{"id":70153,"date":"2023-10-08T06:50:00","date_gmt":"2023-10-08T10:50:00","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/here-are-the-commodities-that-bucked-the-weeks-downtrend-in-the-sector\/"},"modified":"2023-10-08T06:50:03","modified_gmt":"2023-10-08T10:50:03","slug":"here-are-the-commodities-that-bucked-the-weeks-downtrend-in-the-sector","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=70153","title":{"rendered":"Here are the commodities that bucked the week\u2019s downtrend in the sector"},"content":{"rendered":"

Commodities suffered overall declines for the week, pressured by worries over the demand outlook, but natural gas, frozen orange juice, and wheat futures scored impressive gains for the week. <\/p>\n

It\u2019s been a \u201cweek of declines for more commodity prices, as commodities were caught up in the more widespread selling of financial assets,\u201d with crude-oil among the hardest hit, said Edward Gardner, a commodities economist at Capital Economics, in a note dated Friday. <\/p>\n

\n

On Friday, U.S. benchmark West Texas Intermediate crude saw its front-month November contract
\n CL.1,
\n +0.02%<\/bg-quote><\/p>\n

CLX23,
\n +0.02%<\/bg-quote>
\n settle at $82.79 a barrel on the New York Mercantile Exchange, 8.8% lower for the week, according to Dow Jones Market Data. Global benchmark Brent crude for December delivery
\n BRN00,
\n -0.18%<\/bg-quote><\/p>\n

BRNZ23,
\n -0.18%<\/bg-quote>
\n ended $84.58 a barrel on ICE Futures Europe, losing 8.3% from a week ago. <\/p>\n

Read:<\/strong> Demand destruction sinks oil prices as gasoline inventories send warning signal<\/p>\n

At the heart of the commodities sell-off were \u201congoing concerns that U.S. interest rates might have to remain higher for longer, especially after [Friday\u2019s] surprisingly strong payrolls\u201d data, Gardner said.<\/p>\n

U.S. government data Friday showed that the nation gained 336,000 new jobs in September, while economists polled by The Wall Street Journal had forecast a climb of 170,000 jobs. The better-than-expected employment numbers may convince the Federal Reserve to approve one more interest-rate hike this year, raising the risk of a recession. <\/p>\n

The main implication of \u201chigher for longer\u201d interest rates is that commodities \u201cdemand could be potentially weaker,\u201d Gardner said. <\/p>\n

In Friday dealings, the S&P GSCI index
\n XX:SPGSCI,<\/span>
\n a benchmark for investments in the commodity markets, traded down 5.5% for the week, on track for its worst weekly performance since March 17.<\/p>\n

However, Capital Economics\u2019 long-held view is that many developed market central banks will cut interest rates over the next year, with the U.S. Fed starting in the first quarter of next year, \u201cwhich will lend support to most commodity prices,\u201d he said.<\/p>\n

Natural gas<\/h2>\n

This week, a few commodities managed to buck the downtrend, including natural gas.<\/p>\n

\u201cSome say storage may not be sufficient for a cold winter, which is the most likely driver [for the rally], along with excitement ahead of winter, said Beth Sewell, president and chief executive officer at Quantum Gas & Power Services.<\/p>\n

Others, however, \u201csay there\u2019s plenty of gas in storage and a slower economy will put a damper on demand,\u201d she told MarketWatch. \u00a0\u201cThen you have weather forecasts all over the board with some calling for a warm winter and others forecasting it to be 3% colder than last winter.\u201d<\/p>\n

\u201cTraders thrive on uncertainty and are focusing on the \u2018good news\u2019 to move the market ahead of the season start since temps are a bit cooler over the next few days,\u201d said Sewell on Friday.\u00a0\u201cWe\u2019re also seeing traders covering prompt month short positions, which also contributes to the run up.\u201d<\/p>\n

Natural gas for November delivery
\n NG00,
\n -0.24%<\/bg-quote><\/p>\n

NGX23,
\n -0.24%<\/bg-quote>
\n settled Friday at $3.338 per million British thermal units on Nymex, posting a gain of 14% for the week.<\/p>\n

Manish Raj, managing director at Velandera Energy Partners, sees tightness when it comes supplies. Natural-gas producers \u201ccan\u2019t fill export orders fast enough, with all export pipelines throttling at full speed,\u201d he told MarketWatch. <\/p>\n

He pointed out that the number of active U.S. natural-gas drilling rigs are down by a count of 40, or 25%, from last year. \u201cSo while exports are booming, supply remains constrained,\u201d he said. Data from Baker Hughes
\n BKR,
\n +1.14%<\/bg-quote>
\n released Friday show the U.S. natural-gas rig count at 118 for the week, down 40 from a year ago.<\/p>\n

Despite the supply-demand picture, the \u201cultimate controller of prices remains mother nature,\u201d with a harsh winter likely to bring \u201charsh\u201d natgas prices, whereas a mild winter is likely to help ease prices, said Raj. <\/p>\n

OJ and wheat<\/h2>\n

Frozen orange juice and wheat futures were also among the few gainers in the commodities sector this week. <\/p>\n

The most-active November contract for frozen concentrate orange juice
\n OJX23,
\n +0.11%<\/bg-quote><\/p>\n

OJ00,
\n +0.11%<\/bg-quote>
\n settled at $3.772 a pound on ICE Futures U.S., up nearly 7.9% for the week. <\/p>\n

As an agricultural commodity, orange juice is a weather derivative at heart, said Darin Newsom, Barchart senior market analyst, and production in Florida has been hurt in the past number of years from hurricanes and greening disease, which is a disease that affects citrus plants. A drought in Brazil has also led to lower orange production, he said.<\/p>\n

So supplies low are low, but \u201cdemand isn\u2019t anything to get excited about either,\u201d said Newsom. <\/p>\n

There is \u201cvery little open interest or trade volume in orange juice futures, making it a thin market,\u201d he explained. \u201cA few orders come in to buy and the market makers run up the price.\u201d<\/p>\n

Meanwhile, wheat prices got a boost from worries about risks to grain cargo ships in the Black Sea.<\/p>\n

The U.K. has accused Russia of plotting to sabotage civilian cargo ships loaded with grain by planting sea mines on the approach to the country\u2019s Black Sea ports, The Guardian reported on Wednesday. <\/p>\n

Newsom said there was \u201cchatter\u201d this week that a Turkish cargo ship hit a sea mine at the mouth of the Danube River on the Black Sea. \u201cThis probably triggered some additional algorithm short-covering despite the fact Russia was reportedly putting those mines in over the last number of weeks,\u201d he said. <\/p>\n

The wheat, as well as the corn markets are \u201ctouchy, and have seen so much selling it doesn\u2019t take much to start a rally,\u201d said Newsom. \u00a0<\/p>\n

December wheat traded in Chicago
\n WZ23,
\n -1.60%<\/bg-quote><\/p>\n

W00,
\n -1.60%<\/bg-quote>
\n settled at $5.68 1\/4 a bushel on Friday, up 4.9% for the week.<\/p>\n

Capital Economics\u2019 Gardner said the weekly rise for wheat seems \u201cconsistent with reports that Ukraine\u2019s grain exports have fallen by about 28% year on year so far in the 2023\/2024 marketing year,\u201d which started in July.<\/p>\n

Looking ahead, September inflation data for the U.S., set for release on Thursday, will be closely watched, he said. <\/p>\n

Capital Economics expects the data to show a modest 0.2% month on month increase in core prices, which \u201ccould dampen higher-for-longer [rate] expectations and boost commodity prices,\u201d said Gardner.<\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Commodities suffered overall declines for the week, pressured by worries over the demand outlook, but natural gas, frozen orange juice, and wheat futures scored impressive gains for the week. It\u2019s been a \u201cweek of declines for more commodity prices, as commodities were caught up in the more widespread selling of financial assets,\u201d with crude-oil among […]<\/p>\n","protected":false},"author":1,"featured_media":37820,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-70153","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nHere are the commodities that bucked the week\u2019s downtrend in the sector | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Commodities suffered overall declines for the week, pressured by worries over the demand outlook, but natural gas, frozen orange juice, and wheat futures\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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