. Glencore is involved in all aspects of these businesses from production to processing, refining, transport, storage, marketing and distribution. It has a negative P/E, but the company has been actively cutting debt, recently selling off 40% of its agricultural business to a Canadian pension fund. Glencore is the 800 pound gorilla when it comes to trading acumen. The company pays a 9.29% dividend to compensate for the current lack of earnings. GLNCY shares have traded in a range between $1.95 per share in January 2016 to highs of $15.70 in February 2012 just following the company’s IPO in May 2011. The company’s merger with Xstrata in 2012/2013 resulted in a mountain of debt, which the company is now working to lower. GLNCY shares were at $3.665 last week. This company has a high-risk, high-reward profile.

BHP Billiton (NYSE:BHP) is a diversified commodity producer with production interests all over the world. BHP was trading at $26.84 per share last week. The recent bear market in commodities has caused the company to have a negative P/E ratio. To compensate for its lack of earnings, BHP currently pays a 5.51% dividend. Shares of BHP have traded from lows of $7.56 in September 2001 to highs of $104.59 in April 2011 at the height of the bull market in commodities. Any improvement in the Chinese economy will have an immediate effect on BHP shares, which are in some ways a proxy for Chinese and global economic growth that will boost raw material prices.

Finally, Rio Tinto (NYSE:RIO) is a massive metals and mining company with production interests around the globe. RIO shares were at $28.31 last week. The company has a negative P/E due to the bear market conditions that have persisted over the past five years for the commodities they produce.

RIO pays a dividend of 7.25%. In September 2001, it traded to lows of $13.43, and highs of $139.66 in May 2008. Like BHP, RIO is a proxy for Chinese growth as the nation consumes vast amounts of metals and minerals to build infrastructure and support a population of over 1.3 billion people. The potential for growth in coming years from the world’s second-most populous nation, India, provides additional potential for infrastructure demand, which will boost returns for BHP and RIO as well as GLNCY.

The high-risk cases for investments in the commodity sector are based on better-than-expected growth in Asia over the coming months and years. While their shares have suffered over recent months, a turn in the trajectory of the commodity asset class is promising for these high-risk companies.

Yield and capital growth are only available at the beginning of a market cycle

All of the stocks mentioned in this piece have negative price to earnings ratios or P/Es that are not only below the current market average but below the long-term average of 16. They all pay dividends that are above market averages, and in the case of those companies with negative P/Es, the dividend yield compensates investors for the added risk in the current environment.

The potential for both yield and capital growth is compelling and rare, and it tends only to be available at the beginning of a new market cycle or a shift in a long-term trend. We believe that commodities put in important lows in late 2015 and early 2016. There will be many factors that influence commodity prices over the weeks and months ahead. A rally in the dollar could cause prices to fall; however, it is unlikely that we will see the lows that were established several months ago. Therefore, we would suggest using weakness in commodity prices to buy these companies slowly on a scale down basis to build a balanced portfolio of commodity investments for the years to come.

Robyn Conti and I will be on my biweekly radio show, The Commodities Hour, on Tuesday, May 25 to discuss these compelling opportunities as well as other issues in her area of expertise, dividends and investing. You can tune in to the show on Tiger Financial News Network that will air at 5 PM EST here. And, you will get to see Robyn live so do not forget to be there.

 

SOURCE: SeekingAlpha.com

El Nino to hit coffee, palm oil and other commodities

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The declaration of a strengthening El Nino has raised concerns about agricultural and mining commodities, with coffee and palm oil likely to experience the sharpest price rises.

The Australian Bureau of Meteorology this week confirmed earlier pronouncements by US and Japanese weather services that El Nino conditions have begun across the tropical Pacific.

El Nino conditions can wreak havoc on commodity prices. It causes drought in Australia, heavier rain across south America and changes to wind patterns across the Pacific region. The event occurs every few years each with slightly different impacts on commodity prices.

Capital Economics senior commodities economist Caroline Bain has issued a note to investors outlining the possible impact of the season.

“The mere presence of El Nino conditions doesn’t necessarily mean that agricultural commodity prices will rise,” Ms Bain said. “It is the strength, timing and duration which ultimately determine its impact on productions.”

As it is too early to assess the severity of this El Nino cycle, Capital Economics did not estimate the impact on prices but highlighted the commodities most likely to be affected.

These included cocoa, coffee, palm oil, rice, sugar and wheat, where harvests are expected to suffer in the dryer conditions.

Capital Economics pointed out the coffee and palm oil prices are likely to rise the most as they are concentrated in key El Nino-affected zones of South America and Asia.

Previously, Australia, Canada and the United States wheat producers have driven up the prices of wheat due to smaller harvests. In the US on Thursday the wheat price leapt in the face of severe weekend storms across the Great Plains.

Some mining stocks, especially those based in South America such as zinc and copper, could be at risk of flooding and transport or distribution issues due to higher rainfall.

“Given current tight zinc supplies, the risk of El Nino-related supply disruptions should be another factor supporting prices. In contrast, the nickel price is likely to be relatively unmoved given that Indonesia has a ban on nickel ore exports,” Ms Bain wrote.

The only commodity tipped to thrive from the wetter conditions was soybeans, where much of the trade is concentrated in Brazil.

 

SOURCE: smh.com.au