You are on page 1of 8

Investment Research — General Market Conditions

06 August 2010

Commodities Daily
Commodities news
Today’s key points
 Overview – In the last 24 hours, there has been a lot of attention on wheat prices.
Yesterday, Russia announced an export ban on wheat, in effect from 15 August and  US: Non-farm payrolls report
lasting for the rest of the year. After the announcement, wheat prices soared in both
Europe and the US. US prices ended limit-up (8%) and in Europe prices hit a record
of EUR235 per tonne on record trading volumes. Both base metal and energy prices
fell slightly yesterday, after US equities fell marginally.

 Wheat Prices continued higher in Asian times, but this afternoon we have seen some
profit-taking. CBOT prices have again fallen below USc800 per bushel, after trading Commodities overview
as high as USc 841. Matif Wheat in Paris is trading more less unchanged compared
Contract Last price %, d/d
with yesterday. It seems that the market is increasingly focusing on the fact that
WTI, NYMEX 1. pos 81.8 -0.8
global wheat stocks are in fact quite large compared with the 2007/08 season – see
the chart below. We think that the market is correct in taking a breather. In the light Brent, ICE 1. pos 81.1 -1.4
of the wheat stocks, the latest price strength seems a bit overdone and we would not Heating Oil, NYMEX 1. pos 217.8 -1.1
be surprised to see prices falling slightly in the next couple of days, provided that Gasoline, NYMEX 1. pos 215.8 -0.8
new countries do not introduce export bans.
Aluminium, LME 3M 2222 -0.3
 The all-important US non-farm payrolls report that has just been released, which in Copper, LME 3M 7440 -0.9
our view was disappointing. US payrolls fell by 131k, but the main culprit was 143k Lead, LME 3M 2197 -2.1
fewer publicly-employed census people, implying that private employment rose by Nickel, LME 3M 22159 1.0
71k – well below the 150-200k readings we saw in the spring. The number could
Zinc, LME 3M 2131 0.5
further fuel double-dip fears in the US and weigh on business cycle sensitive
Steel, LME 3M 503 0.2
commodities. However, the dollar is also suffering, mitigating the growth effect on
dollar-denominated prices. Hot Rol Coil, NYMEX 1. pos 560 -3.4

Gold, spot 1195 0.0


 The United Arab Emirates government acknowledged today that an oil tanker was
indeed attacked by terrorists four days ago. See CNN story. Together with Silver, spot 18 -1.0
Lebanon/Israel tensions and Iran, this might indicate that geo-politics is about to
Wheat, CBOT 1. pos 796.8 9.8
return to the oil agenda in the next few days.
Corn, CBOT 1. pos 397.5 -0.7
Source: Bloomberg, Danske Markets
Huge stocks should dampen panic in global wheat markets

Commodities Research:

Chief Analyst
Arne Lohmann Rasmussen
+45 4521 8532
arr@danskebank.dk

Senior Analyst
Christin Tuxen
+45 45137867
tux@danskebank.dk

Commodities Sales:

Senior Dealer
Martin Vorgod
+45 4514 3286
mavo@danskebank.dk

Vice President
Source: USDA * Estimates by USDA Fredrik Åberg
+45 4514 3285
fredrik.aberg@danskebank.dk

Bloomberg: DRFX <GO>

www.danskeresearch.com
Commodities Daily

Commodity price movements

06.08.2010 Yesterday Month ago Year ago This year


Last price %, today Close %, d/d Price %, m/m Price %, y/y %, YTD
Energy (1. pos):
NYMEX WTI ($/bbl) 81.8 -0.3 82.0 -0.6 72.0 13.6 71.9 13.7 3.0
ICE Brent ($/bbl) 81.1 -0.6 81.6 -0.7 71.4 13.5 74.8 8.4 4.0
NYMEX Heating Oil ($/gallon) 217.8 -0.4 218.7 -0.7 191.7 13.6 193.7 12.5 2.8
NYMEX RBOB Gasoline ($/gallon) 215.8 -0.3 216.4 -0.5 197.1 9.5 206.1 4.7 5.1
ICE Gasoil ($/ton) 683.3 -0.7 688.0 -0.8 623.3 9.6 611.0 11.8 7.5
ICE NWE Jet Fuel, CIF ($/ton) 746.4 -0.6 750.6 -0.6 666.8 11.9 660.6 13.0 6.6
TTF NL Natural Gas (€/mwh) 18.9 0.0 18.9 -1.6 21.3 -11.3 9.6 97.3 45.4
Henry Hub Natural Gas ($/MMBtu) 4.6 0.0 4.6 -2.9 4.7 -1.8 3.7 22.8 -17.5
Nordpool electricity (€/mwh) 44.6 0.6 44.4 0.1 46.8 -4.6 - - -
Fuel oil, 1%, FOB NWE ($/ton) 479.5 -0.5 482.0 - 446.5 3.8 301.3 53.8 81.3
Fuel oil, 3.5%, FOB ARA ($/ton) 450.0 -0.6 452.5 - 433.0 3.7 227.0 97.8 98.2
API2 steam coal, CIF ARA ($/ton) 94.8 -0.2 94.9 -0.3 93.3 1.6 71.0 33.5 13.8
ICE ECX Carbon Emission (€/tn) 14.3 -0.4 14.3 0.1 15.2 -5.9 14.8 -3.4 14.0

Base metals:
Aluminium, LME 3M, $/ton 2222 1.0 2200 -1.3 1995 11.4 1990 11.7 -0.4
Copper, LME 3M, $/ton 7440 0.6 7399 -1.4 6605 12.6 6025 23.5 0.9
Lead, LME 3M, $/ton 2197 0.5 2185 -2.6 1780 23.4 1855 18.4 -9.7
Nickel, LME 3M, $/ton 22159 1.3 21875 -0.3 18900 17.2 19600 13.1 19.6
Zinc, LME 3M, $/ton 2131 1.6 2097 -1.1 1850 15.2 1850 15.2 -16.8
Steel, LME 3M, $/ton 503 0.0 503 0.2 420 19.8 415 21.2 22.8
Hot Rolled Coil, NYMEX, 1. pos, $/ton 560 0.0 560 -3.4 610 -8.2 500 12.0 1.8

Precious Metals (spot, $/t oz.):


Gold 1195 -0.1 1197 0.1 1210.5 -1.3 960.6 24.4 8.2
Silver 18 0.0 18 -0.9 17.9 2.7 14.7 25.2 7.7

Agriculturals (1. pos):


CBOT Wheat ($/bu.) 796.8 1.4 785.8 8.3 492.8 61.7 500.3 59.3 47.1
Matif Mill Wheat (€/ton) 224.5 6.9 210.0 2.8 145.8 54.0 126.0 78.2 71.0
CBOT Corn ($/bu.) 397.5 -1.5 403.5 0.8 360.0 10.4 332.5 19.5 -4.1
CBOT Soybeans ($/bu.) 1057.0 0.2 1055.0 0.2 964.3 9.6 1170.5 -9.7 1.7
NYBOT Sugar ($/lb.) 18.4 0.8 18.3 -3.1 16.7 10.5 19.8 -6.9 -31.6

Commodity indices (total return):


DJ-UBS 275 -0.1 275 1.2 249 10.4 262 5.1 -1.6
S&P GSCI 4389 -0.2 4397 -0.3 3909 12.3 4406 -0.4 -3.2
Reuters CRB 278 -0.5 279 0.8 254 9.4 264 5.0 -1.9
Rogers commodity index 3290 -0.1 3294 0.1 2901 13.4 3056 7.7 0.5
DJ-AIG 137 -0.1 137 1.2 124 10.4 130 4.9 -1.7
S&P GSCI Energy 964 -0.7 971 0.0 862 11.8 1023 -5.8 -5.1
S&P GSCI Industrial Metals 1657 -1.3 1679 1.1 1435 15.5 1527 8.5 -2.9
S&P GSCI Precious Metals 1547 0.3 1543 0.5 1556 -0.5 1256 23.2 8.7
S&P GSCI Agriculture 626 2.6 610 3.2 515 21.5 578 8.3 1.7
Source: Bloomberg, Danske Markets.

2|
www.danskeresearch.com
Commodities Daily

Energy
Oil prices US crude oil stocks, EIA

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

WTI (NYMEX) forward curve Brent (ICE) curve

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Jet fuel and gasoil crack spreads Gasoline crack spread, RBOB, NYMEX 1. pos

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

3|
www.danskeresearch.com
Commodities Daily

Heating oil crack spread, NYMEX 1. pos Fuel oil, NWE, crack spreads

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

CO2 emission rights, ICE 1. pos Electricity, Nordpool quarterly, 1. pos

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Natural gas, 1. pos API2 coal, 1. pos

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

4|
www.danskeresearch.com
Commodities Daily

Metals
Aluminium Aluminium forward curve

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Copper Copper forward curve

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Nickel Nickel forward curve

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

5|
www.danskeresearch.com
Commodities Daily

Zinc Zinc forward curve

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Copper SHFE-LME spread Steel

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Gold and silver Gold forward curve

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

6|
www.danskeresearch.com
Commodities Daily

Grains
Wheat Milling wheat forward curve, NYSE LIffe

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Corn, CBOT 1. pos Corn forward curve, CBOT

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

Soybeans, CBOT 1. pos Soybeans forward curve, CBOT

Source: EcoWin, Danske Markets. Source: EcoWin, Danske Markets.

7|
www.danskeresearch.com
Commodities Daily

Disclosure
This research report has been prepared by Danske Research, which is part of Danske Markets, a division of
Danske Bank. Danske Bank is under supervision by the Danish Financial Supervisory Authority.

Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high
quality research based on research objectivity and independence. These procedures are documented in the Danske
Bank Research Policy. Employees within the Danske Bank Research Departments have been instructed that any
request that might impair the objectivity and independence of research shall be referred to Research Management
and to the Compliance Officer. Danske Bank Research departments are organised independently from and do not
report to other Danske Bank business areas. Research analysts are remunerated in part based on the over-all
profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other
remuneration linked to specific corporate finance or debt capital transactions.

Danske Bank research reports are prepared in accordance with the Danish Society of Investment Professionals’
Ethical rules and the Recommendations of the Danish Securities Dealers Association.

Financial models and/or methodology used in this research report


Calculations and presentations in this research report are based on standard econometric tools and methodology
as well as publicly available statistics for each individual security, issuer and/or country. Documentation can be
obtained from the authors upon request.

Risk warning
Major risks connected with recommendations or opinions in this research report, including as sensitivity analysis
of relevant assumptions, are stated throughout the text.

First date of publication


Please see the front page of this research report for the first date of publication. Price-related data is calculated
using the closing price from the day before publication.

Disclaimer
This publication has been prepared by Danske Markets for information purposes only. It has been prepared
independently, solely from publicly available information and does not take into account the views of Danske
Bank’s internal credit department. It is not an offer or solicitation of any offer to purchase or sell any financial
instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no
representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from
reliance on it. Danske Bank, its affiliates or staff may perform services for, solicit business from, hold long or
short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned
herein. The Equity and Corporate Bonds analysts are not permitted to invest in securities under coverage in their
research sector. This publication is not intended for retail customers in the UK or any person in the US. Danske
Markets is a division of Danske Bank A/S. Danske Bank A/S is authorized by the Danish Financial Supervisory
Authority and is subject to provisions of relevant regulators in all other jurisdictions where Danske Bank A/S
conducts operations. Moreover Danske Bank A/S is subject to limited regulation by the Financial Services
Authority (UK). Details on the extent of our regulation by the Financial Services Authority are available from us
on request. Copyright (C) Danske Bank A/S. All rights reserved. This publication is protected by copyright and
may not be reproduced in whole or in part without permission.

This publication has been prepared by the correspondent of Auerbach Grayson & Company Incorporated
(“AGC”) named above on the date listed above.
We are distributing this publication in the U.S. and any U.S. person receiving this report and wishing to effect
transactions in any security discussed herein, should do so only with a representative of Auerbach Grayson &
Company Incorporated. Additional information on recommended securities is available on request.

8|
www.danskeresearch.com