Commodities

Oil and metals on the rise

Global oil prices climbed 1.5-2.0% on Friday along with other key commodities. Increases in Chinese mobility indicators suggested higher demand for oil, reports CommSec. “And a weaker dollar improved buying power of European and Asian buyers. The Brent crude oil price rose US$1.25 or 1.5% to US$85.28 a barrel. The US Nymex crude oil price added US$1.47 or 1.9% to US$79.86 a barrel. Over the week Brent crude rose 8.5% and Nymex rose 8.3% - the biggest weekly gains since October. Base metal...

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Commodity prices generally weakening

Aluminium prices prop commodity trade. Photo - NZAS smelter at Tiwai Pt, Bluff. 11.1.23 “The ANZ World Commodity Price Index fell just 0.1% in December, as higher aluminium and dairy prices helped offset weaker returns for meat,” notes ANZ .In local currency terms the index dropped 3.8%, as the NZD appreciated 2.1% against the Trade Weighted Index. Global shipping prices have fallen sharply and are nearing pre-pandemic levels” notes agri-analyst Susan Kilsby. “Demand for container shipping has...

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Oil prices brighten up

Global oil prices climbed on Tuesday as the US government forecast record global petroleum consumption next year CommSec also notes that the US dollar hovered near seven-month lows. Global consumption of liquid fuels is forecast to reach 102.2 million barrels per day in 2024. The Brent crude oil price rose US45 cents or 0.6% to US$80.10 a barrel. And the US Nymex crude oil price added US49 cents or 0.7% to US$75.12 a barrel.

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Gas supply deal by NZOG

15.12.22 NZ Oil & Gas has signed a new gas supply agreement with South32 Cannington for supply of gas from the Mereenie field. The two-year term from 1.1.23 is for delivery of 0.38 Petajoules (PJ) of gas from NZOG into the East Coast, Australia, domestic market. The fixed price, take-or-pay contract reflects strong market conditions, says NZOG. Gas supplied under the GSA will be aggregated with gas from the Mereenie Joint Venture (Macquarie Mereenie (50%), Central Petroleum (25%), NZ Oil...

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Kiwi dollar surges overnight

  The New Zealand dollar briefly broken above US$0.65 overnight, following a drop in the US dollar. “Another US CPI downside miss has driven risk appetite higher alongside much lower US rates, supporting equity markets and leading to a large broad-based fall in the USD,” notes Jason Wong, senior markets strategist at BNZ Markets. “NZD, AUD and JPY lead the gains, with the NZD temporarily breaking above 0.65. “Santa Claus has come early for the market with the gift of a second consecutive...

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Weaker risk appetite- NZD easier

13.12.22 Some market nerves are evident ahead of a massive week loaded with event risk, with tonight’s US CPI release one of the key acts, says BNZ Markets’ senior market strategist Jason Wong. “Risk appetite is weaker, with a higher VIX and the NZD and AUD underperforming. US Treasuries shows a slightly higher and flatter curve overnight. “There hasn’t been a great deal of news to start the week but the event calendar is filled with plenty of event risk, including central bank meetings of the...

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China growth issues surface

22.11.22 Markets have traded with a more cautious tone to start the new week, with equity markets lower and the USD stronger, says Nick Smyth at BNZ Markets this ,morning. Oil prices have fallen on concerns around Chinese growth, as some cities reimpose Covid restrictions, and reports, since denied by Saudi Arabia, that OPEC+ will consider a production increase.  Global rates are slightly lower overnight and yield curves are again flatter, the US 2y10y curve pushing down to fresh 40-year lows...

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Oil prices push upwards

Global oil prices rose on Tuesday by around 1%, reversing earlier losses. Supporting prices were a weaker US dollar, rising global sharemarkets and hopes of further easing of Chinese Covid restrictions. In addition a European Union ban on seaborne Russian crude, set to start on December 5, means that 1.1 million barrels per day must be replaced, the International Energy Agency said. The Brent crude oil price rose by US72 cents or 0.8% to US$93.86 a barrel. And the US Nymex crude oil price rose...

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Dairy auction prices improve

16.11.22 The fortnightly GDT dairy auction saw the price index up 2.4%, breaking a 3-auction streak of falls, with gains of just over 3% for whole milk and skim milk powder. Overall and WMP prices remain down 18% and 19% respectively on the same time a year ago. Prices were mixed by product, with three products posting price rises and three posting falls, notes Westpac.  Skim milk powder (SMP) prices matched WMP’s 3.1% price lift, while anhydrous milk fat (AMF) prices rose by 2.7%. “Together...

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Oil prices make ground

26.10.22 Global oil prices rose by almost 1% on Tuesday, reports CommSec. The US dollar index fell, making dollar-denominated oil less expensive for other currency holders and helping to push prices higher. “Prices were also supported by supply concerns raised by Saudi Arabia's energy minister. But downward pressure on prices was applied by weaker economic data in Europe and the US. “The Brent crude oil price rose by US26 cents or 0.3% to US$93.52 a barrel. And the US Nymex crude oil price...

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Oil prices slide further

13.10.22 Global oil prices fell for a third day, down by around 2.0% on Wednesday. OPEC cut its outlook for demand growth this year by between 460,000 barrels per day (bpd) and 2.64 million bpd, said CommSec. “Also the US Energy Department lowered its expectations for both production and demand in the US. The Brent crude oil price fell by US$1.84 or 2.0% to US$92.45 a barrel. And the US Nymex crude oil price fell by US$2.08 or 2.3% to US$87.27 a barrel. Base metal prices were mixed on the...

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Steady dairy auction expected

3.10.22 Westpac expect whole milk powder prices (WMP) to be unchanged at the upcoming auction. This follows a 3.7% price rise at the previous auction. “Our pick is lower than the circa 2% lift that the futures market is pointing to,” says Westpac. “Fundamentally, global dairy prices are being underpinned by very weak global dairy supply. “However, at this auction we are erring on the side of caution as the surging US dollar has made dairy prices more expensive for most dairy buyers. In...

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KIwi dollar tumbles in to weekend

Commodity currencies were hammered last week as risk sentiment deteriorates with the NZD falling over 2% on Friday to end the week just below 0.56, notes BNZ Markets. Friday brought an end to another tumultuous quarter, with US equities making fresh lows (S&P500 -1.5%) and commodity currencies tumbling again, says Jason Wong, senior markets strategist. “The NZD was hammered on Friday, ending the week just below 0.56.  In contrast, the GBP continued to recover and is now close to where it...

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Sterling outperforms as Truss government forms

The USD remains in the ascendency amidst rising Fed rate expectations; DXY hits fresh 20-year high. GBP outperforms and UK curve sees huge steepening move on reports of Truss plan to cap household energy prices, says BNZ Markets this morning. “There has been another big sell off in global bonds overnight with market reacting to a stronger-than-expected US ISM Services index and reports that new UK PM Liz Truss will unveil a massive fiscal stimulus later this week to protect households from...

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Commodities Update

  5.9.22 * Global oil prices rose by around 0.5% on Friday. The OPEC+ production group is expected to keep oil output quotas unchanged for October at today's meeting. US jobs data supported oil prices. The Brent crude oil price rose by US66 cents or 0.7% to US$93.02 a barrel. And the US Nymex crude oil price rose by US26 cents or 0.3% to US$86.87 a barrel. Over the week Brent crude fell US$7.97 or 7.9% and Nymex crude fell US$6.19 or 6.7%. * Base metals were mixed on Friday. Zinc fell...

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Global oil prices up

9.8.22 Global oil prices rose around 2% on Monday, reported CommSec, traders citing firm economic data driving prices, notably stronger export growth in China and Friday's strong US jobs report. “Despite recession fears, the data suggested that demand for oil may not ease as much as expected. “Reuters cited a research report from Goldman Sachs with the broker saying the case for higher oil prices remains strong, with the market in a larger deficit than they expected in recent months.” The...

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Dairy price weakness likely

1.8.22   Westpac expect whole milk powder prices (WMP) to drop by around 2% at the upcoming auction this week. “This follows a 5.1% price slide at the previous auction. Commodity prices have corrected lower on growing concerns about the downside risks for global economic activity, and dairy prices have been no exception. “In addition, Fonterra lifted WMP auction volumes for August and September. This move may have increased the downward pressure on prices at least temporarily. “However,...

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Base metals higher

25.7.22 Base metal prices were higher on Friday except lead which was flat. Over the week metals rose 0.7-14.2% with nickel up the most and tin up the least, reports CommSec The gold futures rose by US$14.00 an ounce or 0.8% to US$1,727.40 an ounce. Spot gold was trading near US$1,726 an ounce at the US close. Over the week gold rose by US$23.80 or 1.4%. The iron ore futures price rose by US$1.10 or 1.1% to US$104.46 a tonne. Over the week iron ore rose by US$1.39 or 1.3%

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Weakening in global dairy demand

20.7.22 Dairy auction prices posted a chunky fall this week, comments Nathan Penny, agri-economist for Westpac. Overall prices slid 5.1%, while key whole milk powder (WMP) prices were down 5.0%. “Prices have effectively been on the wane since March,” says Mr Penny. “In fact, WMP prices have plunged 25% over that period, while overall prices are down 23%. “The price weakness was also broad-based. All five products on offer fell, with skim milk powder prices posting the largest fall (down...

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Commodity currencies and UK pound out-perform

8.7.22 Having been gripped by recession fears over recent weeks, markets are trading with a more upbeat tone overnight, notes BNZ Markets. “US equities and commodity prices are higher, the US 10-year rate is back to 3%, while global growth-sensitive currencies, including the NZD, are stronger,” says Nick Smyth. “The EUR remains under pressure though, falling to 1.0150 and bringing parity into closer view.  The nonfarm payrolls release is the key market focus in the session ahead. Market...

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Kiwi flat on quiet markets

5.7.22. With US markets closed for the Independence Day holiday, trading conditions have been quiet. Commodity currencies have found some favour, although going against the grain the NZD has been relatively flat, says Jason Wong at BNZ Markets. “The yen has underperformed against a backdrop of much higher European bond yields. “With the US on holiday, there has been little news and market movements have been modest apart from a notable lift in European bond yields.  This reverses some of last...

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Kiwi dollar dips below key support

Recession concerns continue to dominate markets at present and the NZ dollar has briefly broken key support on the downside. There were big falls in global rates again (US 10-year -13bps) in thin conditions, says Nick Smyth at BNZ Markets.   • Industrial commodities fall further on demand fears - copper now 25% off its highs   • NZD and AUD make two-year lows amidst stronger USD and global growth concerns   A soft ISM manufacturing survey on Friday night added to investors’...

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Neat deal but lacking meat on its bones

  New Zealand’s newest free trade agreement, with the 27-state European Union, is being hailed as a big success by PM Jacinda Ardern, who shook on the deal with EU President Ursula von der Leyden in Brussels overnight. “Export revenue to the EU will grow by up to $1.8 billion annually on full implementation,” said Ardern. There will be duty-free access on 97% of New Zealand’s current exports to the EU; with over 91% being removed the day the FTA comes into force. “NZ exporters set to save...

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Kiwifruit harvest 2022 in the bin

The 2022 harvest of New Zealand’s largest horticultural produce, kiwifruit, is now largely complete with almost all 2,800 growers’ orchards from Kerikeri in the north to Motueka in the south picked for consumers. The 2022 season was expected to have a record-breaking crop of at least 190 million trays of kiwifruit, overtaking last year’s record of over 177 million trays, according to NZ Kiwifruit Growers Inc. On average, each tray has around 30 pieces of kiwifruit. However, revisions in the...

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Tight supply underpins oil price

Global oil prices rose by as much as 1% on Tuesday. Traders attribute the gains to continued tight global supplies and increased summer fuel demand in the US and Europe, notes CommSec. “Supporting prices were predictions from Exxon Mobil Corp Chief Executive Darren Woods that fairly tight oil markets would extend for 3-5 years.” US President Biden has asked the chief executives of six oil companies to a meeting on Thursday to discuss ways to reduce high energy prices. The Brent crude price...

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Oil prices swing higher

Global oil prices swung higher in volatile trading on Monday, as traders focused on tight crude supplies over slowing global economic growth. The Brent crude price rose by US$1.01 or 0.9% to US$114.13 a barrel. And the US Nymex crude price gained US71 cents or 0.6% to US$110.27 a barrel. * Base metal prices were mostly higher on Monday. Aluminium rose by 1.3%. And copper lifted by 0.3% after hitting 9-month lows on worries about a potential global recession. Tin fell by 1.3%. * The gold...

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US investors fear rate hikes

14.6.22 US sharemarkets slumped again on Monday with investors fearing that aggressive inflation-fighting rate hikes could tip the economy into recession, notes CommSec. Reuters reported "Cryptocurrency- and blockchain-related stocks, including Riot Blockchain, Marathon Digital Holdings and Coinbase Global, all plunged as bitcoin slumped more than 10% after major US cryptocurrency lending company Celsius Network froze withdrawals and transfers citing "extreme" conditions." The Dow Jones index...

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US market had one direction to go

14.6.22 \\ US stocks only had one way to go after inflation fears intensified and raised the risk of stronger tightening by the Fed and a much sooner recession, says Edward Moya, senior market analyst, The Americas, for OANDA this morning. “Wall Street is facing a plethora of negative headlines, but the problem is that until we see a deterioration with credit conditions and market functioning, the Fed has the greenlight to tighten as much as possible to get inflation under control “An ugly...

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Global food crisis looms

Global food prices continue to strengthen as shortages loom for basic foods such as grains, says the ANZ bank in its latest Agri Focus report. This means there will also be a shortage of carbohydrates to feed livestock, says ANZ agri economist Susan Kilsby. “This won’t directly impact New Zealand food production systems, but it will impact our competitors who rely on grain to produce beef and milk. At the same time, the price of growing pasture has also gone up, as global fertiliser costs have...

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Commodity prices higher

, Commodities were generally higher last week, Brent crude oil gaining 6% and hitting a 2-month high, just below $120 per barrel, ahead of the start of the US summer driving season. BNZ Markets notes that EU leaders are meeting over the next two days, hoping to convince Hungary to sign up to a plan to phase out Russian oil exports. Meanwhile, copper, often seen as a barometer of the global economy, was up a more modest 0.5% on the week, but is still almost 6% off its recent lows.  At face...

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