Professional Documents
Culture Documents
120
ENERGY 0-3 M 4-6 M 7-12 M
• We expect Brent crude prices to remain high in Q2-11 with risk 110
nov-10
feb-10
feb-11
jan-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
dec-10
jan-11
mar-11
apr-11
that could be exacerbated in Q2 as US and European refineries
ramp up production
• So far there seems to have been only limited demand
destruction due to high oil prices
Sector performance last month
INDUSTRIAL METALS 0-3 M 4-6 M 7-12 M (MSCI World, UBS Bloomberg CMCI price indices)
• The industrial metals market currently focuses on Chinese soft 24
22
vs. hard landing expectations as leading indicators signal an 20
18 YTD (%) M/M (%)
approaching downturn 16
• Temporary sell-offs are likely over the nearest months on 14
12
periods of Chinese hard landing fear 10
•
8
The long term picture is supported by ambitious Chinese plans 6
to build low cost housing 4
2
• Japanese reconstruction demand, potentially recovering OECD 0
-2
demand and approaching Chinese industry restocking also -4
Agriculture
Industrial
Equities
Commodities
Energy
Precious
lends long term support
metals
Platinum
Aluminium
Cotton
Lead
Corn
Gold
Zinc
WTI
Soybeans
Steel billets
Sugar
Copper
CO2 (EUA)
Power (Cont.)
Power (Nordic)
Gasoline (US)
Cocoa (US)
Nickel
Brent
Wheat
Arrows indicate the expected price change during the period in question.
2
Commodities Monthly
General
UBS Bloomberg CMCI
The commodity outlook is becoming less clear. (price index, weekly closing)
Recovery, USD weakness and plentiful liquidity 1800
remain positive forces, but Libyan oil outage is now 1700
discounted and China continues to implement 1600
measures to dampen its own (inflationary) 1500
1400
economic activity. With broad commodity indices at
1300
or close to record highs we see little further upside 1200
at present other than the possibility that they could 1100
continue to move higher as the USD depreciates. A 1000
technical correction is unavoidable at some point 900
800
with speculative positions near record highs and
700
volatilities at complacent lows. It is hard to imagine 600
what factor will trigger such a correction. Examples 500
include a strong reversal in the USD downturn 400
driven by European debt flare-ups; bad news from 300
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
China suggesting the possibility of a hard landing;
deterioration in US growth; or an improvement in
the situation in MENA. The unavoidable technical
correction is however unlikely to mark the end of JPM global manufacturing PMI
the current cyclical bull market in commodities. It (monthly, PMIs >50 expansive)
may instead create attractive buying opportunities. 65
2006
2007
2008
2009
2010
2011
crude has outperformed most commodities lately mainly
as a result of radically tighter fundamentals in Q1. In
response to rising demand many commodities are priced
either based on tight supply (e.g. cotton, corn, copper, OECD composite leading indicators
(monthly, 100 corresponds to long term trend in industrial production)
tin, sweet crude, coking coal and iron ore) or on rising
marginal costs (e.g. aluminium) while precious metals 105
104
move upwards because of liquidity, risk aversion and a 103
softer USD. Currently, commodities generally are 102
supported by both liquidity and growth, enjoying the 101
100
best of all worlds with support for both precious metals, 99
China
industrial metals and energy. Sooner or later one of these 98 Eurozone
97
drivers will have to give way. Either surplus liquidity will OECD
96 USA
need to be removed as growth is solid or growth will 95 Reference
break down paving the way for even higher liquidity. But 94
93
for now they co-exist together. 92
91
In terms of plain long positions we prefer gold, long 90
89
dated oil and copper while maintaining a bearish view on 88
agriculture generally as conditions normalise after La
2005
2006
2007
2008
2009
2010
2011
3
Commodities Monthly
Crude oil
Crude oil price
The physical tightness created by the loss of Libyan (NYMEX/ICE, $/b, front month, weekly closing)
sweet crude is probably discounted in the present 150
Brent crude price and in the size of speculative long 140 NYMEXWTI
positions. The shortage in sweet crude could 130 ICE Brent
however be exacerbated as US and European 120
refiners ramp up production in coming months. We 110
100
therefore expect sweet crude prices to remain high
90
for at least the rest of the second quarter with risk 80
skewed above $120/b. For H2-11 we expect the oil 70
price to ease once the summer driving season is 60
over with softer demand for sweet crude. We also 50
anticipate further signs of demand destruction and 40
potentially a reduced MENA risk premium. However, 30
20
we raise our Brent crude oil forecast for H2-11 from
10
$95/b to $105/b as the MENA situation has
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
continued to deteriorate and therefore is unlikely to
be resolved in 2011.
The crude oil market is supported by a range of bullish US crude oil inventories
factors making record long speculators reluctant to take (DOE, mb, weekly data)
profits despite a 33% rally by Brent crude so far this year. 370
The main reason is the increasing likelihood that Libyan
oil will be out of the market for a long time, particularly 360
with Gaddafi loyalists attacking rebel held oil fields to
prevent further exports. Primarily, this has resulted in a 350
market shortage of sweet, i.e. low sulphur, crude oil. With
desulphuring capacity in the Atlantic basin limited, sweet 340
crude oils such as Brent, WTI and Bonny Light are trading
at a substantial premium to sour crude oils. In addition, 330 2006-2010 avg.
US growth optimism on strong economic indicators, 2010
potential further dollar weakness and growing inflation 2011
320
worries are keeping crude oil bulls happy. The main
upside risks concern a potential escalation in post-
310
election unrest in Nigeria, a further deterioration in the
j f m a m j j a s o n d
MENA situation, and a more acute sweet crude shortage.
However, a technical correction is unavoidable sooner or Chart Sources: Bloomberg, SEB Commodity Research
later.
Current global crude oil demand estimates
OPEC is insisting that the crude oil market is
oversupplied which may be true from a sour crude 2010 Revision 2011 Revision
perspective. However, it can do very little to relieve the (mb/d) (kb/d) (mb/d) (kb/d)
sweet crude shortage. Refinery activity was at a seasonal IEA 87.9 +10 89.4 +/-0
low when Libya left the market and the situation could EIA 86.68 -10 88.20 +/-0
OPEC 86.55 +160 87.94 +110
therefore deteriorate further in Q2-11 as refineries ramp
up production. Indications suggest OECD crude oil and
product inventories have begun to fall rapidly.
4
Commodities Monthly
Energy
WTI futures curve Brent futures
futures curve
(NYMEX, $/b) (ICE, $/b)
115 126
114 125
113 11-02-28 124 11-02-28
112 123
11-03-31 122 11-03-31
111 121
110 11-04-28 120 11-04-28
109 119
108 118
107 117
106 116
115
105 114
104 113
103 112
102 111
101 110
100 109
108
99 107
98 106
97 105
96 104
jun-11
sep-11
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
jun-11
sep-11
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
Gasoline and heating oil prices Gasoline and distillate inventories
(NYMEX, ¢/gal, front month, weekly closing) (DOE, mb, weekly data)
450 250
NYMEXGasoline 240
400 NYMEXHeating oil 230
220
350
210
300 200
Gasoline 2006-2010 avg.
190
250 Gasoline 2011
180
Distillate fuel oil 2006-2010 avg.
170
200 Distillate fuel oil 2011
160
150 150
140
100 130
120
50
110
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
j f m a m j j a s o n d
2003
2004
2005
2006
2007
2008
2009
2010
2011
5
Commodities Monthly
Nordic power
Nordic power price
During April the power market was dominated by the (Nord Pool, €/MWh, front quarter, weekly closing)
aftermath of the Japanese earthquake and its 80
implications for the future of nuclear power, as well as 75
weather issues and the spring flood. In Germany an 70
earlier decision to extend the current nuclear program 65
was withdrawn as a result of the Japanese accident. The 60
nuclear debate in Europe and elsewhere is fierce and 55
where it will end is very difficult to predict. We believe it 50
will be impossible to significantly replace existing nuclear 45
capacity in the foreseeable future without switching to
40
CO2 intensive fossil fuel-based power generation. For
35
now, other cleaner energy sources are not realistic
30
alternatives and are also far more expensive. We believe
25
that both the industry and the unions will do their best to
20
turn public opinion around primarily because shutting
2006
2007
2008
2009
2010
2011
down nuclear capacity is more than likely to reduce
European industrial competitiveness with obvious
implications for employment.
Continental power price
Spot prices fell in April on normal seasonality, i.e. fewer (EEX, €/MWh, front quarter, weekly closing)
dark hours and higher temperatures. At the beginning of 95
the month prices were above EUR 60/MWh but hit a low 90
85
of EUR 33.63/MWh over Easter when a low load in
80
conjunction with the spring flood and warm weather 75
caused prices to collapse. While the warm and dry 70
weather has acted as a short term bearish price driver it 65
60
is bullish from a mid- to long term perspective as it
55
worsens an already very stretched hydrological balance. 50
As a result forward prices have increased over the past 45
month. The spot market traded above EUR 50/MWh in 40
the last days of April. The April average was EUR 35
30
53.84/MWh, EUR 10.37/MWh lower than in March. The
25
Swedish spot traded largely in line with the system price. 20
2006
2007
2008
2009
2010
2011
For the most part, forward prices moved sideways over
the month but finished higher. Q3-11 gained EUR
2.05/MWh to close at EUR 56.25/MWh while YR-12
EUA price
gained EUR 2.20/MWh before closing at EUR
(ECX ICE, €/t, Dec. 11, weekly closing)
52.35/MWh. The German curve remained stable during
35
the period despite higher fuel prices, narrowing the
spread between markets with the German YR-12 now
trading at a EUR 6.95/MWh premium to the Nordic YR-12 30
2007
2008
2009
2010
2011
6
Commodities Monthly
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
is likely to have a strong bearish effect on industrial
metals prices. However, further out, their prospects
are significantly brighter. Although more Chinese
interest rate hikes are expected this summer, Industrial metal prices
lending restrictions could be eased as early as H2-11 (LME, indexed, weekly closing, January 2010 = 100)
if the economy cools to a desired level. In addition, 200 Copper
China’s fixed asset investments remain high with 190 Nickel
Aluminium
further plans to build tens of millions of low cost 180
Zinc
housing units under the 2011-2015 five year plan. 170
Lead
160 Tin
The long term situation is further supported by 150
Japanese reconstruction requirements, potentially 140
recovering OECD demand, and the fact that Chinese 130
restocking needs are apparently increasing due to a 120
combination of continued strong economic growth 110
100
and relatively weak metal imports. In the near term
90
soft spots could therefore be used to build long term 80
positions. 70
60
nov-10
feb-10
feb-11
jan-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
dec-10
jan-11
mar-11
apr-11
Chinese authorities continue to clamp down on energy
inefficient industrial metals production and overcapacity
even though such efforts have proven relatively
unsuccessful historically. This is due to a clear
divergence between central government efforts toward LME price and inventory changes last month
more efficient use of resources and local governments’
strategy to boost regional employment and growth. 13
12
However, current indications suggest the central 11
10
government will try to limit annual production growth of 9
8
ten non-ferrous metals to 8% over the next five years. 7
6
5
Indifference in industrial metals markets to 4
3
developments within the OECD has been well illustrated 2
1
by their limited reaction to the European and US 0
-1
sovereign debt debacle, which implies strong austerity -2
-3
measures over the next decade, as well as industrial -4
-5
production disturbances resulting from component -6 Price (%) Inventories (%)
-7
shortages following the Japanese earthquake. The lack of -8
Tin
Aluminium
Lead
Zinc
Copper
Nickel
Steel
7
Commodities Monthly
Industrial metals
Aluminium LME aluminium price and inventories
(weekly data)
• Chinese authorities have initiated a new wave of 5000000 3500
LME inventoris (t, left axis)
clampdowns on inefficient production and capacity
4500000 LME price ($/t, right axis) 3250
expansion. Planned projects are to be halted
4000000 3000
immediately.
• Reduced capacity expansion and energy efficiency 3500000 2750
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Copper LME copper price and inventories
(weekly data)
• While LME and Chinese bonded warehouse inventories 1000000 11000
LME inventoris (t, left axis)
appear to be rising China’s industry inventories are likely
900000 LME price ($/t, right axis) 10000
to trend lower together with SHFE inventories. Extensive
800000 9000
restocking should therefore be expected later this year.
• We believe copper prices are well supported in both the 700000 8000
short and long term and do not expect prices below 600000 7000
$8500/t during periods of temporary risk aversion. 500000 6000
• The International Copper Study Group (ICSG) forecasts a
400000 5000
market deficit of 377 kt in 2011 and 279 kt in 2012.
• The second round of the Peruvian presidential election in 300000 4000
June will be extremely important for the copper market. 200000 3000
2003
2004
2005
2006
2007
2008
2009
2010
2011
2003
2004
2005
2006
2007
2008
2009
2010
2011
8
Commodities Monthly
Industrial metals
Zinc
Zin c LME zinc price and inventories
(weekly data)
• The zinc market remains in oversupply with prices well 900000 LME inventoris (t, left axis) 5000
above production costs. It therefore continues to LME price ($/t, right axis)
800000 4500
represent one of the weakest segments of the industrial
metals sector. 700000 4000
• The International Lead and Zinc Study Group (ILZSG) 600000 3500
expects this year’s increased supply to exceed growth in
500000 3000
demand for a fifth consecutive year. It forecasts a market
surplus of 200 kt. 400000 2500
• While the zinc market appears relatively balanced next 300000 2000
year, it may be in deficit in 2013. We see a predominant
200000 1500
risk that the surplus will continue into 2012.
• LME inventories once again moved higher in April while 100000 1000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Steel LME steel billet price and inventories
(weekly data)
• Sluggish MENA steel demand gives a bearish flavour to 90000 1300
the European steel market. 80000
LME inventoris (t, left axis) 1200
• Chinese economic cool down efforts are making market LME price ($/t, right axis) 1100
70000
stakeholders careful. 1000
• An approaching mild inventory cycle with rising steel 60000
900
inventories is also putting a lid on the upside for steel 50000 800
products. 700
40000
• Mainly sideways prices in April with small price changes 600
in most steel products. 30000
500
• Iron ore is trading at $181.5/t, up 4.4% m/m while coking 20000
400
coal was negotiated as high as $330/t in April. 10000 300
• The European steel market looks sideways to bearish
0 200
over the nearest months.
jul-08
okt-08
jan-09
apr-09
jul-09
okt-09
jan-10
apr-10
jul-10
okt-10
jan-11
apr-11
LME lead price and inventories LME tin price and inventories
(weekly data) (weekly data)
325000 4000 40000 36000
LME inventoris (t, left axis)
300000 33000
LME price ($/t, right axis) 3500 35000 LME inventoris (t, left axis)
275000
LME price ($/t, right axis) 30000
250000 3000 30000 27000
225000
200000 2500 25000 24000
175000 21000
2000 20000
150000 18000
125000 1500 15000 15000
100000
1000 10000 12000
75000
9000
50000
500 5000
25000 6000
0 0 0 3000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
9
Commodities Monthly
Industrial metals
Aluminium futures curve Copper futures curve
(LME, $/t) (LME, $/t)
2975 10000
2950 9900
2925 9800
2900 9700
2875 9600
2850 9500
2825 9400
2800
9300
2775
9200
2750
9100
2725
9000 11-02-28
2700
11-02-28 8900 11-03-31
2675
2650 11-03-31 8800 11-04-28
2625 11-04-28 8700
2600 8600
2575 8500
nov-11
nov-12
nov-13
nov-14
nov-11
nov-12
nov-13
nov-14
feb-12
feb-13
feb-14
feb-15
feb-12
feb-13
feb-14
feb-15
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
maj-14
aug-14
maj-15
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
maj-14
aug-14
nov-12
nov-13
nov-14
nov-11
nov-12
nov-13
nov-14
feb-12
feb-13
feb-14
feb-15
feb-12
feb-13
feb-14
feb-15
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
maj-14
aug-14
maj-15
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
maj-14
aug-14
maj-15
Lead futures curve Tin futures curve
(LME, $/t) (LME, $/t)
2750 32400
2725 32350
11-02-28
2700 32300
2675 11-03-31 32250
2650 11-04-28 32200
2625 32150
2600 32100
2575 32050
2550 32000
11-02-28
2525 31950
2500 31900 11-03-31
2475 31850 11-04-28
2450 31800
2425 31750
2400 31700
2375 31650
nov-11
nov-12
nov-13
nov-14
nov-11
feb-12
feb-13
feb-14
feb-15
feb-12
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
maj-14
aug-14
maj-15
maj-11
jun-11
jul-11
aug-11
sep-11
okt-11
dec-11
jan-12
mar-12
apr-12
maj-12
jun-12
jul-12
10
Commodities Monthly
Precious metals
Precious metal prices
Our short term gold market view remains bullish on (COMEX/NYMEX, indexed, weekly closing, January 2010 = 100)
European and US sovereign debt fears, inflation 290
worries, the current bearish dollar trend and high 280
270 Silver
geopolitical risk. Our bullish long term view is 260 Platinum
250
however beginning to moderate due to a potential 240 Gold
230 Palladium
dollar bullish end to QE2 and expectations of US 220
interest rate hikes in early 2012. In addition, Chinese 210
200
inflation is likely to begin to show signs of slowing 190
180
going forward, resulting in reduced demand for 170
160
inflation hedging. Gold could therefore peak 150
between $1700-1800/ozt this year. However, 140
130
European and US sovereign debt concerns are 120
110
unlikely to recede and therefore represent the 100
90
greatest upside risk to the gold market together 80
nov-10
feb-10
feb-11
jan-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
dec-10
jan-11
mar-11
apr-11
with a situation in which inflation accelerates. Key
downside risks include a stronger than expected
economic recovery and a sharp upturn in the dollar.
2003
2004
2005
2006
2007
2008
2009
2010
2011
to paper money. Overall however, the real interest rate
environment appears likely to remain gold supportive
during the rest of this year, at least throughout the third
quarter. Potentially softer food and energy prices could Gold and currencies vs. USD
help dampen inflation in H2-11.
12
YTD (%) MoM (%)
11
While most people still consider the US AAA rating as 10
sacrosanct in current circumstances S&P’s outlook 9
revision from stable to negative managed to move the 8
market. As long as US politicians fail to agree on how to 7
handle mounting debt over the coming decade the US 6
will follow the same course as Europe from a sovereign 5
debt perspective. European and US leaders are obviously 4
equally unwilling to decide on measures that risk turning 3
11
Commodities Monthly
Precious metals
Gold Gold price
(COMEX, $/ozt, front month, weekly closing)
• We maintain our bullish outlook for gold despite the fact 1600
that the long term view is being undermined by potential 1500
renewed dollar strength and the inflation dampening 1400
effects of Chinese monetary tightening. 1300
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
record highs.
2003
2004
2005
2006
2007
2008
2009
2010
2011
early May are likely to continue to occur.
2003
2004
2005
2006
2007
2008
2009
2010
2011
12
Commodities Monthly
Precious metals
Gold futures curve
curve Silver futures curve
(COMEX, $/ozt) (COMEX, $/ozt)
1800 48
47
1750 46
11-02-28
45
1700 11-03-31 44 11-02-28
11-04-28 43 11-03-31
1650 42
11-04-28
41
1600 40
39
1550 38
37
1500 36
35
1450 34
33
1400 32
nov-11
nov-12
nov-13
nov-14
nov-15
feb-12
feb-13
feb-14
feb-15
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
maj-14
aug-14
maj-15
aug-15
jun-11
sep-11
dec-11
mar-12
jun-12
sep-12
dec-12
mar-13
jun-13
sep-13
dec-13
mar-14
jun-14
sep-14
dec-14
mar-15
jun-15
sep-15
dec-15
mar-16
jun-16
sep-16
dec-16
Palladium futures curve Platinum futures curve
(NYMEX, $/ozt) (NYMEX, $/ozt)
810 1860
805 1850
800
1840
11-02-28
795
11-02-28 1830 11-03-31
790
11-03-31 1820 11-04-28
785 11-04-28
1810
780
775 1800
770 1790
765 1780
760 1770
jun-11
sep-11
dec-11
mar-12
jun-12
jul-11
jul-12
okt-11
jan-12
apr-12
Physical silver
silver and gold ETP holdings Physical palladium
palladium and platinum ETP holdings
(weekly data, tonnes) (weekly data, tonnes)
2200 75
2100 70
2000 65
1900 60
1800 55
1700 Silver holdings / 10 50
Gold holdings Palladium
1600 45
Platinum
1500 40
1400 35
1300 30
1200 25
1100 20
nov-10
feb-10
feb-11
nov-10
jan-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
dec-10
jan-11
mar-11
apr-11
feb-10
feb-11
jan-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
dec-10
jan-11
mar-11
apr-11
13
Commodities Monthly
Agriculture
Grains prices
We expect agricultural commodity prices to (CBOT, indexed, weekly closing, January 2010 = 100)
continue to trend lower for the rest of this year as 190
production estimates are raised and risk premiums 180 Wheat
lowered due to the diminishing effects of the La 170
Soybeans
Corn
Niña weather anomaly. The current National 160
Oceanic and Atmospheric Administration (NOAA) 150
forecast suggests that global weather patterns will 140
have normalized by June. Due to generally high 130
agricultural prices, upside risk is limited by demand 120
destruction. However, inventories for several 110
agricultural commodities are low and sensitivity to 100
disturbances therefore very high. As both 90
decreasing La Niña related disturbances and normal 80
variations will continue to hamper production we 70
nov-10
feb-10
feb-11
jan-10
mar-10
apr-10
maj-10
jun-10
jul-10
aug-10
sep-10
okt-10
dec-10
jan-11
mar-11
apr-11
expect further temporary price rallies during the rest
of the year. Current examples include extremely dry
conditions in the US Great Plains where winter
wheat is growing, and cold, wet conditions in the
northern United States where soybeans, corn and Year end grain inventories (days of supply)
spring wheat are about to be planted. In the grains (USDA, yearly data updated monthly)
sector, corn is most exposed to disruptions and 130
could also pull other associated crops higher Wheat
120
through substitution effects. Soybeans
Corn
110
According to the International Grains Council (IGC) the
100
outlook for grain production in the 2011/2012 season is
favourable. IGC expects production to increase by 4.5% 90
after weather disturbances weighed on production in the
80
previous harvest year. Consumption is forecast to
increase by a more modest 1.5% but will slightly exceed 70
supply in absolute terms. The current forecast therefore
60
suggests a relatively well balanced market. IGC also
projects record high grain consumption during the 50
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10
10/11
current season.
Soft commodity prices generally also continue to fall Chart Sources: Bloomberg, USDA, SEB Commodity Research
back. Sugar prices began to decrease earlier this year on
strong Brazilian and Thai production and have recently
been joined by cotton. Exceptionally high cotton prices
have finally caused demand to slow down resulting in
cancelled orders. Although the general sector is trending
towards lower prices there are some exceptions. Arabica
coffee has continued to move higher, trading above
$3/lb for the first time ever. The coffee market is
supported by strong demand, record low inventories and
production disruptions in several major producer
nations. The situation originated with three consecutive
disappointing Columbian crop years. However, given
current record high prices, demand destruction is bound
to put an end to the coffee rally sooner or later.
14
Commodities Monthly
Agriculture
Corn Corn price
(CBOT, ¢/bu, front month, weekly closing)
• Snow, rain and cold weather continue to delay US 800
planting with acreage losses to soybeans and lower
yields the potential result if conditions do not improve. 700
• Due to low inventories, the corn market will remain
600
highly sensitive to future disruptions.
• Although demand destruction and substitution appear to 500
be holding back the corn market, high oil prices continue
to stimulate demand from ethanol producers. 400
• According to the US Department of Agriculture (USDA)
global 2010/2011 ending stocks will reach 71.0 days of 300
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
during the 2011/2012 season. A record crop is needed to
relieve the tight inventory situation.
2003
2004
2005
2006
2007
2008
2009
2010
2011
bullish influences could come from the more strained
corn market.
2003
2004
2005
2006
2007
2008
2009
2010
2011
15
Commodities Monthly
Agriculture
Corn futures curve Wheat futures curve
(CBOT, ¢/bu) (CBOT, ¢/bu)
750 950
725 925
11-02-28
700 11-03-31 900
675 11-04-28
875
650
850
625
825 11-02-28
600
11-03-31
800
575 11-04-28
550 775
525 750
500 725
nov-11
nov-12
nov-13
nov-14
feb-12
feb-13
feb-14
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
maj-14
aug-14
nov-11
nov-12
feb-12
feb-13
maj-11
aug-11
maj-12
aug-12
maj-13
Soybean futures curve Sugar
(CBOT, ¢/bu) (NYBOT, ¢/lb)
1450 40
1425 11-02-28
35
1400 11-03-31
11-04-28 30
1375
1350 25
1325 20
1300
15
1275
1250 10
1225 5
1200
nov-11
nov-12
nov-13
feb-12
feb-13
0
maj-11
aug-11
maj-12
aug-12
maj-13
aug-13
2002
2003
2004
2005
2006
2007
2008
2009
2010
200 3600
3400
180
3200
160 3000
140 2800
2600
120
2400
100 2200
80 2000
1800
60
1600
40 1400
20 1200
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
16
Commodities Monthly
17
Commodities Monthly
Performance
Closing YTD 1m 1q 1y 5y
(%) (%) (%) (%) (%)
UBS Bloomberg CMCI Index (TR) 1481,64 8,8 1,3 38,4 30,3 42,7
UBS Bloomberg CMCI Index (ER) 1393,86 8,7 1,3 38,1 30,1 29,3
UBS Bloomberg CMCI Index (PI) 1761,07 8,7 1,1 42,5 33,3 71,1
UBS B. CMCI Energy Index (PI) 1766,53 22,6 5,0 44,1 27,9 44,8
UBS B. CMCI Industrial Metals Index (PI) 1330,75 3,2 0,1 32,6 18,2 32,7
UBS B. CMCI Precious Metals Index (PI) 2424,41 12,2 8,4 54,6 40,4 139,5
UBS B. CMCI Agriculture Index (PI) 1922,95 -2,2 -3,0 43,8 51,5 106,9
Baltic Dry Index 1269,00 -29,3 -17,1 -29,3 -62,2 -46,4
Crude Oil (NYMEX, WTI, $/b) 112,86 23,5 5,8 54,8 31,0 57,0
Crude Oil (ICE, Brent, $/b) 125,02 31,9 6,5 75,0 43,0 73,6
Aluminum (LME, $/t) 2767,50 12,0 4,5 33,1 22,7 0,5
Copper (LME, $/t) 9320,00 -2,9 -1,1 38,2 25,4 33,3
Nickel (LME, $/t) 26850,00 8,5 2,9 45,1 2,1 39,3
Zinc (LME, $/t) 2247,00 -8,4 -4,9 6,5 -1,7 -29,2
Steel (LME, Mediterranean, $/t) 559,00 -1,9 0,7 35,5 6,5
Gold (COMEX, $/ozt) 1531,20 7,7 6,4 41,4 29,7 133,9
Corn (CBOT, ¢/bu) 723,00 14,9 4,3 102,8 97,4 203,5
Wheat (CBOT, ¢/bu) 743,00 -6,5 -2,7 56,8 51,1 114,6
Soybeans (CBOT, ¢/bu) 1350,25 -3,1 -4,3 47,7 36,5 129,9
Sources: Bloomberg, SEB Commodity Research
Contact list
COMMODITIES Position E-mail Phone Mobile
Terje Anderson Global Head of terje.anderson@seb.no +47 22 82 71 03 +47 92 61 26 76
Commodities
RESEARCH
Bjarne Schieldrop Chief analyst bjarne.schieldrop@seb.no +47 22 82 72 53 +47 92 48 92 30
Filip Petersson Strategist filip.petersson@seb.se +46 8 506 230 47 +46 70 996 08 84
SALES SWEDEN
Katarina Johnsson Corporate katarina.johnsson@seb.se +46 8 506 233 95 +46 73 501 52 02
Karin Almgren Institutional karin.almgren@seb.se +46 8 506 230 51 +46 73 642 31 76
SALES NORWAY
Maximilian Brodin Corporate/Institutional maximilian.brodin@seb.no +47 22 82 71 62 +47 92 45 67 27
SALES FINLAND
Vesa Toropainen Corporate/Institutional vesa.toropainen@seb.fi +358 9 616 286 08 +358 50 597 000 6
SALES DENMARK
Peter Lauridsen Corporate/Institutional peter.lauridsen@seb.dk +45 331 777 34 +45 616 211 59
TRADING
Mats Hedberg Chief Dealer mats.hedberg@seb.se +46 8 506 230 15 +46 70 462 29 78
18
Commodities Monthly
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
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document is being provided as information only, and no specific actions are being solicited as a result of it; to the extent
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or its contents.
SEB is a public company incorporated in Stockholm, Sweden, with limited liability. It is a participant at major Nordic and
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conducts operations.
19
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