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Global Commodities Roundup: Market Talk

24 Apr 2017 2:58 am

0258 GMT - Tokyo rubber prices are lower following declines in Shanghai and Friday's sharp rebound. "It's a slow start to the week," says a Singapore-based trader who expects trading to remain weak. Overall, trading will remain quite weak, he adds. The Tokyo Commodity Exchange rubber contract for September delivery is down 1.2% at Y213.5/kilogram. (vibhuti.agarwal@wsj.com)

0001 GMT - Morgan Stanley says "earnings risks remain elevated" at Coca-Cola Amatil after the company warned that business was weak in its main Australia unit. Although Coca-Cola Amatil expects underlying net profit to be flat in FY17, Morgan Stanley says even that is looking ambitious. The analysts say the company is too reliant on cola, given that consumption continues to decline. "A softer consumer environment, poor March weather, input cost pressure and Woolworths likely seeking greater promotional support all likely contributed to the warning," Morgan Stanley says. (mike.cherney@wsj.com; @Mike_Cherney)

2328 GMT - Morgans says Evolution Mining (EVN.AU) needs to show improvement at its Edna May gold mine this quarter after notching 3-straight periods of struggle "despite efforts to revive the management team and increase the amount of waste stripping and capital allocated to the project." Edna May, in Western Australia state, was Evolution's only mine that didn't generate positive cash in F3Q. Meanwhile, as the broker drops Evolution to hold after a 50% stock pop since mid-December's low, Morgans remains a fan and has "no trouble recommending the stock for those who see upside in the near-term gold price." EVN is up 14% this month. (david.winning@wsj.com; @dwinningWSJ)

23:12 GMT [Dow Jones] Morgans analysts say a previously announced share buyback from Australian bottler Coca-Cola Amatil, expected to resume shortly, should help support the stock price in the coming days. That would be a welcome reprieve for investors who weathered a 10% decline in the share price on Friday after the company said trading in its main Australian beverages division was weaker than expected. Given the upcoming buyback, Morgans maintains its hold recommendation. But Morgans says the trading update underscores the "considerable challenges the Australian beverages business faces, with cost out measures clearly not enough at this point to stem the decline in earnings." (mike.cherney@wsj.com; @Mike_Cherney)

23:09 GMT [Dow Jones]--Credit Suisse takes a more positive view of Regis Resources's (RRL.AU) untapped McPhillamy's gold deposit, but still thinks the stock is overvalued. The brokerage now thinks McPhillamy's could be developed as a mine producing 7 million tons of gold-bearing ore annually if management can ensure there's enough water at the site. Credit Suisse's positive assessment of McPhillamy's leads to a 7.1% rise in its price target to A$3.00/share. Yet it remains troubled by the lack of a water solution, resulting in the inclusion of only 50% of McPhillamy's net present value in its target. "Water availability will define whether the resource can become a reserve, and volume availability will define the ultimate scale of the project," says Credit Suisse, which stays at underperform. (david.winning@wsj.com; @dwinningWSJ)

22:19 GMT [Dow Jones] Consumers are shunning sugary soft drinks for healither alternatives, and UBS analysts don't think Australian bottler Coca-Cola Amatil can halt the soft-drink decline over the next three years. The headwinds facing the market are "structural, not cyclical," UBS says. Coca-Cola Amatil warned Friday that underlying net profit would fall in the first half of 2017, citing weak trading in its Australian division. "We believe management is executing well and has delivered better-than-expected results via cost-out, however these opportunities are slowing and top line is not improving," UBS said. The analysts slapped Coca-Cola Amatil with a sell rating. (mike.cherney@wsj.com; @Mike_Cherney)

22:18 GMT [Dow Jones] A delay to Oz Minerals's (OZL.AU) preparatory work for its Carrapateena copper-gold mine in South Australia state has cemented Canaccord Genuity's cautious view of the project. On Friday, Oz Minerals said the outcome of a feasibility study now won't be known until 3Q. "While long life, scalable base metal projects in Australia are rare, Carrapateena is one of the more challenging projects in our coverage list," Canaccord says. "Its outcome will depend on Oz Minerals's ability to execute and the prevailing copper price." Oz Minerals's 1Q copper output of 25,000 tons was softer than Canaccord's 30,000-ton estimate. Canaccord stays at sell on Oz Minerals, which last traded at A$7.43. (david.winning@wsj.com; @dwinningWSJ)

(END) Dow Jones Newswires

April 23, 2017 22:58 ET (02:58 GMT)

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