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Global Commodities Roundup: Market Talk

24 Jul 2017 3:22 am

0322 GMT - Copper prices ease slightly in Asian trading after Friday's 4-month high, but near-term fundamentals are strong amid falling inventories and worker unrest at a Chilean mine. Three-month copper prices on the London Metal Exchange are down 0.1%, but zinc gains 0.5% and aluminum rises 0.2% amid continued declines in the dollar. (biman.mukherji@wsj.com)

0254 GMT - China iron-ore futures fell amid some profit-taking and broader weakness in the commodities market. Though near-term fundamentals for domestic Chinese demand appear robust, there are some concerns about US import restrictions. While America accounts for only a small proportion of Chinese steel exports, any US action could trigger similar action by other nations. Dalian iron-ore futures are down 1.6% and Shanghai steel rebar falls slightly this morning. (biman.mukherji@wsj.com) (END)

0242 GMT - Asian palm-oil prices slide to start the week after Friday weakness in US soybean prices. Market focus will be on tomorrow's release of Malaysia palm-oil exports; the question is whether strong shipments seen to start the month are sustainable. The Bursa Malaysia benchmark palm-oil contract is down 1% at MYR2,549/ton. (lucy.craymer@wsj.com; @lucy_craymer) (END)

0240 GMT - BMI Research still sees cocoa prices remaining range-bound before gains starting in 4Q as fundamentals tighten. It sees West Africa underperforming in terms of output growth from 2018-21, albeit due to strong recent production. That as modest growth in Indonesian output will be absorbed entirely by the domestic market, adds BMI. (lucy.craymer@wsj.com; @lucy_craymer) (END)

0235 GMT - Tokyo natural rubber prices continue to come off recent highs as the USD/JPY weakens making the Japanese yen denominated commodity nominally more expensive. However, prices are likely to find strong support around Y200/kg having traded around this level for a couple of weeks before the small rally last week supported by moves in industrial commodities and the USD/JPY. The Tocom benchmark natural rubber contract is trading down Y5.1/kg at Y209.4/kg. (lucy.craymer@wsj.com;Twitter: @lucy_craymer) (END)

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) (END)

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)

(END) Dow Jones Newswires

July 23, 2017 23:22 ET (03:22 GMT)

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