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SEB Jordbruksprodukter, 28 januari 2013

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SEB - Prognoser på råvaror - CommodityTorkan i USA fortsätter att skapa oro för USA:s skörd i år. Samtidigt fortsätter vädret i Brasilien, världens nya kornbod, att vara gynnsamt. Vi gör inga ändringar av rekommendationer den här veckan. Majs ska man hålla ett öga på. Om priset bryter nedåt i veckan som kommer kan en sådan prisnedgång få en förlängning. Den kan i så fall smitta av sig på vetemarknaden och sojamarknaden.

Odlingsväder

Torkan i USA håller i sig, som vi ser i den senaste ”Drought Monitor”, som publicerades i torsdags. Sedan förra veckan har torkan förbättrats marginellt.

Karta över odlningsväder i USA

Andelen av USA:s yta som är drabbad av torka minskade marginellt i veckan fram till den rapport som kom förra veckan. Den övre röda linjen visar hur många procent av USA:s areal som är drabbad av någon form av torka. Den nedre blå linjen visar hur många procent som är drabbat av de två värsta varianterna av torka ”extreme” och ”exceptional”.

Torkra - US drought monitor

Nedan ser vi prognosen fram till den sista april / första maj, alltså till dess sådden av majs och sojabönor börjar. Alla färgade (ej vita) områden innebär att torkan håller i sig. Det lär alltså vara tämligen torrt när såningsmaskinerna dammar ut på fälten.

Prognos april/maj

Över hela Europa har det kommit nederbörd den senaste tiden, vilket gynnar vintervetet. I västra Ryssland / Ukraina likaså, utom i de allra mest södra delarna. Även Turkiet och nordvästra Afrika har fått ordentlig nederbörd. I nordvästra Afrika avslutade detta en torr period på en månad. Det har också regnat i Sydostasien, vilket gynnar odlingen av ris. I Argentina har det kommit lättare nederbörd i de södra delarna.Prognos råvarupriser i jordbruket

De torra delarna av världen är norra Argentina, som är ett viktigt odlingsområde. Australien är rekordtorrt och så USA, som vi sett ovan är nästan rekordtorrt, nästan som 1939, det sista året av ”Dust Bowl” på 1930-talet.

Vete

Priset på november (2013) kontraktet nådde upp till den tekniska motståndslinjen på 229 euro per ton, där det fanns tillräckligt med säljare för att trycka ner priset till 220. Veckan stängde på 222 euro.

Vetepris - Diagram den 25 januari 2013

Nedan ser vi decemberkontraktet på CBOT. Uppgången i januari framträder nu allt mer som vi beskrev den i förra veckobrevet. Som en rekyl mot en fallande trend. Marknaden fann dock stöd i torsdags och fredags på 800 cent (en jämn siffra; jämna siffror är naturliga platser att vänta sig stöd och motstånd). Om måndagens handel öppnar uppåt, får vi ta det som tecken på ytterligare en rekyl uppåt, mot trenden. Omvänt, om marknaden öppnar veckans handel med att sjunka under 800 cent, eller gör det senare i veckan, ska vi tolka det som att marknaden kan vara beredd på att fortsätta den nedåtgående trenden.

CBOT - Vetepris, decemberkontraktet

Det gick rykten i veckan om att Ryssland skulle ta bort importskatten på 5% på vetet. Det har kommit rapporter om brist på vete från Ryssland. I fredags gick dock Rysslands vice premiärminister ut och dementerade att landet skulle ta bort importskatten. Förmodligen är det tullsamarbetet med spannmålsrika Kazakstan som hindrar detta. Till bilden av spannmålsbrist i Ryssland kan fogas nyheten om att den ryska Spannmålsorganisationen skrev av 8% av vintervetet då detta inte grott. De sade också i veckan att 7% sannolikt skadas pga bristen på skyddande snötäcke i kölden. Det ser ut som om Ryssland skulle behöva importera ett par ton.

EU:s vete tar slut den 24 juli med USDA:s prognos för utgående lager. EU:s export har däremot varit ännu högre än USDA räknat med. Därför måste EU:s höga exporttakt resten av säsongen ligga 13% lägre än hittills för att hålla USDA:s prognos, som knappast kan bli lägre, eftersom lagret i praktiken nästan innebär att det är tomt på sina håll.

Fundamentalt ser det alltså ganska oroligt ut. Den globala vetesituationen kan utvecklas både åt det bättre hållet, eller åt det sämre. Just nu ser det ut tämligen oroväckande ut och vi kan trots det höga priset inte rekommendera sälj. Vi fortsätter med neutral rekommendation.

Maltkorn

November 2013-kontraktet föll under veckans oroliga handel från 253 till 248.25 euro per ton. Maltkornet gick därmed ner – samtidigt som vetet steg.

Maltkorn, diagram den 25 januari 2013

Potatis

Potatispriset för leverans i april nästa år (2014) föll marginellt från 15.90 förra veckan till 15.80 i fredags vid stängning.

Majs

Majspriset (december 2013) fortsatte sin rekyl uppåt, men slutade veckan med prisnedgångar. Priset ligger nu precis på rekylens tekniska stöd. Om marknaden börjar veckan med att falla, bryts stödet och vi får anse rekylen överstökad. Då finns potential att testa den föregående bottennoteringen från januari på 570 cent. Nästa stöd finns i så fall på 550 cent.

Majspris (C Z3) 25 januari 2013

Sådden i Argentina är ännu inte klar, därför att det har varit för torrt. Normalt sett börjar majsen blomma i januari. Den engelska termen är ”silking”, som beskriver mer hur majsen ser ut när den blommar. Effekten tolkas motstridigt av BAGE och regeringen i Argentina, där regeringen är mer avslappnad och frikostig med exportlicenser. Jag tror man ska tolka detta med vetskapen om den allmänna kortsiktighet som präglar landets styrning.

I övrigt väntas rekordstor areal (mitt i torkan i USA, vilket ger enorm osäkerhet). Hur det här kommer att utveckla sig får vi tolka en dag i taget. Den tekniska analysen blir viktig i detta. Just nu ligger som ovan nämnt, priset precis på en stödlinje. Bryts den nedåt i veckan, får vi tolka detta som en kortisktig säljsignal. I annat fall får vi hålla oss neutrala.

Sojabönor

Sojabönorna (november 2013) var i veckan uppe på ett pris över motståndslinjen från toppen i september.

Prisdiagram för sojabönor

USA:s export ligger över förra årets. Argentinas export ligger dock efter. En tolkning är att bönderna behåller lager som en inflationshedge. Även här får vi ta marknadens utveckling en dag i taget. Den tekniska analysen säger just nu ingenting. Så vi får vänta i neutralt läge.

Raps

Rapspriset (november 2013) fortsatte upp i början av veckan, men vände sedan ner. Tekniskt ser diagrammet ut som rörelsen sedan december är en rekyl i en fallande marknad. Vi fortsätter därför med säljrekommendationen.

Pris på november 2013-terminen på raps

Gris

Grispriset (Maj 13), amerikansk Lean Hogs, har rekylerat uppåt efter brottet nedåt av stödlinjen vid årsskiftet. Rekylen uppåt följer ett klassiskt mönster. Den är ett säljtillfälle.

Grispris - Maj 2013-terminen

Mjölk

I diagrammet nedan ser vi tre kurvor.Den gröna linjen är priset på skummjölkspulver i euro per ton på Eurex-börsen. Den blå är priset på smör på Eurex börsen. Priserna på Eurex anges i euro per ton.

Slutligen så den gröna linjen. Den visar priset på helmjölkspulver (WMP) FOB Västeuropa. Källan är USDA och priserna uppdateras varannan vecka. Vi ser att WMP-priset legat stabilt det fjärde kvartalet förra året, med en liten nedgång mot slutet av året. 2013 har dock börjat med en liten prisuppgång.

Diagram över helmjölkspulver etc

Det börsbaserade priset i svenska kronor beräknas med formeln:

Mjölk - Formel för det börsbaserade priset i svenska kronor

där

BUT = priset på smör i euro per ton
SMP = priset på skummjölkspulver i euro per ton
FX = växelkursen för EURSEK.

EURSEK

EURSEK rörde sig ”sidledes” i veckan som gick. De som läste vårt förra veckobrev minns att vi skrev att det var det mest troliga. Nu står marknaden och väger, precis på det övre motståndet. Vanligtvis brukar marknaden falla tillbaka i lägen som det här. Men, om veckan börjar med stigande kurser, kan det bli en förlängning på uppgången, i så fall till 8 kronor jämnt i första hand.

Valutadiagram EUR SEK den 25 januari 2013

USDSEK

Dollarn har fortsatt att utveckla sig svagt mot kronan. I fredags föll kursen ner mot den senaste månadens stödnivå, som dock höll. I alla fall i fredags. Men det ser ut som om trenden nedåt är stark och gissningsvis vinner den. Vi tror att dollarförsvagningen fortsätter, drivet av att ”Fiscal Cliff” återigen rycker allt närmare.

Valutadiagram USD SEK den 25 januari 2013

[box]SEB Veckobrev Jordbruksprodukter är producerat av SEB Merchant Banking och publiceras i samarbete och med tillstånd på Råvarumarknaden.se[/box]

Disclaimer

The information in this document has been compiled by SEB Merchant Banking, a division within Skandinaviska Enskilda Banken AB (publ) (“SEB”).

Opinions contained in this report represent the bank’s present opinion only and are subject to change without notice. All information contained in this report has been compiled in good faith from sources believed to be reliable. However, no representation or warranty, expressed or implied, is made with respect to the completeness or accuracy of its contents and the information is not to be relied upon as authoritative. Anyone considering taking actions based upon the content of this document is urged to base his or her investment decisions upon such investigations as he or she deems necessary. This document is being provided as information only, and no specific actions are being solicited as a result of it; to the extent permitted by law, no liability whatsoever is accepted for any direct or consequential loss arising from use of this document or its contents.

About SEB

SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic and other European Regulated Markets and Multilateral Trading Facilities (as well as some non-European equivalent markets) for trading in financial instruments, such as markets operated by NASDAQ OMX, NYSE Euronext, London Stock Exchange, Deutsche Börse, Swiss Exchanges, Turquoise and Chi-X. SEB is authorized and regulated by Finansinspektionen in Sweden; it is authorized and subject to limited regulation by the Financial Services Authority for the conduct of designated investment business in the UK, and is subject to the provisions of relevant regulators in all other jurisdictions where SEB conducts operations. SEB Merchant Banking. All rights reserved.

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Analys

Nat gas to EUA correlation will likely switch to negative in 2026/27 onward

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SEB - analysbrev på råvaror

Historically positive Nat gas to EUA correlation will likely switch to negative in 2026/27 onward

Bjarne Schieldrop, Chief analyst commodities, SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

Historically there has been a strong, positive correlation between EUAs and nat gas prices. That correlation is still fully intact and possibly even stronger than ever as traders increasingly takes this correlation as a given with possible amplification through trading action.

The correlation broke down in 2022 as nat gas prices went ballistic but overall the relationship has been very strong for quite a few years.

The correlation between nat gas and EUAs should be positive as long as there is a dynamical mix of coal and gas in EU power sector and the EUA market is neither too tight nor too weak:

Nat gas price UP  => ”you go black” by using more coal => higher emissions => EUA price UP

But in the future we’ll go beyond the dynamically capacity to flex between nat gas and coal. As the EUA price moves yet higher along with a tightening carbon market the dynamical coal to gas flex will max out. The EUA price will then trade significantly above where this flex technically will occur. There will still be quite a few coal fired power plants running since they are needed for grid stability and supply amid constrained local grids.

As it looks now we still have such overall coal to gas flex in 2024 and partially in 2025, but come 2026 it could be all maxed out. At least if we look at implied pricing on the forward curves where the forward EUA price for 2026 and 2027 are trading way above technical coal to gas differentials. The current forward pricing implications matches well with what we theoretically expect to see as the EUA market gets tighter and marginal abatement moves from the power sector to the industrial sector. The EUA price should then trade up and way above the technical coal to gas differentials. That is also what we see in current forward prices for 2026 and 2027.

The correlation between nat gas and EUAs should then (2026/27 onward) switch from positive to negative. What is left of coal in the power mix will then no longer be dynamically involved versus nat gas and EUAs. The overall power price will then be ruled by EUA prices, nat gas prices and renewable penetration. There will be pockets with high cost power in the geographical points where there are no other alternatives than coal.

The EUA price is an added cost of energy as long as we consume fossil energy. Thus both today and in future years we’ll have the following as long as we consume fossil energy:

EUA price UP => Pain for consumers of energy => lower energy consumption, faster implementation of energy efficiency and renewable energy  => lower emissions 

The whole idea with the EUA price is after all that emissions goes down when the EUA price goes up. Either due to reduced energy consumption directly, accelerated energy efficiency measures or faster switch to renewable energy etc.

Let’s say that the coal to gas flex is maxed out with an EUA price way above the technical coal to gas differentials in 2026/27 and later. If the nat gas price then goes up it will no longer be an option to ”go black” and use more coal as the distance to that is too far away price vise due to a tight carbon market and a high EUA price. We’ll then instead have that:

Nat gas higher => higher energy costs with pain for consumers => weaker nat gas / energy demand & stronger drive for energy efficiency implementation & stronger drive for more non-fossil energy => lower emissions => EUA price lower 

And if nat gas prices goes down it will give an incentive to consume more nat gas and thus emit more CO2:

Cheaper nat gas => Cheaper energy costs altogether, higher energy and nat gas consumption, less energy efficiency implementations in the broader economy => emissions either goes up or falls slower than before => EUA price UP 

Historical and current positive correlation between nat gas and EUA prices should thus not at all be taken for granted for ever and we do expect this correlation to switch to negative some time in 2026/27.

In the UK there is hardly any coal left at all in the power mix. There is thus no option to ”go black” and burn more coal if the nat gas price goes up. A higher nat gas price will instead inflict pain on consumers of energy and lead to lower energy consumption, lower nat gas consumption and lower emissions on the margin. There is still some positive correlation left between nat gas and UKAs but it is very weak and it could relate to correlations between power prices in the UK and the continent as well as some correlations between UKAs and EUAs.

Correlation of daily changes in front month EUA prices and front-year TTF nat gas prices, 250dma correlation.

Correlation of daily changes in front month EUA prices and front-year TTF nat gas prices
Source: SEB graph and calculations, Blbrg data

EUA price vs front-year TTF nat gas price since March 2023

EUA price vs front-year TTF nat gas price since March 2023
Source: SEB graph, Blbrg data

Front-month EUA price vs regression function of EUA price vs. nat gas derived from data from Apr to Nov last year.

Front-month EUA price vs regression function of EUA price vs. nat gas derived from data from Apr to Nov last year.
Source: SEB graph and calculation

The EUA price vs the UKA price. Correlations previously, but not much any more.

The EUA price vs the UKA price. Correlations previously, but not much any more.
Source: SEB graph, Blbrg data

Forward German power prices versus clean cost of coal and clean cost of gas power. Coal is totally priced out vs power and nat gas on a forward 2026/27 basis.

Forward German power prices versus clean cost of coal and clean cost of gas power. Coal is totally priced out vs power and nat gas on a forward 2026/27 basis.
Source: SEB calculations and graph, Blbrg data

Forward price of EUAs versus technical level where dynamical coal to gas flex typically takes place. EUA price for 2026/27 is at a level where there is no longer any price dynamical interaction or flex between coal and nat gas. The EUA price should/could then start to be negatively correlated to nat gas.

Forward price of EUAs versus technical level
Source: SEB calculations and graph, Blbrg data

Forward EAU price vs. BNEF base model run (look for new update will come in late April), SEB’s EUA price forecast.

Forward EAU price vs. BNEF base model run
Source: SEB graph and calculations, Blbrg data
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Analys

Fear that retaliations will escalate but hopes that they are fading in magnitude

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SEB - analysbrev på råvaror

Brent crude spikes to USD 90.75/b before falling back as Iran plays it down. Brent crude fell sharply on Wednesday following fairly bearish US oil inventory data and yesterday it fell all the way to USD 86.09/b before a close of USD 87.11/b. Quite close to where Brent traded before the 1 April attack. This morning Brent spiked back up to USD 90.75/b (+4%) on news of Israeli retaliatory attack on Iran. Since then it has quickly fallen back to USD 88.2/b, up only 1.3% vs. ydy close.

Bjarne Schieldrop, Chief analyst commodities, SEB
Bjarne Schieldrop, Chief analyst commodities, SEB

The fear is that we are on an escalating tit-for-tat retaliatory path. Following explosions in Iran this morning the immediate fear was that we now are on a tit-for-tat escalating retaliatory path which in the could end up in an uncontrollable war where the US unwillingly is pulled into an armed conflict with Iran. Iran has however largely diffused this fear as it has played down the whole thing thus signalling that the risk for yet another leg higher in retaliatory strikes from Iran towards Israel appears low.

The hope is that the retaliatory strikes will be fading in magnitude and then fizzle out. What we can hope for is that the current tit-for-tat retaliatory strikes are fading in magnitude rather than rising in magnitude. Yes, Iran may retaliate to what Israel did this morning, but the hope if it does is that it is of fading magnitude rather than escalating magnitude.

Israel is playing with ”US house money”. What is very clear is that neither the US nor Iran want to end up in an armed conflict with each other. The US concern is that it involuntary is dragged backwards into such a conflict if Israel cannot control itself. As one US official put it: ”Israel is playing with (US) house money”. One can only imagine how US diplomatic phone lines currently are running red-hot with frenetic diplomatic efforts to try to defuse the situation.

It will likely go well as neither the US nor Iran wants to end up in a military conflict with each other. The underlying position is that both the US and Iran seems to detest the though of getting involved in a direct military conflict with each other and that the US is doing its utmost to hold back Israel. This is probably going a long way to convince the market that this situation is not going to fully blow up.

The oil market is nonetheless concerned as there is too much oil supply at stake. The oil market is however still naturally concerned and uncomfortable about the whole situation as there is so much oil supply at stake if the situation actually did blow up. Reports of traders buying far out of the money call options is a witness of that.

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Analys

Fundamentals trump geopolitical tensions

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SEB - analysbrev på råvaror

Throughout this week, the Brent Crude price has experienced a decline of USD 3 per barrel, despite ongoing turmoil in the Middle East. Price fluctuations have ranged from highs of USD 91 per barrel at the beginning of the week to lows of USD 87 per barrel as of yesterday evening.

Ole R. Hvalbye, Analyst Commodities, SEB
Ole R. Hvalbye, Analyst Commodities, SEB

Following the release of yesterday’s US inventory report, Brent Crude once again demonstrated resilience against broader macroeconomic concerns, instead focusing on underlying market fundamentals.

Nevertheless, the recent drop in prices may come as somewhat surprising given the array of conflicting signals observed. Despite an increase in US inventories—a typically bearish indicator—we’ve also witnessed escalating tensions in the Middle East, coupled with the reinstatement of US sanctions on Venezuela. Furthermore, there are indications of impending sanctions on Iran in response to the recent attack on Israel.

Treasury Secretary Janet Yellen has indicated that new sanctions targeting Iran, particularly aimed at restricting its oil exports, could be announced as early as this week. As previously highlighted, we maintain the view that Iran’s oil exports remain vulnerable even without further escalation of the conflict. It appears that Israel is exerting pressure on its ally, the US, to impose stricter sanctions on Iran, an action that is unfolding before our eyes.

Iran’s current oil production stands at close to 3.2 million barrels per day. Considering additional condensate production of about 0.8 million barrels per day and subtracting domestic demand of roughly 1.8 million barrels per day, the net export of Iranian crude and condensate is approximately 2.2 million barrels per day.

However, the uncertainty surrounding the enforcement of such sanctions casts doubt on the likelihood of a complete ending of Iranian exports. Approximately 80% of Iran’s exports are directed to independent refineries in China, suggesting that US sanctions may have limited efficacy unless China complies. The prospect of China resisting US pressure on its oil imports from Iran poses a significant challenge to US sanctions enforcement efforts.

Furthermore, any shortfall resulting from sanctions could potentially be offset by other OPEC nations with spare capacity. Saudi Arabia and the UAE, for instance, can collectively produce an additional almost 3 million barrels of oil per day, although this remains a contingency measure.

In addition to developments related to Iran, the Biden administration has re-imposed restrictions on Venezuelan oil, marking the end of a six-month reprieve. This move is expected to impact flows from the South American nation.

Meanwhile, US crude inventories (excluding SPR holdings) surged by 2.7 million barrels last week (page 11 attached), reaching their highest level since June of last year. This increase coincided with a decline in measures of fuel demand (page 14 attached), underscoring a slightly weaker US market.

In summary, while geopolitical tensions persist and new rounds of sanctions are imposed, our market outlook remains intact. We maintain our forecast of an average Brent Crude price of USD 85 per barrel for the year 2024. In the short term, however, prices are expected to hover around the USD 90 per barrel mark as they navigate through geopolitical uncertainties and fundamental factors.

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