Commodities

Oil prices move higher

Oil prices were higher on Friday, gaining around 1.5%, with the market concerned about tight supply and the EU’s proposed ban on Russian oil imports, according to BNZ   Markets “However, Bloomberg reported over the weekend that Hungary continues to block the EU’s proposed Russian oil ban, even though it would be afforded a longer transition. “In contrast, industrial metals prices were all weaker, suggesting investors see the demand outlook softening.  Copper was 0.8% lower on Friday and 3.6%...

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Low yields for grain mean high prices

7.5.22 The additional demand from China for imported food, combined with tight global supplies of nearly all types of protein, has pushed the price of many commodities to record levels. This is certainly benefitting New Zealand farmers right now, with very strong prices on offer for dairy, beef and lamb, comments Susan KIlsby, senior agri-economist at ANZ in New Zealand. High grain costs are making importing this product very expensive for poorer countries, which may therefore result in grain...

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Dairy auction prices plunge

4.5.22 The GDT dairy auction price index plunged 8.5% at the overnight auction, more than the 2-3% expected, driven by falls across all product groups. Skim and Whole milk power prices fell 6.5%, while butter was the biggest mover, down 12.5%. The price index has now fallen for four consecutive auctions, taking the cumulative price decline to 13.4% since 1 March, notes Jason Wong at BNZ Markets. “Since that time, the NZD has fallen about 5%, cushioning the blow for prices in NZD terms, and the...

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Fresh low for Kiwi Dollar

3.5.22 By recent standards it has been a quiet trading session with little news, with the UK and some key Asian markets on holiday, says BNZ Markets. “But the new month has begun with the same trends as we saw through April – weaker equities, higher rates and a stronger USD,” says Jason Wong, senior markets strategist. “The NZD has traded at a fresh near 2-year low. The US 10-year Treasury rate cracked the 3% mark for the first time this cycle. “After a horrible April for bonds, equities and...

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Commodity prices set to stay

1.5.22 The war in Ukraine has dealt a major shock to commodity markets, altering global patterns of trade, production, and consumption in ways that will keep prices at historically high levels through the end of 2024, according to the World Bank’s latest Commodity Markets Outlook report. The increase in energy prices over the past two years has been the largest since the 1973 oil crisis. Price increases for food commodities—of which Russia and Ukraine are large producers—and fertilisers, which...

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Commodites help lift ASX

13.4.22 Buyers helped the ASX 200 deliver its second gain of the week on Wednesday, after finishing up 0.3% or 25 pts, at 7479. This comes after the Materials sector climbed 0.6% on the back of a movements in the commodity space which saw the gold price rally for the fourth straight day, and the iron ore snap a five-day losing streak, notes CommSec. Oil prices also surged by around 6% overnight, boosting the local Energy sector by 1%. Gains were also seen in other parts of the market today,...

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Commodity currencies struggle

Risk appetite is weaker as investors focus on increasing lockdowns in China and the relentless rise in longer term bond rates, BNZ Markets noted this morning. Global equities are weaker and global 10-year rates have risen to fresh multi-year highs, says Jason Wong, senior markets strategist. “Oil prices have fallen back below US$100 on weaker demand fears from China lockdowns, amid ongoing supply from Russia. Against that backdrop, commodity currencies and JPY have underperformed. The new week...

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Oil prices easing back

30.3.22 Global oil prices fell by around 2% on Tuesday. Hopes for progress in Ukraine-Russia peace talks drove oil prices lower, reported CommSec. “Also lockdowns in Shanghai to curb the spread of Covid-19 prompted concerns of lower Chinese oil demand. Investors look ahead to the meeting of OPEC+ oil producers on Thursday.” The Brent crude price fell by US$2.25 a barrel or 2.0% to US$110.23 a barrel. US Nymex crude fell by US$1.72 or 1.6% to US$104.24 a barrel. “Base metal prices fell by as...

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Oil prices retreat on ceasefire hopes

29..3.22 Global oil prices fell by near 7% on Monday on fears of lower Chinese demand. Shanghai launched a two-stage lockdown to contain a surge in Covid-19 infections, said CommSec. Reuters also noted "Hopes for progress in peace negotiations between Russia and Ukraine, which could start in Turkey on Tuesday, also weighed on prices." Investors look ahead to a meeting of OPEC+ nations on Thursday. The Brent crude price fell by US$8.17 a barrel or 6.8% to US$112.48 a barrel. The US Nymex crude...

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NZ dollar up as commodities rise

24.3.22 Global equity markets have pulled back overnight and global bond rates are also lower after their recent surge higher, notes BNZ Markets.  Commodities prices are stronger, and this has supported the AUD, more so than the NZD. GBP weakened despite another strong inflation report, while EUR was also on the soft side, says Jason Wong, senior markets strategist. “This week it feels that the bond market has captured the market’s attention, given the surge in yields that has prevailed, but...

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Dairy auction rally hits a roadblock

16.3.22 Dairy auction prices dipped in the latest DairyTrade auction. Overall prices fell 0.9%, while key whole milk powder (WMP) prices slid by 2.1%. The price fall was the first this year, and thus snapped a run of five consecutive price rises, observed Nathan Penny, senior agri-economist at Westpac.  WMP and butter posted the largest price falls. “Despite the fall, overall and WMP prices still sit 18% and 20% higher, respectively, than as at the end of 2021. Prices were mixed by product;...

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Oil price plunge – currencies steady

16.3.22 A further plunge in oil prices has helped support a recovery in US equities. “Anxiety in the bond market has settled for a day, with small changes in US Treasuries and European rates pushing lower,” adds Jason Wong, senior markets strategist at BNZ Markets this morning. “Currency movements have been modest, with the NZD showing a small gain overnight to 0.6760, recovering the small loss seen during local trading hours.” “The key market movement overnight has been another plunge in oil...

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Markets remain extremely volatile

14.3.22 Investor sentiment remains fragile amidst the fallout from the war in Ukraine and the prospect of major central bank tightening this year, says Nick Smyth at BNZ Markets this morning. "US equities fell further on Friday while the US 10-year rate hovered around the 2% mark," he says. "The USD was broadly stronger, with USD/JPY hitting a five-year high and the NZD slipping back towards 0.68.  The US 10-year breakeven inflation rate surged to a record high, just below 3%.  Besides ongoing...

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Global rates up, Kiwi firms

11.3.22 Global rates are higher overnight after the ECB set out an accelerated tapering schedule and opened the door to earlier rate hikes, despite the ongoing war in Ukraine, says BNZ Markets. “European rates have seen big moves higher, especially in the periphery, while the US 10-year rate has punched through 2%.,” comments Nick Smyth. “Equity markets are weaker, by 1-2% in the US and 3-4% in Europe, amidst the prospect of monetary policy tightening and no breakthrough in Russia-Ukraine...

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Markets bounce – Kiwi higher

10.1.22 Market volatility continues, with a reversal of recent trends despite no obvious trigger. “Global equities have rebounded strongly, commodity prices show widespread falls, global rates are significantly higher and European currencies (ex CHF) are the strongest performers by far,” says Jason Wong, senior markets strategist at BNZ Markets. “Amidst improved risk appetite, safe-haven currencies are weaker, seeing the NZD recover to 0.6850 and the AUD up to 0.7320. “On seeing the...

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NZD underperforms – commodities choppy

The war in Ukraine remains the predominant driving force for markets. “Speculation on a plan for the EU to jointly issue bonds saw German yields rocket higher, feeding through into US Treasury yields,” says Jason Wong at BNZ Markets this morning. “Oil prices are higher as the UK and US adopt a Russian import embargo. The AUD and CAD have underperformed against some turmoil in commodity markets. The NZD has been less affected, after domestic rates surged following a domestic trading bank...

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Kiwi slips – oil prices soar – equities lower

8.3.22 Market volatility has continued in response to the war in Ukraine “Some extreme moves in commodity markets are unnerving investors,” comments Jason Wong, senior market strategist at BNZ Markets this morning. “Germany ruled out a Russian oil embargo, seeing a turnaround in some markets. Oil prices are well down from the heights during Asian trading and the NZD is down almost a cent from yesterday’s high.” Global equities are down for the day, while global rates have pushed higher on...

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Bulk exports a key trade

Norwegian fertiliser maker Yara International says in a statement that the international community must trim its dependence on Russian raw materials for agriculture. The Norwegian company, which is one of the world’s biggest fertiliser producers, supplies Ukraine’s agricultural sector and is a big buyer of raw materials, such as phosphate and potash, from Russia, Ukraine and Russia are both major exporters of some of the world’s most basic foodstuffs, together accounting for about 29% of...

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Commodity prices increase

4.3.22 Commodity prices remain in the spotlight given the potential for supply disruptions, notes BNZ Markets Spot Brent crude oil hit almost $128 per barrel overnight although it has since given back those gains amidst speculation an Iranian nuclear deal could be close, which would help release Iranian supply to the market. Brent crude is now down around 2% on the session.   Likewise, European natural gas futures hit an all time high of €200 before falling back to €160.  Aluminium prices hit...

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Markets remain volatile

4.3.22 Markets remain volatile and focused on the Russia-Ukraine war. BNZ Markets notes US equities and bond yields are lower overnight, partially reversing their big moves higher yesterday, while the EUR hit a fresh 18-month low. “Wheat, corn and aluminium prices continue to push higher on supply fears although oil is slightly lower overnight on speculation of an imminent Iran nuclear deal,” says Nick Smyth. “The NZD remains torn between the tailwind of higher commodity prices and the...

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Dairy auction for the ages

3.2.22 Soaring prices for dairy commodities on this week’s GlobalDairyTrade auction has taken values to the highest levels in years. The average price index shot up 5.1%, with average prices reaching above the USD 5k/tonne mark (USD 5,065/tonne). RaboResearch Senior Agricultural Analyst Emma Higgins says the surge is propelled by dwindling milk supplies, market uncertainty around the fall-out from the Ukraine crisis and ultimately what the combination will mean for global dairy trade. “Average...

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Beef prices elevated but Omicron headache

3.2.22 Constrained global beef availability and ongoing strong demand continue to support elevated prices for New Zealand beef farmers, Rabobank says in a new report. However a raft of processing challenges have placed the industry in a race against time to capitalise on the strong returns. In its Q1 Beef Quarterly, the agribusiness banking specialist says New Zealand’s meat processors are now juggling a host of issues including significant staff shortages, the risk of Covid-19 and its impact...

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Westpac revise forecast on dairy price

21.2.22 On the back of the continued strength in global dairy prices, last Westpac upgraded their 2022/23 farmgate milk price forecast by $1.00 to $8.50/kg. A weaker NZD/USD is also supporting a higher forecast. “Meanwhile for now, we are sticking with our record-high 2021/22 forecast of $9.50/kg,” add Westpac economists. This revision to next season’s forecast comes as global dairy prices continue to surge. Already, overall prices have lifted nearly 14% so far over 2022, while key whole milk...

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Oil price hit 7-year high

4.2.22 Global oil prices rose on Thursday to 7-year highs on on-going supply concerns. CommSec reports, “The Brent crude price rose by US$1.64 or 1.8% to US$91.11 a barrel. The US Nymex crude price rose by US$2.01 or 2.3% to US$90.27 a barrel. “Base metal prices were on lower by as much as 2.2% on Thursday with lead down the most. But aluminium rose 2.4%. “The gold futures price fell by US$6.20 or 0.3% to US$1,804.10 an ounce. Spot gold was trading near US$1,805 an ounce in late US trade. Iron...

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Dairy prices sustain strength

2.2.22 The GlobalDairyTrade auction was another strong one, with the price index rising by 4.1%, following the gain at the previous auction of 4.6%. Whole milk powder rose by 5.8% while skim milk powder rose by 2.1%. “Prices are up over 30% from a year ago, against a backdrop of a softer NZ dollar through much of the past year,” said Jason Wong at BNZ Markets. This is creating an environment of strong returns for dairy farmers, who are on track for a record milk payout this year. Mr Wong said...

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Rising world markets

1.2.22 There hasn’t been a great deal of news but the new week has begun with a classic lift in risk appetite, note BNZ Markets. This sees higher equity markets, higher global bond rates, higher commodity prices and higher commodity currencies alongside a weaker USD and soft safe haven currencies, said Jason Wong, senior markets strategist. The AUD has outperformed, lifting 1%. Following the sharp rally in US equities late Friday, the new week has seen some more positive price action, with the...

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Oops, oil takes quick dip

Global oil prices fell by near 2% on Monday on jitters ahead of the US Federal Reserve meeting. “A stronger US dollar made commodities more expensive for buyers in Asia and Europe,” noted CommSec. “Adding to investor jitters was news that the United Arab Emirates intercepted and destroyed two Houthi ballistic missiles targeting the Gulf country on Monday. “The Brent crude price fell by US$1.62 or 1.8% to US$86.27 a barrel. “The US Nymex crude price fell by US$1.83 or 2.1% to US$83.31 a...

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Oil prices at 7 year high

20.1.22 Global oil prices climbed to 7-year highs on Wednesday. Reuters notes that "a fire on a pipeline from Iraq to Turkey briefly stopped flows, increasing concerns about an already tight short term supply outlook." Concerns about instability in the United Arab Emirates and Ukraine added to supply concerns, reported CommSec. The Brent crude price lifted by US93 cents or 1.1% to US$88.44 a barrel. The US Nymex crude price added US$1.53 or 1.8% to US$86.96 a barrel. “Base metal prices rose by...

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Oil trend firm and gold rises

6.1.22 Global oil prices rose by around 1.0% on Wednesday despite mixed news on US fuel inventories. CommSec adds, “The Brent crude price rose by US80 cents or 1.0% to US$80.80 a barrel. And the US Nymex crude price rose by US86 cents or 1.1% to US$77.85 a barrel. *\ “ Base metal prices were weaker on Wednesday by between 0.8- 2.4% with copper and lead down the least and nickel down the most. But tin rose 0.2% and aluminium rose 3%. “The gold futures price rose by US$10.50 or 0.6% on Wednesday...

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Oil prices move higher

5.1.22 Global oil prices rose by around 1.2% on Tuesday, noted CommSec. OPEC+ oil ministers agreed to stick to their plan of gradually unwinding production constraints, lifting output targets by 400,000 barrels per day in February. Production disruptions in Libya also supported crude prices. The Brent crude price rose by US$1.02 or 1.3% to US$80.00 a barrel. And the US Nymex crude price rose by US91 cents or 1.2% to US$76.99 a barrel. Base metal prices were firmer on Tuesday, lifting by...

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