Dollar's ascent piles pressure on commodities as polar vortex looms

Head of Commodity Strategy at Saxo Bank Ole Sloth Hansen

Commodity prices remain under pressure across all sectors as the dollar continues to rise while rising supplies of many key commodities from energy through metals to food is not being met by an equal rise in demand. The outlook for global growth remains subdued, not least in Europe and China. 

Several commodities from iron ore to crude oil and gold hit new lows as bears have taken control of the price action for now. The Bloomberg Commodity Index of 22 leading commodities touched a new fiver-year low before a dramatic rally in natural gas helped support a small recovery in the index.

The precious metal sector was the hardest hit for a second week in a row with both gold and silver continuing to be sold following the technical break below USD 1180/oz. on gold. Soft commodities were all lower, led by sugar on ample supply, while the strong dollar together with the removal of the Ebola premium saw cocoa drop to a six-month low.

Grains were also lower following five weeks of gains as record US supplies begin to hit the market. The UN's Food & Agriculture Organisation forecast that world grain reserves would reach a 15-year high during the 2014-15 period and this could weigh on the price of key crops such as corn and wheat.

The individual performance table gives a clear picture of the overall negative sentiment in commodities at the moment. All but a few suffered losses during the past week with natural gas being an almost extreme exception. Since October 28 the current futures contract for December delivery has rallied by almost one quarter as the early arrival of winter has brought back memories of the dramatic price spikes seen back in January when record gas demand drove inventories to a uncomfortably low levels. 

A large blast of Arctic air or polar vortex is expected to hit the US next week and this could drive temperatures to at least 6 degrees Celsius below normal and sharply increase demand for natural gas, which heats around half the homes in the US. Most of the gas that was consumed during last winter's frigid weather has been replaced but the return of colder than normal weather so early in the season has raised concerns about a repeat of last winter. 

 Return of the polar vortex? Planalytics, a business weather intelligence company, reckons the last one cost the US economy $5bn. Photo: AccuWeather

Crude oil came under renewed selling pressure with supply continuing to rise faster than demand. OPEC, in its annual World Oil Outlook, reduced the forecast for how much the cartel need to supply all the way out to 2035 citing the ongoing shale boom, especially in the US, as the primary reason for cutting the outlook. 

The price of both WTI and Brent crude oil, however, did manage to find some support as concerns about Libya's ability to maintain its recent production gains were highlighted after production from its biggest field was temporarily halted following an attack by militias. Meanwhile in the US, the weekly inventories rose by less than expected as refinery demand, against expectations, rose for the first time since September. This could be the first indication that the seasonal pick up in demand as begun.

The OPEC meeting on November 27 is going to receive a lot of attention considering the challenge the cartel is currently facing. OPEC is currently producing around 30.5 million barrels per day (bpd) as the International Energy Agency only expects some 29.3 million bpd will be needed throughout 2015. A cut of 1 million barrels per day is now increasingly required just to stabilise prices so lack of action carries the risk of sending oil down even further.

Another important date for oil markets and the near-term direction of the price is the November 24 deadline for reaching a deal between six major powers and Iran over its nuclear program. President Obama, who is in need of a success story following the defeat at the midterm election, has a strong incentive to push the negotiations towards a successful conclusion. The potential lifting of sanctions would trigger a sharp increase in exports from Iran as it would insist on reclaiming the market share that was lost when sanctions were imposed back in 2012.

WTI crude has reached an important area of support ahead of the 2011 low at USD 75/barrel and although it remains stuck within a negative trend we believe that most of the selling could now be behind us. A meaningful recovery however can only happen when the current supply surplus begins to shrink, either through reduced supply and/or increased demand. So while we expect the price of WTI crude to remain above USD 75/barrel it will require a break above 80 dollars before short covering could take it back to resistance at USD 83/barrels.

Gold traded in dollars continues to suffer from the adverse impact of a rising dollar and falling energy prices. As commodity prices falls so do the inflationary pressures. And in order to avoid the deflationary trap, increases in quantitative easing from the likes of  the European Central Bank and the Bank of Japan further supports the dollar. This has now become a vicious circle from where gold and silver are struggling to escape and as a result both metals have fallen to their lowest level since 2010.

Gold's slide in the rout of Q2 last year was eventually halted by strong physical buying from China. So far there has been no sign of a similar pick up in demand with the spot price on the Shanghai Gold Exchange trading flat relative to London compared with a premium last month. Without a pick up in physical demand the bears are left in control leaving the upside potential limited as rallies will be viewed as a new selling opportunity.

Only a move back above USD 1180/oz could trigger a major round of short covering and signalling a move back towards a neutral stance. Attention is currently removed from the Swiss Gold referendum on November 30 as recent polls have indicating fading support for this initiative which otherwise could have provided a major boost to the price of gold.

ارتفاع الدولار يفرض مزيداً من الضغط على السلع إبان الدوامة القطبية التي تلوح في الأفق

بقلم أولي سلوث هانسن، رئيس استراتيجية السلع في ساكسو بنك

لا تزال أسعار السلع ترزح تحت الضغط عبر كافة القطاعات بسبب استمرار الدولار في الارتفاع بينما لم تلق التوريدات المرتفعة في العديد من السلع الرئيسية بدءاً بالطاقة ومروراً بالمعادن وانتهاءاً بالطعام ارتفاعاً مماثلاً في الطلب في حين بقيت النظرة المستقبلية بخصوص النمو العالمي ضعيفة لا سيما في أوروبا والصين.  

سجلت عدة سلع مثل خام الحديد والنفط الخام والذهب انخفاضات قياسية جديدة في الوقت الذي يسيطر فيه المضاربون على حركة السعر حتى الآن في حين اقترب مؤشر سلع بلومبيرج الخاص بعدد 22 من السلع الرئيسية من أدنى متسوى له في خمس سنوات قبل أن يساعد الارتفاع الدراماتيكي في الغاز الطبيعي على إنعاش المؤشر.

شكل قطاع المعادن الثمينة الضربة القاضية للأسبوع الثاني على التوالي مع استمرار بيع الذهب والفضة بعد الاختراق التقني تحت 1180 دولار للأونصة على الذهب في حين انخفضت كافة السلع الاستهلاكية يقودها السكر جراء العرض الوفير بينما أدى الدولار القوي بالإضافة إلى زوال تفوق الإيبولا إلى هبوط الكاكاو إلى أدنى مستوياته في ستة أشهر.

انخفضت الحبوب كذلك الأمر بعد خمسة أسابيع من الأرباح نظراً لبدء التوريدات الأمريكية القياسية في ضرب السوق في الوقت الذي توقعت فيه منظمة الزراعة والغذاء التابعة للأمم المتحدة بأن يصل الاحتياطي العالمي من الحبوب إلى أعلى معدلاته في 15 سنة خلال عامي 2014/2015 مما قد يؤدي إلى فرض ثقل على سعر المحاصيل الرئيسية كالذرة والقمح.

 المصدر: بلومبيرج، ساكسو بنك

 

يعطي جدول الأداء الفردي صورة واضحة للزخم السلبي الشامل الذي تشهده السلع في الوقت الراهن في حين تعرضت معظمها إلى الخسائر خلال الأسبوع الماضي ما عدا الغاز الطبيعي الذي شكل استثناءاً إذ انتعشت العقود المستقبلية الحالية الخاصة بالتسليم في شهر ديسمبر منذ 28 أكتوبر بحوالي ربع واحد في الوقت الذي يعيدنا فيه الوصول المبكر للشتاء إلى ذاكرة ارتفاعات السعر التي شهدناها في شهر يناير عندما تسبب الطلب القياسي على الغاز إلى هبوط المخزونات إلى مستويات منخفضة مزعجة.  

من المتوقع أن يضرب تيار هوائي قوي أو دوامة قطبية الولايات المتحدة في الأسبوع القادم مما قد يتسبب في انخفاض درجات الحرارة تحت معدلها الطبيعي بست درجات مئوية على الأقل وبالتالي زيارة الطلب على الغاز الطبيعي بصورة حادة بوصفه يستخدم في تدفئة نصف المنازل في الولايات المتحدة. وعلى الرغم من تعويض معظم الغاز الذي تم استهلاكه خلال برد الشتاء القارس، إلا أن عودة الطقس البارد تحت المعدل الطبيعي يثير المخاوف حول تكرار الشتاء الماضي مرة أخرى.