Commodity Research

Commodities Daily 31 March 2014

Financial investors withdraw from many commodities Energy: Oil prices have shed almost all of the gains they achieved on Friday again, Brent falling back to below $108 per barrel this morning and WTI slipping under $101.5 per barrel. At present there is much to suggest that they will continue to trend sideways around their current price levels. The plentiful supply, particularly from Saudi Arabia and Iraq, is offset by the ongoing production outages in Libya and the – albeit fairly remote – prospect of the West imposing sanctions on the Russian oil and gas sector. Speculative financial investors reduced their net long positions in WTI for the third time running in the week to 25 March, though at 282,600 contracts they remain at a comparatively high level. There is thus further scope for long positions to be cut, which should weigh on the WTI price. Much the same applies to Brent. The corresponding data will be published by the ICE at lunchtime today.

Speculative market positioning (net) 25-Mar

Precious metals: The gold price is trading at a good $1,290 per troy ounce as the new week begins. It thus continues to hover around the technically important 200-day moving average, though it has yet to drop lastingly below this threshold. While the price dipped temporarily to a six-week low of $1,286 on Friday, this level was clearly regarded as attractive and sparked increased physical gold buying, thereby preventing the gold price from sliding. In the week to 25 March, money managers reduced their net long positions in gold by almost 12% to 107,000 contracts for the first time in seven weeks, a trend that doubtless continued after the reporting date and had a negative impact on the gold price. That said, we do not anticipate any sharp or sustained price decline. The fall in net long positions in silver was much more noticeable: they were slashed by 38% to 12,800 contracts – their fourth consecutive weekly decline and putting them at their lowest level since midFebruary. As with gold, silver is likely to have continued this trend in the meantime. As the new week gets underway, silver is trading well below the $20 per troy ounce mark. CHART OF THE DAY: Carbon price sheds all its gains since start of year again 10

282.636

-7.585

Henry Hub

195.394

-18.348

54.644

-1.739

107.013

-14.050

Silver

12.796

-7.852

Platinum

32.267

-0.779

Palladium

18.868

-1.417

Gold

Copper

-24.970

-3.086

Wheat

39.963

14.526

Corn

245.033

14.888

Soybeans

185.123

-6.595

Cotton

64.996

-0.178

Coffee

44.486

3.082

Cocoa Sugar

70.620 125.341

-4.832 -0.152

Source: CFTC, Bloomberg

Head of Commodity Research Eugen Weinberg +49 69 136 43417 [email protected]

Analyst Carsten Fritsch +49 69 136 21006 [email protected]

Analyst

EUR per ton

Barbara Lambrecht

9

+49 69 136 22295 [email protected]

8 Analyst

7

Michaela Kuhl

6

+49 69 136 29363 [email protected]

5

Analyst Daniel Briesemann

4

+49 69 136 29158 [email protected]

3 2 Jan-12

Apr-12

Jul-12

Oct-12

Jan-13

Apr-13

Jul-13

Oct-13

Jan-14

Source: ICE, Bloomberg, Commerzbank Corporates & Markets

For important disclosure information please see last page

Weekly change

WTI Gasoline

On Friday, the carbon price for December 2014 plunged by as much as 30% to hit €3.7 per ton. It is likely that the sell-off was triggered by the preliminary carbon emission figures for British utilities. Nonetheless, we believe the key factor to have been selling on the part of the industrial sector at the end of the first quarter and the technical selling that took place when the price fell below the psychologically important €5 per ton mark. Tomorrow, the European Commission will be releasing preliminary data for verified emissions in 2013 – they are likely to show stagnating or slightly falling carbon emissions and another surplus. That said, the surplus should turn out to be significantly smaller than in the previous year. Furthermore, thanks to the rapid implementation of “backloading”, 400 million certificates fewer will be auctioned this year than originally planned. We are confident that EU policy will continue to support the carbon market, and thus also expect the carbon price to recover.

‘000 contracts

research.commerzbank.com Bloomberg: CBKR

Base metals: The copper price recovered noticeably in the second half of the week and this morning is trading at a three-week high of around $6,650 per ton. We had already pointed out on a number of occasions that the price no longer reflects the supply-demand situation on the global copper market. After all, while demand shows itself to be surprisingly robust, supply remains fraught with problems. Codelco, the world’s largest copper producer, has reported for example that its production declined in 2013 to a five-year low of 1.62 million tons. This was due first and foremost to lower ore grades – a persistent problem that almost all copper producers face, especially those drawing on aging deposits. This is just one of the reasons why the International Copper Study Group is likely to significantly revise its previously optimistic estimate of the copper market balance in 2014 during its spring meeting that begins tomorrow. Speculative financial investors expanded their net short positions in copper for the third consecutive week to 25,000 contracts in the week to 25 March, putting them at their highest level in eight months. The copper price had fallen to its lowest level since July 2010 during the period under review. There is likely to have been widespread covering of short positions meanwhile, money managers thereby contributing to the recovery of the copper price. Agriculturals: The International Grains Council (IGC) risked a first assessment of the 2014/15 season for corn at the end of last week. The IGC expects global production to increase slightly by 2 million tons to 961 million tons, based on a marginally larger global corn acreage. For 2014/15, the IGC envisages a further corn supply of 16 million tons, which will drive global stocks to a 15-year high. Although the IGC has not yet included the 2014/15 season in its tables for the individual countries, it nonetheless makes it clear that the global inventory build will once again be driven primarily by the US. The markets will be eagerly awaiting today’s report from the USDA about growing plans in the US, which is based on a representative survey of 10,000 farmers. In addition, the US inventory levels as per 1 March will be published. Prices for US lean hogs have already skyrocketed by 45% this year. A pound now costs 126 US cents in the contract which matures in April, and a full 130 US cents in the contract due in August. This is due to a diminished supply of hogs after a virus decimated stocks. At least 27 US states have meanwhile been affected. Data from the USDA show that the total US hogs and pigs herd as per 1 March was 3.3% smaller than last year, making it the smallest it has been since March 2007.

Prices Energy 1)

Inventories current

1 day

1 week

1 month

1 year

Energy *

current

1 day

1 week

1 month

1 year

Brent Blend WTI

108.1 101.7

0.2% 0.4%

1.0% 2.0%

-1.1% -1.0%

-2% 4%

Gasoline Gasoil

954.5 903.0

-0.7% 0.4%

2.1% 0.7%

-0.9% -1.8%

-11% -2%

Crude oil Gasoline Distillates Ethanol

382471 217198 112401 15653

1.8% -2.3% 1.4% 2.5%

5.5% -5.8% -0.6% -8.1%

-1% -2% -2% -10%

Diesel Jet fuel Natural gas ($/mmBtu)

925.8 961.5 4.49

0.8% 0.7% -2.2%

0.9% 0.2% 4.0%

-0.8% -1.7% -3.5%

-1% -2% 11%

28477 896

-

-4.5% -6.0%

-18.2% -33.5%

-42% -50%

Gasoil (ARA) Gasoline (ARA)

1744 1137

-

-1.2% 0.1%

-12.3% 28.0%

-27% 22%

1758 6670 2067 15710 22875 1976.5

1.2% 1.7% 0.0% 0.0% 0.3% 0.2%

2.5% 2.9% 0.1% -1.5% -0.1% 1.6%

1.1% -5.0% -3.0% 7.8% -2.7% -4.6%

-7% -12% -2% -5% -1% 4%

Base metals ** Aluminum LME

5381900

-0.1%

-0.5%

1.3%

3%

Shanghai Copper LME COMEX Shanghai

371085 265175 19749 193725

-0.8% 18.6% -

5.7% 0.6% 38.3% -7.7%

30.9% -4.0% 45.3% -2.3%

-27% -53% -74% -22%

Lead LME

200325

0.0%

-0.2%

-0.9%

-24%

1295.3 941.9 19.8 1411.1 774.9

0.3% 0.2% 0.6% 0.9% 2.1%

-1.3% -0.7% -0.6% -0.5% -2.4%

-2.6% -0.2% -6.6% -1.7% 4.4%

-19% -25% -30% -9% 0%

Nickel LME Tin LME

284694 9555

-0.3% 0.1%

0.4% 1.4%

5.2% 18.5%

72% -32%

Zinc LME Shanghai Precious metals ***

779600 269942

0.3% -

0.4% -1.0%

2.3% 1.5%

-34% -16%

202.8 695.5

-0.6% -2.1%

-0.4% -2.3%

7.6% 14.9%

-15% 1%

492.0 1436.5

0.0% 0.0%

0.6% 0.6%

5.6% 1.6%

-30% 2%

Cotton Sugar

93.7 17.98

2.0% 0.3%

0.3% 5.6%

8.3% 1.5%

7% 1%

Coffee Arabica Cocoa (LIFFE, £/t)

180.6 1883

2.4% 0.7%

3.0% 0.2%

0.2% 2.1%

32% 28%

1.3752

0.1%

-0.6%

-0.3%

7%

Base metals 2) Aluminum Copper Lead Nickel Tin Zinc Precious metals 3) Gold Gold (€/oz) Silver Platinum Palladium Agriculturals 1) Wheat (LIFFE, €/t) Wheat CBOT Corn Soybeans

Currencies 3) EUR/USD

2

Crude oil Cushing Natural gas

Gold Silver Platinum Palladium

56771

0.0%

0.0%

1.1%

-28%

634995 2559 2112

-0.1% 0.0% 0.8%

0.0% 0.4% 0.4%

1.1% 3.2% 1.0%

0% 62% -6%

Source: DOE, PJK, LME, COMEX, SHFE, Bloomberg, Commerzbank Corporates & Markets Percentage change on previous period 1) 1 month forward, 2) 3 months forward, 3) spot Crude oil in USD per barrel, oil products and base metals in USD per ton, Precious metals in USD per troy ounce, grains and soybeans in US cents per bushel, Cotton, sugar and coffee Arabica in US cents per pound * US inventories of crude oil, oil products and ethanol in ‘000 barrel, US natural gas inventories in billion cubic feet, ARA stocks in ‘000 tons ** tons, *** ETF holdings in ‘000 ounces

31 March 2014

Net long positions of money managers vs. price GRAPH1: Crude oil (WTI)

GRAPH 2: Natural gas (Henry Hub; futures and swaps) 120

400 '000 contracts

350

110

300 250

250

7.0

'000 contracts

200

6.0

150 100

200 150

90

100 50

80

0

70

5.0

100

4.0

50

3.0

0

2.0

-50

Jan-12

Jul-12

Jan-13

Jul-13

spec. net long positions, lS

Jan-14

-100 Jan-12

WTI ($/barrel), rS

1.0 Jul-12

Jan-13

spec. net long posit., lS

Jul-13

Jan-14

HenryHub ($/MMBtu), rS

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

GRAPH 3: Gold

GRAPH 4: Silver

'000 contracts

200

1800

40

1700

30

35

20

30

10

25

1300

0

20

1200

-10

150 1600 100

40

'000 contracts

1500 1400

50 0 Jan-12

Jul-12

Jan-13

spec. net long posit., lS

Jul-13

Jan-14

Gold ($ per troy ounce), rS

15

Jan-12 Jul-12 Jan-13 spec. net long posit., lS

Jul-13 Jan-14 Silver ($ per troy ounce), rS

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

GRAPH 5: Copper

GRAPH 6: Wheat

40 30 20 10 0 -10 -20 -30 -40

9000

'000 contracts

8500 8000

Jul-12

Jan-13

spec. net long positions, lS

Jul-13

'000 contracts

1000

60

900

40 20

7500

0

7000

-20

6500

-40

6000

Jan-12

80

800 700 600

-60 -80

Jan-14

500

Jan-12 Jul-12 Jan-13 spec. net long posit., lS

Copper ($/ton), rS

Jul-13 Jan-14 Wheat (c per bushel), rS

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

GRAPH 7: Corn

GRAPH 8: Sugar

400

900

'000 contracts

300

26

120

24

700

80

22

600

40

20

0

18

-40

16

100 0

500

-100 -200 Jan-12 Jul-12 Jan-13 spec. net long posit., lS

400 Jul-13 Jan-14 Corn (c per bushel), rS

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

31 March 2014

28

'000 contracts

160

800

200

200

-80 Jan-12 Jul-12 Jan-13 spec. net long posit., lS

14 Jul-13 Jan-14 sugar (c per pound), rS

Source: CFTC; Bloomberg, Commerzbank Corporates & Markets

3

GRAPH 9: Forward curve oil market (WTI)

GRAPH 10: Forward curve oil market (Brent)

106

113

102

110

98

107

94

104

90

101

86

98

82

95

78

92 1M

8M actual

15M

22M

29M

3Y

one week ago

43M

1M

8M

one month ago

15M

actual

22M

29M

3Y

one week ago

43M

one month ago

Source: NYMEX; Bloomberg, Commerzbank Corporates & Markets

Source: ICE; Bloomberg, Commerzbank Corporates & Markets

GRAPH 11: Forward curve gas market (Henry Hub)

GRAPH 12: Forward curve gasoil (ICE) 950

5.00

940

4.75

930

4.50

920

4.25

910 900

4.00

890

3.75 1M

8M actual

15M

22M

29M

3Y

one week ago

43M

880 1M actual

one month ago

3M

5M one week ago

7M

9M one month ago

Source: NYMEX; Bloomberg, Commerzbank Corporates & Markets

Source: ICE; Bloomberg, Commerzbank Corporates & Markets

GRAPH 13: Forward curve aluminium (LME)

GRAPH 14: Forward curve copper (LME) 7100

2100

7000

2000

6900 1900

6800

1800

6700 6600

1700

6500

1600

6400 1M

8M

actual

15M

22M

29M

one week ago

3Y

43M

1M

one month ago

8M

actual

15M

22M

29M

one week ago

3Y

43M

one month ago

Source: LME; Bloomberg, Commerzbank Corporates & Markets

Source: LME; Bloomberg, Commerzbank Corporates & Markets

GRAPH 15: Forward curve Nickel (LME)

GRAPH 16: Forward curve zinc (LME)

16500

2100

16000

2050

15500

2000

15000

1950 1900

14500 1M actual

8M

15M

22M

one week ago

29M

3Y

one month ago

Source: LME; Bloomberg, Commerzbank Corporates & Markets

4

43M

1M actual

5M

9M

13M

one week ago

17M

21M

one month ago

Source: LME; Bloomberg, Commerzbank Corporates & Markets

31 March 2014

GRAPH 17: Forward curve lead (LME)

GRAPH 18: Forward curve tin (LME) 23500

2175 2150

23250 2125

23000

2100 2075

22750

2050

22500

2025 1M actual

8M 15M one week ago

1M

22M one month ago

4M

actual

7M

10M

one week ago

13M one month ago

Source: LME; Bloomberg, Commerzbank Corporates & Markets

Source: LME, Bloomberg, Commerzbank Corporates & Markets

GRAPH 19: Forward curve wheat (CBOT)

GRAPH 20: Forward curve wheat (MATIF)

740

215

720

210

700

205

680

200

660

195

640

190

620

185 2M actual

6M

12M 16M one week ago

21M 26M one month ago

2M actual

8M

10M 12M one week ago

14M 18M one month ago

Source: CBOT; Bloomberg, Commerzbank Corporates & Markets

Source: MATIF; Bloomberg, Commerzbank Corporates & Markets

GRAPH 17: Forward curve corn (CBOT)

GRAPH 22: Forward curve soybeans (CBOT)

510

1500

500 1400

490 480

1300

470 1200

460 450

1100

2M actual

9M

16M one week ago

28M

46M one month ago

2M actual

6M

12M 17M one week ago

28M 32M one month ago

Source: CBOT; Bloomberg, Commerzbank Corporates & Markets

Source: CBOT; Bloomberg, Commerzbank Corporates & Markets

GRAPH 23: Forward curve cotton (NYBOT)

GRAPH 24: Forward curve sugar (NYBOT)

95

19.5

92

19.0

89

18.5

86

18.0

83

17.5

80

17.0 16.5

77 2M 4M actual

7M

9M 12M 14M one week ago

16M 19M 21M one month ago

Source: NYBOT; Bloomberg, Commerzbank Corporates & Markets

31 March 2014

1M actual

7M

14M 19M one week ago

26M 31M one month ago

Source: NYBOT; Bloomberg, Commerzbank Corporates & Markets

5

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31 March 2014