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SEB Veckobrev Jordbruksprodukter - AnalysTorkan i Argentina och södra Brasilien och effekten på soja- och majsskörden är i fokus i nyhetsflödet. Kanske är det eurokris-utmattning som gjort att Portugals nedgradering till ”skräp” passerat obemärkt förbi. Marknaden räknar med en 65% chans att landet går i konkurs inom fem år. Staten lånar nu till över 14.5% ränta, som vi ser i diagrammet nedan.

 

 

Diagram över statlig Portugal-obligation

SEB - Tendens och prognos för jordbrukspriserKina rapporterade en tillväxt på låga 8.9%, vilket är närmast chockerande lågt när landet legat på 10% i nästan tio år. Samtidigt noterar vi att tillväxten på landsbygden i Kina ligger på 11% och att halva Kinas befolkning bor där. Kina är också ett land som rapporterar högre veteskörd för 2011, trots minskad areal. Mycket tyder på att Kina släppt på monetär stimulans under december och att detta – tillsammans med solid tillväxt på landsbygden, bidrar till att ge landet en mjuklandning. Den monetära stimulansen – att staten släpper på likviditet – brukar slå igenom med ett maximum av effekt efter ca 6 månader.

Vete

USA var stängt i måndags och det är ovanlig nyhetstorka. Det är relativt torrt i USA och det saknas snötäcke på sina håll. Det är också kallare än normalt, så utvintring kan möjligen bli ett tema framöver. Ukraina har samma situation. En uppgift finns om att så mycket som 35% av vetet skulle kunna vara i dåligt skick. Ryskt vete har snötäcke. Nederbörden i Europa har varit normal, utom i Spanien.

Lagren av vete är höga i världen och om det inte uppstår stora problem under våren borde vetet kunna falla från de här nivåerna.

Nedan ser vi kursdiagrammet för novemberkontraktet på Matif.

Kursdigram för novemberkontrakt på Matif

Nedan ser vi terminskurvan för Chicagovete och Matif nu och för en vecka sedan. De ”feta” kurvorna är de aktuella. De ”smala” är förra veckans. Det fortsätter att vara ”backwardation” på Matif, dvs terminspriserna för längre löptid är lägre än för korta. I USA är det däremot ”contango”, högre terminspriser ju längre ut i tiden man kommer. Det är lagringskostnaden som orsakar contangot.

Diagram - Contango respektive backwardation för vete

Vi fortsätter att tro på en nedgång i vetepriset under året.

Maltkorn

Maltkornsmarknaden har behållit sin styrka relativt andra spannmål med novemberleverans på Matif på 246.25, upp från 242 euro per ton förra veckan.

Prisdiagram för maltkorn på Matif

Potatis

Priset på potatis har fortsatt att stiga, för leverans nästa år (av sommarens skörd), men uppgången har förlorat lite av sin kraft.

Pris på potatis för leverans år 2013

Majs

Förra året producerade Argentina 23 mt majs och inför sommaren (i Argentina) hade man hoppats kunna nå 28 – 29 mt. USDA förutspådde förra veckan att skörden blir 26 mt (en sänkning med 3 mt).

Maizar, som representerar majsodlarna i Argentina rapporterar att 20% av majssådden inte blev av och att 10% av det som såddes gått förlorat. Man kan så om och man kan så en andra gröda, safrinha, men om den blir för sen kan den skadas av tidig frost i mars och april. Oftast är det sojabönor man sår som andra gröda.

Det finns två väderleksprognoser för norra Argentina / södra Brasilien. En säger regn till helgen och sedan torrt igen. Den andra har mer generell nederbörd i prognosen.

Enligt en rapport från Global Weather Monitoring på onsdagseftermiddagen ska det regna 25 mm från 21 januari. Förra veckan regnade det 50 mm, efter att det varit torrt i 40 dagar. Nedan ser vi decemberkontraktet på CBOT, där priset just fallit ner från 600-cent-nivån.

Majs - Diagram över pris för decemberkontrakt

Tekniskt ser det ut som om priset skulle kunna falla ner mot 500 cent, men 550 cent är ett starkt stöd, där det funnits starka köpintressen tidigare.

Tekniks analys på majs den 18 januari 2012

Sojabönor

Conab, som gör skördeprognoserna inom det brasilianska jordbruksdepartementet estimerar att landet kommer att bärga en skörd på 71.75 mt i år. Det är 4.7% mindre än förra året. Att det blir en så liten minskning trots torkan i Parana (15 mt normal produktion) i söder, beror på att det vuxit frodigt i den väldiga delstaten Mato Grosso (där det knappt finns någon skog kvar, bara till namnet). Privata analysfirmor i Brasilien, som t ex Agroconsult förutspår en nedgång på 2% totalt till 73.52 mt och AgRural väntar sig en skörd på 73.06 mt.

I Argentina sänkte USDA skörden förra veckan från 52 mt till 50.5 mt. Förra året skördades 49 mt soja, så det är ändå en uppgång. Jordbrukare i Argentina kan fortfarande så ”andrasojan”. I delstaten Cordoba, som vi skrev om förra veckan, och som är näst största producenten av majs, utlystes katastroftillstånd den här veckan. Det betyder att nödhjälp kan betalas ut till jordbrukarna. Hela landet Paraguay gjordet detsamma.

Tekniskt står priset och väger. Vädret håller på att förbättras i Sydamerika. Å andra sidan tyder det mesta på att Kina har startat monetär stimulans och det kan öka efterfrågan senare under året.

Diagram för pris på sojabönor den 18 januari 2012

Enligt USDA kommer Brasilien att gå om USA som världens största exportör av sojabönor i år, året som slutar den 30 september 2012.

Raps

Priset på rapsfrö har varit förbluffande starkt på Matif. Tekniskt ser vi i diagrammet nedan att det finns en motståndslinje precis ovanför. Det skulle förvåna mycket om raps, som är mycket dyrare än kandensisk canola och sojabönor skule lyckas bryta upp över 420 euro per ton.

Teknisk analys på raps den 18 januari 2012

Nedan ser vi terminspriserna framåt i tiden för Matif raps, kanadensisk canola och för CBOT sojabönor, allt uttryckt i euro per metriskt ton.

Terminspris för Matif Raps, Canola, CBOT Sojabönor

I diagrammet nedan ser vi att rapsfrö är ovanligt dyrt i förhållande till kanadensisk canola (IJA=raps, RSA=canola).

Rapsfrö är ovanligt dyrt i förhållande till kanadensisk canola (IJA=raps, RSA=canola)

Vi har en negativ vy på Matif raps.

Mjölk

Nedan ser vi priset på marskontraktet på flytande mjölk (kontant avräknat mot USDA:s prisindex). Marknaden stötte på säljare på 18 och priset föll tillbaka kraftigt ner till 17.21.

Diagram - Pris på flytande mjölk

Gris

Priset på lean hogs rekylerade upp kraftigt de senaste dagarna, vilket gör att priset fortfarande ligger kvar i det breda prisintervall som etablerades redan under förra våren.

Lean hogs future - FEB12 - LHG2

Priset i Europa har betett sig på samma sätt. Nedan ser vi det vid var tid kortaste terminskontraktet (närmast spot):

Terminskontrakt på lean hogs den 18 januari 2012

Nedan ser vi terminspriserna med förfall framåt i tiden. Amerikanska Lean Hogs-priserna är omräknade till euro per kilo. Vi ser att Lean Hogs ligger lägre i pris och att skillnaden är riktigt stor från oktober och framåt.

Lean hogs, priser på terminskontrakt

Valutor

EURSEK har helt naturligt noterat lägre priser och borde fortsätta att falla.

Valuta - Diagram för EUR SEK den 18 januari 2012

EURUSD är i en tydlig negativ trend.

Valuta - Diagram för EUR USD den 18 januari 2012

USDSEK har en stigande trend och har nått upp till heltalet 7 kr per dollar, varifrån det återigen vänt ner. 7 kronor verkar vara ett starkt motstånd. Köpsignal torde vi ta på allvar om kursen noteras över 7.05 kr, väl över motståndsnivån.

Valuta - Diagram över USD SEK den 18 januari 2012

Gödsel

Kväve

Nedan ser vi 1 månads terminspris på Urea fob Uyzhnyy. Priset har inte rört sig från den nivån den senaste veckan.

1 månads terminspris på Urea fob Uyzhnyy den 18 januari 2012

[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

The cuts are for real and are already bullishly impacting the market

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Thumbs down was first reaction by financial market. The market gave the decision from the latest OPEC+ meeting an unexpectedly bearish reception. Yes, it was an unusual type of decision as well as the form of the communication. It was individual, ’voluntary’ cuts rather than a wide OPEC+ based decision with cuts divided pro-rate across the group. The communication of these cuts were not done by the OPEC secretariat as is usual but rather by the individual energy ministers who committed to cuts. All this gave the decision an airy feel with the sense that ’voluntary’ meant kind of ’maybe’ instead of real commitments. Further that the group is no longer tied properly together with no solid unanimous decision. It all summed up to ’thumbs down’ by the financial market and the price fell.

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

The cuts are real and ’voluntary’ doesn’t mean ’maybe’. These ’voluntary’ committed cuts are no less firm commitments and no less real than the current voluntary cut by Saudi Arabia which continues to hold its production at 9.0 m b/d vs a normal 10 m b/d. These are real cuts: Russia -200 k b/d, Iraq: 223 k b/d, UAE 163 k b/d, Kuwait 135 k b/d, Kazakhstan 82 k b/d, Algeria 51 k b/d and Oman 42 k b/d. Total 896 k b/d. Compliance is of course always an issue. But broadly we expect these cuts to be delivered.

US oil inventories may continue to show marginal, bearish tendencies in December. These cuts will kick in from January 2024 and as such they will not impact oil inventories before then. So weekly US oil inventory data can continue to deliver marginally bearish data points through December along a trend for a while now where we have seen that total commercial crude and product stocks inches closer and closer towards the 2015-19 seasonal average.

The new cuts by OPEC+ is already physically impacting the market with tighter availability of crude cargoes for January programs. But that doesn’t mean that the new committed cuts by OPEC+ from January 2024 isn’t already impacting the physical oil market and oil prices. They are. Sales of physical oil cargoes by OPEC+ for January crude shipment programs are already in full swing. Refineries around the world are already now in the process of purchasing physical crude cargoes for Q1-24. Offerings of crude cargoes for Q1-24 by OPEC+ were immediately reduced the moment OPEC+ decided to reduce supply by 900 k b/d from January onward. Forward physical crude buyers are thus already experiencing a tighter supply in their forward purchases. And as such oil prices are already impacted.

Cuts are a backstop against deteriorating crude prices sub-USD 80/b and not a recipe for USD 100/b. The fresh 900 k b/d cut is not a recipe to drive the oil price to USD 100/b. In our eyes it is more of an effort to prevent the oil price from deteriorating further below USD 80/b. It is a backstop. And as such we think it is probably a sufficient backstop.

The bottoming of the global manufacturing cycle will be the ’big, fat cigar’ for OPEC+. It is pointless for OPEC+ to try to drive the oil price to USD 100/b without a solid tailwind from an accelerating global economy. Their best option is to try to stabilize the oil price around USD 80/b and then savor the joyride once the global economic cycle bottoms out and starts to accelerate. Long positions in oil will then rise rapidly and physical demand (oil demand growth) will accelerate. Both underpinning oil prices. OPEC+ can then lean back and smoke a big, fat cigar! The big, big question is of course when that will happen? Will we first have an ugly, economic setback in 2024/25 due to the strong rise in interest rates over the past 1-2 years? Or will inflation evaporate completely over the coming quarters because it is a complete creation of the exceptional Covid-19 events which are now reversing back towards normal? Financial markets are struggling to decide which one of these it will be. Ugly trough before global acceleration of global acceleration right away if inflation evaporates completely?

A macro economist I worked with during the global financial crises argued strongly then that the first sign of bottoming and acceleration would be found by looking at the manufacturing PMI of South Korea since they produce a swath of industrial sub-components which the global industrial engine needs. Much has changed since 2008/09 and true or false I don’t know as I’m not a macro economist. But here it is:

Manufacturing PMIs. South Korea has bottomed and lifted to the 50-line

Manufacturing PMIs. South Korea has bottomed and lifted to the 50-line
Source: SEB graph, Data from Blbrg
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Analys

SEB Metals price forecast update

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Softer economic growth in 2024 calls for somewhat softer metals prices in 2024. Industrial metals prices as well as other commodity prices exploded during Covid-19 as governments around the world unleashed stimuli in the magnitude of 10x of what was done during the global financial crisis in 2008/09. Consumers shifting spending from services to consumer goods added to the boom. Bloomberg’s industrial metals price index was up 91% in March 2022 versus January 2020 because of this. Global manufacturing PMI peaked in May 2021 and has been fading since and below the 50-line from September 2022 with latest reading at 48.8. Industrial metals prices have faded since their peak in March 2022 but are still 30% higher than they were in January 2020. Even zinc, the worst performing metal, is still 9% above where it was in January 2020. As such one could possibly argue that industrial metals have not yet fully faded from their Covid-19 stimulus boom. One possible explanation could be inflation where US inflation is up 19% over the period. But this still leaves industrial metals up 11% in real terms. Another possible explanation is the big jump in energy prices over the period. While coal and gas prices have fallen back a lot, they are still quite high. The coal price in western Europe is 110% above where it was at the start 2020 and 50% above its 2010-2019 average. Most industrial metals are highly energy intensive to produce with digging and crushing of rocks, smelting, and refining of ore. The current aluminium price of USD 2215/ton is for example well aligned with coal prices. In addition to this there has also been significant closures of zinc and aluminium smelting capacity in Europe which probably have supported prices for these metals.

Global economic growth is forecasted to slow from 3.5% in 2022, to 3.0% in 2023 and then again to 2.9% in 2024 as the big jump in interest rates induce economic pain with a lag. Aligned with this we expect lower industrial metals prices in 2024 than in 2023 though only marginally lower for most of the metals. But the field of metals is wide, and the price action is thus adverse. Copper is likely the metal with the most strained supply and with huge needs in the global energy transition. 

Aluminium: Prices will likely be depressed versus marginal costs in 2024. Aluminium from Russia is flowing unhindered to the market. Most is going to China for reprocessing and potentially re-exported while some is going to Turkey and Italy. It is all flowing into the global pool of aluminium and as such impacting the global market balance. The LME 3mth aluminium price is currently well aligned with coal prices and both have traded mostly sideways since June this year. Aluminium premiums in the EU have however fallen 30-40% since mid-June in a sign of weakness there. The global market will likely run a surplus in 2024 with depressed prices versus the marginal cost of production.

Copper: Softer fundamentals in 2024 but with accelerating tightness on the horizon. Copper is currently trading at USD 8470/ton and close to 37% above its early Jan 2020 level. The market is expected to run a slight surplus in 2024 followed by accelerating tightness the following years. Downside price risk for 2024 is thus warranted along with softer global growth. The power of Unions is however getting stronger in Latin America with demands for higher salaries. Strikes have broken out in Peru with production at the Las Bambas copper mine at only 20%. Further strikes and disruptions could quickly put the market into deficit also in 2024.

Nickel: Indonesia pursuing market share over price pushing the price down the cost curve. Indonesia’s nickel production is growing rapidly. Its production reached 1.6 million ton in 2022 (+54% YoY) and accounted for close to 50% of total global supply in 2022. Its share looks set to reach 70% by 2030. Lower prices will stimulate demand and will also force higher cost producers to shut down thus making room for the wave of new supply from Indonesia. Prices will be sluggis the nearest years as Indonesia aims for market share over price.

Zinc: Price has stabilized around USD 2500/t. Weakness in global construction will drive prices lower at times in 2024. The 3mth LME zinc price has fallen from a peak of USD 4499/ton in April 2022 to only USD 2248/ton in May 2023. Since then, it has recovered steadily to USD 2500/ton.  Demand could struggle in 2024 as construction globally will likely struggle with high interest rates. But mine closures is a natural counter effect of low prices and will put a floor under prices.

Price outlook

SEB Commodities price outlook
Source: Historical values from Bloomberg, Price forecast by SEB


Bjarne Schieldrop
Cheif Commodities Analyst
SEB Commodity Research

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Analys

Now it’s up to OPEC+

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All eyes are now back at OPEC+ after the recent fall in oil prices along with weakening crude curve structures and weakening economic statistics. OPEC+ will have to step up the game and give solid guidance of what it intends to do in 2024. If Saudi Arabia is to carry the burden alone (with only a little help from Russia) it will likely need to keep its production at around 9.0 m b/d on average for 2024 and drop it down towards 8.5 m b/d in Q1-24. This may be too much to ask from Saudi Arabia and it may demand some of the other OPEC members to step up and join in on the task to regulate the market in 2024. More specifically this means Iraq, Kuwait and UAE. The oil market will likely be quite nervous until a firm message from Saudi/Russia/OPEC+ is delivered to the market some time in December.

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

Saudi Arabia may get some help from President Joe Biden though as his energy secretary adviser, Amos Hochstein, has stated that the US will enforce sanctions on Iran on more than 1 m b/d. 

Brent crude fell 4.6% ydy to USD 77.4/b and over the last three trading sessions it has lost USD 5.1/b. This morning it is trading only marginally higher at USD 77.6/b which is no vote of confidence. A good dose of rebound this morning would have been a signal that the sell-off yesterday possibly was exaggerated and solely driven by investors with long positions flocking to the exit. So there’s likely more downside to come.

In general there is a quite good relationship between net long speculative positions in Brent crude and WTI versus the global manufacturing cycle. Oil investors overall typically have an aversion of holding long positions in oil when the global economy is slowing down. As of yet there are few signs that the global economic cycle is about to turn. Rather the opposite seems to be the case. Global manufacturing fell in October and yesterday we saw US industrial production fall 0.6% MoM while continued jobless claims rose more than expected and to the highest level in two years. This matches well with the logic that the strong rise in interest rates since March 2022 is inflicting pain on the economy with more pain ahead as the effect comes with a lag.

Most estimates are that the global oil market is running a solid deficit in Q4-23. The IEA has an implied deficit in the global oil market of 1 m b/d in Q4-23 if we assume that OPEC will produce 28 m b/d vs. a call-on-OPEC at 29 m b/d. But prices in the oil market is telling a different story with weakening crude curves, weakening refining margins and a sharp sell-off in oil prices.

For 2024 the general forecasts are that global economic growth will slow, global oil demand growth will slow and also that the need for oil from OPEC will fall from 28.7 m b/d to 28.4 m b/d (IEA). This is a bearish environment for oil. The average Brent crude oil price so far this year is about USD 83/b. It should essentially be expected to deliver lower in 2024 with the negatives mentioned above.

Two things however will likely counter this and they are interconnected. US shale oil activity has been slowing with falling drilling rig count since early December 2022 and that has been happening at an average WTI price of USD 78/b. The result is that total US liquids production is set to grow by only 0.3 m b/d YoY in Q4-24. This allows OPEC+ to support the oil price at USD 80-90/b through 2024 without fear of loosing a significant market share to US oil production. Thus slowing US liquids production and active price management by OPEC+ goes hand in hand. As such we do expect OPEC+ to step up to the task.

So far it has predominantly been Saudi Arabia with a little help from Russia which together proactively have managed the oil market and the oil price through significant cuts. Saudi Arabia produced 10.5 m b/d in April but then cut production rapidly to only 9.0 m b/d which is what it still produces. Its normal production is about 10 m b/d.

What has made the situation more difficult for Saudi Arabia is the combination of solid growth in non-OPEC supply in 2023 (+2.1 m b/d YoY; IEA) but also a substantial revival in production by Venezuela and Iran. The two produced 660 k b/d more in October than they on average did in 2022. So the need for oil from Saudi Arabia is squeezed from both sides.

All eyes are now back at OPEC+ after the recent fall in oil prices along with weakening crude curve structures and weakening economic statistics.

OPEC+ will have to step up the game and give solid guidance of what it intends to do in 2024. If Saudi Arabia is to carry the burden alone (with only a little help from Russia) then it will likely need to keep its production at around 9.0 m b/d on average for 2024 and drop it down towards 8.5 m b/d in Q1-24. This may be too much to ask from Saudi Arabia and it may demand some of the other OPEC members to step up and join in on the task to regulate the market in 2024. More specifically this means Iraq, Kuwait and UAE.

The oil market will likely be quite nervous until a firm message from Saudi/Russia/OPEC+ is delivered to the market some time in December.

Saudi Arabia may get some help from President Joe Biden though as his energy secretary adviser, Amos Hochstein, has stated that the US will enforce sanctions on Iran on more than 1 m b/d.

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