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Global Commodities Roundup: Market Talk

24 Jul 2017 2:24 am

0224 GMT - Australian cattle prices are likely to remain under pressure as the country is likely to remain too dry for farmers to keep all their animals on the properties which will lead to destocking and more cows being sent to slaughter, says Tobin Gorey, Commonwealth Bank of Australia in a note; "The market is anticipating more supply." He notes that high grain prices and a higher Aussie dollar are also weighing on the market. The Eastern Young Cattle Indicator is trading up A$0.01 at A$5.95/kg having fallen 5% since the start of July. (lucy.craymer@wsj.com;Twitter: @lucy_craymer)

0216 GMT - London spot gold prices tick slightly lower at the beginning of the week, after rising for the sixth straight session Friday. Investors will focus on the Fed meeting later this week for its views on rate changes, though expectations are that it will go slow on the pace of increases. Gold is seen having some further upside from current levels, particularly with political uncertainty around the Trump administration continuing to provide support. Spot gold is trading 41 cents down at $1,254.50/troy ounce. (biman.mukherji@wsj.com) (END)

0113 GMT - Fortescue (FMG.AU) is adding to last week's slide after a court ruling recognized indigenous people's exclusive rights to land the Australian iron-ore firm has a mine. The company will appeal, but for now the often-volatile stock is bogged down by "a bit of uncertainty on the cash they are able to generate and the ability to be a low-cost producer," notes Gary Huxtable at ASR Wealth Advisers in Melbourne. There's also dividend worries, he adds. Morgan Stanley estimates Fortescue may have to pay as much as US$100 million in royalties if it fails to get a reprieve. Shares fall 2%, underperforming a weak overall market, and after sliding 3.5% on Thursday. (kenan.machado@wsj.com) (END)

0034 GMT - Malaysian PM Razak offers aid to local palm-oil farmers via cash handouts and debts waiver worth MYR1.6 billion ($373 million), offering a hint of an early election that is due by August 2018. Investment banks have said local equities could benefit from likely stimulus ahead of national elections. The farmers offered the aid, more commonly known as Felda settlers in Malaysia, are majority voters and command at least 25% of parliament's seats. Some farmers took loans to buy shares in Malaysia's state palm-oil firm Felda Global Ventures (5222.KU) in 2012's IPO. The loans will be waived and those who repaid will get cash, Najib says. Shares of Felda Global have plunged by nearly 2/3 since the company went public amid poor financial performance and more recently management and graft scandals. (yantoultra.ngui@wsj.com; @yantoultra)


0031 GMT - After falling by more than 2% on Friday, crude futures start the week modestly lower in Asia despite continued declines in the US dollar. That as a tanker-tracking data firm says OPEC's daily output is surpassing 33 million barrels this month. In the cartel's meeting today, it is set to review members' compliance to the production caps and discuss the possible inclusion of Nigeria and Libya into the plan. September WTI and Brent are both down 0.3% at $45.64 and $47.92/barrel, respectively. (jenny.hsu@wsj.com; @jen1113)


[Dow Jones] UBS says gold producer Regis Resources (RRL.AU) is priced for perfection and investors should be more skeptical about where it goes from here. That's because Regis has likely developed gold deposits near its existing operations in a deliberate sequence. In short, the best weren't saved until last. "The risk is that the next 6 targets recently announced could be of lower quality (they are on average further away from the mill) and our concern is that the market is perhaps already capitalizing these future targets," UBS says. Also, it thinks the market is moving to price in their undeveloped McPhillamys project in New South Wales, which could be more costly to develop than many think. UBS retains a sell call and A$3.16/share price target on Regis Resources, which ended last week at A$3.72. (david.winning@wsj.com; @dwinningWSJ) (END)

2323 GMT [Dow Jones]--Woodside Petroleum's (WPL.AU) 2Q production update threw two major concerns into sharp relief for Macquarie. The first was weak contract pricing for fuel from the Pluto liquefied natural gas project and whether it was a sign of things to come. The second was a question mark over how realistic the resource size is for the find Woodside bought into off Senegal. The investment bank adds that while there is the prospect of positive news on bringing in additional natural gas through the North West Shelf operation, it doesn't expect to hear anything from Woodside that will strip risk from its valuation until next year. It remains neutral for now. The stock slipped 1.9% last week, widening July's fall to 1.4%. (robb.stewart@wsj.com; Twitter: @RobbMStewart) (END)

2311 GMT [Dow Jones]--A meeting of some OPEC and non-OPEC ministers later today comes at an interesting time for oil markets, says ANZ. Not only are oil prices heading south again, but some analysts are actually predicting a rise in OPEC supply over the coming months, despite an agreement to do the opposite, it adds. While this partly reflects increased supply from Libya and Nigeria, two countries not part of the production cuts, that is not solely the reason. When it comes to OPEC it still seems to be a case of watch what I do, not what I say, ANZ adds. (james.glynn@wsj.com; @JamesGlynnWSJ)


2309 GMT [Dow Jones]--Australia shares look set to carry Friday's weakness into the open, with futures suggesting a fall of 25 points at the bell for the S&P/ASX 200 after losing 38.6 to finish the week at 5722.8. U.S. stocks edged lower on Friday after the worst daily fall for European stocks in three weeks, while crude oil declined and iron-ore prices slipped. Production reports continue to roll out, keeping the resources sector in the spotlight, with Newcrest Mining (NCM.AU) recording a fall in gold output for the last financial year. Westpac (WBC.AU) may attract some attention after it said it was in exclusive talks over the possible sale of its Hastings infrastructure-investment unit to Charter Hall (CHC.AU). It looks to be a quiet session on the domestic data front. (robb.stewart@wsj.com; Twitter: @RobbMStewart) (END)

2255 GMT [Dow Jones]--Wednesday's 2Q CPI print is very much in focus in Australia this week, alongside side a speech by RBA Governor Philip Lowe the same day. One key uncertainty is the effect of Cyclone Debbie on fruit and vegetable prices. The winter tomato and capsicum crops were particularly impacted, says ANZ. The bank has forecast a significant rise in fruit and vegetable prices, sufficient to add 0.2 percentage points to headline CPI, which it expects to have risen by 0.5% on-quarter in 2Q. (james.glynn@wsj.com; @JamesGlynnWSJ)


2221 GMT [Dow Jones]--Canaccord Genuity thinks gold producer Regis Resources (RRL.AU) will extend its record of beating annual cost guidance for a third successive year. On Friday, Regis forecast output of 335,000-365,000 troy ounces of gold at an all-in cost of A$940-A$1,010/oz in FY18. That's underpinned by higher gold grades from satellite deposits. Canaccord expects costs of A$921/oz in FY18, with production near the top end of guidance. "We have also modestly increased production assumptions for FY19 to 386,000 oz at an all-in cost of A$877/oz to incorporate production from Tooheys Well, which Regis will bring on line in 2018, with a view to contributing 90,000 oz/year to the Duketon South production profile," Canaccord says. RRL last traded at A$3.72. (david.winning@wsj.com; @dwinningWSJ) (END)

(END) Dow Jones Newswires

July 23, 2017 22:24 ET (02:24 GMT)

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