Low trading volumes last week left oil in the crosshairs, leading to its first weekly decline since June. Meanwhile, extreme and volatile weather around the world weighs on agricultural products, with cocoa the latest crop to see wild price swings.
(Bloomberg) — Low trading volumes last week left oil in the crosshairs, leading to its first weekly decline since June. Meanwhile, extreme and volatile weather around the world weighs on agricultural products, with cocoa the latest crop to see wild price swings.
Here are five notable charts to consider in commodity markets as the week gets underway.
Agriculture
The impact of last month’s heavy rains in West Africa are raising the likelihood of a cocoa crop deficit for a third straight year. Swollen-shoot disease in top grower Ivory Coast and the potential for an extended El Niño weather pattern are also posing additional risks. Futures in New York are fresh off their first weekly advance in three weeks and have gained more than 30% this year. Even so, cocoa is still down overall in August and on course to see its streak of six monthly advances come to an end. Meanwhile, raw-sugar futures are up almost 19% year-to-date, adding further input-cost pressures for chocolate makers.
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Metals
Gold is in a slump amid ongoing speculation that the Federal Reserve may not yet be done raising interest rates and a selloff in global bond markets. Spot gold settled below its closely watched $1,900 an ounce level on Friday after falling for a fourth-straight week. At the same time, global holdings in bullion-backed exchange-traded funds shrank for 12 straight weeks, the longest stretch since November. Still, signs that US inflation may have peaked could help reverse the trends for the non-interest bearing precious metal. Investors will be closely watching the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming this week for clues on the future path of rates.
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Oil
Oil traders appear to be shrugging off growing signs of a tight physical market, instead focusing their attention on China’s property woes and the potential for further demand weakness. West Texas Intermediate and Brent futures are coming off their first weekly declines since June with both contracts trading in the low-to-mid $80 a barrel range. Should China’s crisis deepen and the global economic outlook worsen — with all eyes also focused on Fed Chairman Jerome Powell’s speech in Wyoming on Friday — crude may have a difficult time reversing the trend.
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Renewable Energy
Billions of dollars in trade with the US are at risk after the Commerce Department concluded that some Chinese manufacturers are illegally dodging tariffs by assembling solar equipment in other Asian countries before shipment. The findings, after a 17-month probe, could expose some manufacturers in the targeted nations — Cambodia, Malaysia, Thailand and Vietnam — to anti-dumping and countervailing duties as high as 254% beginning next June. The four nations accounted for more than 75% of US imports last year, according to data from the Department of Energy’s National Renewable Energy Laboratory. The situation threatens to raise the cost of renewable power and slow the development of clean energy.
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Gasoline
Summer may be nearing its end in the US, but Americans are now facing some of the most expensive prices at the pump in 10 months thanks in part to an outage at a major Gulf Coast refinery. The national average for gasoline climbed above $3.87 a gallon last week, the highest level since October, according to data from auto club AAA. That’s arming Republicans with a fresh weapon to bash President Joe Biden as he and his administration canvas the nation, touting their climate policies and economic strategy. Even so, despite an almost 10% increase since the beginning of July, retail prices are well below where they were at the start of last summer, when the national average reached an eye-popping $5 a gallon. Meanwhile, gasoline futures — which tend to dictate retail prices — are up almost 15% this year.
–With assistance from Jennifer A. Dlouhy and Ari Natter.
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