Commodity markets remained well bid - ANZ

Commodity markets remained well bid as the recent sell off was deemed to excessive amid ongoing supply side issues.

Key Quotes

 “Crude oil prices continued their recovery as the likelihood of OPEC extending its production cuts rose. Kuwait joined the chorus of OPEC members suggesting the group should extend production cuts. This was supported by comments from the OPEC Secretary General that the oil market rebalancing was already underway. When combined with further disruptions in supply from Libya, it was enough to induced buyers into the market. With the prospect of declines in US inventories over the coming weeks, this should see more sustained support return for crude oil prices.”

“Base metals rose across the board as the recovery from last week’s sell off extended. Copper rose strongly despite signs that disruptions were easing. In addition to the strike ending at Escondida, workers at Freeport’s Cerro Verde mine in Peru indicated they would return to work later this week. However, the impact will continue to be felt. Chile’s statistical agency reported February production fell 17% to 376,948 tonnes. It also suggested the lost output from Escondida could reach as much as 230kt (equivalent to 1% of global production).”

“Spot iron ore prices fell slightly, mirroring losses in future markets in China. This came as the China Iron & Steel Association suggested prices would retreat amid lower steel production in China. Despite widespread flooding and mine closures, coking coal prices remained unchanged. With contract settlements being put on hold as the coal industry in Queensland try’s to recovery from Cyclone Debbie, its little wonder market participants remained on the sidelines.”

“Gold prices eased back from their one month high after hawkish comments from the Fed. The suggestion by Rosengren that four hikes may be needed in 2017 was enough to induce some selling in the market.”

“Agriculture markets were weaker, with further big falls in softs. Sugar extended the slump as concerns over ample supply continued to permeate through the market. Wheat also fell heavily after beneficial rains in the US raised concerns of bumper crops.”