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    What to watch in commodity space this week

    Synopsis

    Global crude markets will be center stage this week in the final countdown to Opec’s next meeting.

    Bloomberg
    By Alex Longley, Laura Millan Lombrana and Megan Durisin

    Global crude markets will be center stage this week in the final countdown to Opec’s next meeting. Traders will be alert for comments from the group’s members as well as Russia on whether supply curbs that have helped to hoist prices will be maintained. After posting back-to-back gains in September and October, Brent’s only a little higher this month.

    Beyond Vienna, investors will have an eye on the weather, with Australian forecasters due to weigh in on whether La Nina conditions will set in. They’ll also scrutinize earnings from lithium powerhouse Soc. Quimica & Minera de Chile SA amid gathering excitement about the potential for electric vehicles. Staying in Latin America, there’s scope for further disruptions at copper mines. And lastly, don’t miss a USDA report that may herald cheaper bacon.

    Here are five talking points that’ll be the focus of the commodities world:

    Balancing Act
    The next Opec meeting is little more than a week away and the market is almost certain supply cuts will be extended. Saudi Arabia’s energy minister has said the group should prolong curbs at the Nov. 30 meeting in Vienna, leaving no room for doubt as to the preference of Opec’s top producer. The key boost for the group since it last met in May has been Brent’s rise back above $60 for the first time in more than two years as re-balancing starts to set in.

    Image article boday


    Despite that rise, the benchmark is edging back toward a bearish contango structure. With the market housing more bullish bets than ever, there’s a growing risk the meeting could disappoint. Russia was said to waver on whether an agreement needs to be reached next week and the Kremlin’s view is likely to be the key thing to watch in the run up to the event.

    Rain or Shine?
    US forecasters have just said a La Nina has formed, and this week provides a chance for meteorologists Down Under to have their say. The event -- triggered by cooler Pacific waters and associated atmospheric shifts -- has worldwide reach, delivering colder winters across the northern US, drought in parts of Brazil and a heck of a lot of rain in Australia and Asia.

    Image article boday


    Australia’s Bureau of Meteorology, which issues its latest bi-weekly assessment on Tuesday, started a La Nina watch in October and said earlier this month the chance of it happening was 50-50. Commodity investors, especially in foodstuffs from soy to palm, will be alert for any shift in those odds, as well as the scientists’ best stab at forecasting how powerful the La Nina will be.

    All Charged Up
    Tesla Inc.’s unveiling of its all-electric big rig last week provided an added boost to the outlook for metals used in batteries. As miners race to meet demand from electric cars, investors will be watching earnings from Soc. Quimica & Minera de Chile SA for clues on the supply situation. The excitement over SQM’s bright prospects fueled a rally that’s doubled its shares this year.

    Image article boday


    The Santiago-based company, one of the top lithium producers, has already attracted the attention of Rio Tinto Group. The London-based miner is said to be working with advisers on a bid for a 32 per cent stake in what could be its biggest acquisition since the $38 billion takeover of Alcan Inc. in 2007. Potash Corp. of Saskatchewan Inc. is looking to sell the holding to meet a condition by Indian regulators approving its merger with Agrium Inc.

    Southern Discomfort
    Just when you thought the copper rally is beginning to falter, along comes another labor dispute, with unions at Southern Copper Corp. set to strike in Peru at midnight on Nov. 21. Any disruption could further tighten supply in a market that’s already seen output trail demand in the five months to July. A six-week strike at Chile’s Escondida mine earlier this year helped fuel the deficits.

    Image article boday


    Southern Copper unions aren’t the only ones unhappy with wages and conditions in Peru, the second-largest producer of the mined metal. The Mining Federation, which represents several unions, is also threatening to go on strike after months of mediation failed to produce positive results. Federation leaders meet on Monday and Tuesday to decide on the next steps.

    Bacon Feast
    With holidays just around the corner, American consumers may be looking for relief from pricey bacon. This week’s USDA cold-storage report will provide an update on inventories of pork bellies, the cut used to make the smoky treat. An uptick in stockpiles could signal lower consumer costs ahead.

    Image article boday


    Wholesale prices of pork bellies are up 28 per cent this month. Prices have rebounded since falling to a one-year low in September, when frozen supply climbed for a second straight month, according to the last USDA report.

    Bulls Versus Bears
    Commodity traders and analysts surveyed by Bloomberg are most bullish on natural gas after first storage withdrawal of season left supplies well below 5-year average ahead of winter.

    Image article boday


    They were bearish on crude oil and copper. Bloomberg Terminal users can see the surveys here.

    For the Diary

    MONDAY, NOV. 20
    - JODI issues world oil exports, output data
    - US Department of Agriculture releases data for grain-export inspections
    - MMC Norilsk Nickel PJSC hosts investor day in London

    TUESDAY, NOV. 21
    - Australia’s Bureau of Meteorology ENSO update
    - Monthly Swiss import/export data for gold, platinum, palladium
    - World Platinum Investment Council publishes third-quarter report
    - API Crude Oil Inventories
    - EARNINGS: Graincorp Ltd.

    WEDNESDAY, NOV. 22
    - Russian Energy Minister Novak speaks at Gas Exporting Countries Forum summit in Bolivia
    - European Coffee Symposium takes place in Warsaw. Speakers include representatives from Starbucks Corp.
    - China International Oil & Gas Trade Congress in Shanghai through Friday. Speakers include executives from PetroChina Co., SinOpec, - Saudi Arabian Oil Co.
    - Sydney Mining Club Gala dinner
    - US Department of Agriculture releases monthly cold-storage figures
    - EARNINGS: Soc. Quimica & Minera de Chile SA

    THURSDAY, NOV. 23
    - Opec’s Economic Commission Board meets in Vienna to discuss the oil market before the group’s ministerial meeting International Grains - Council updates forecasts for stockpiles, production, demand and trade
    - China final October commodity & energy trade data, inc. copper, zinc
    - EARNINGS: Felda Global Ventures Holdings Bhd, Thyssenkrupp AG

    FRIDAY, NOV. 24
    - Opec’s Economic Commission Board meets in Vienna to discuss market before ministerial meeting
    - ICE weekly commitments of traders report for data through Nov. 14
    - CFTC Delayed to following Monday for US Holiday



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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