Commodities news

The US commodities regulator, the Commodity Futures Trading Commission (CFTC), issued Wednesday a rare, and rather a blunt reminder to market participants of the risk of negative oil pricing. The advisory also reminded them of their responsibility to maintain orderly trading and pricing in commodities. The CFTC’s letter on risk management and market integrity could also be construed as an unprecedented and public warning to the Chicago Mercantile...

The world’s most precious metal, gold, is an excellent way to hedge the tail risk from COVID-19, according to a research report by Matthew Miller, CFRA. Further, gold’s fundamentals have strengthened following the massive amount of quantitative easing unleashed across the globe to combat the economic damage from the pandemic. An investment in gold mining companies is a great way to ride an appreciating gold price because gold miners are lev...

Jeff Currie, head of commodities research at Goldman Sachs (NYSE: GS) says livestock is the only other commodity market “looking as precarious as oil.” Speaking to reporters on a video call, Currie was referring to the major market imbalance in the U.S. food industry following the coronavirus pandemic. “We had a problem with livestock going into this … We now have a very serious problem,” Currie added. The parallel with oil The crude oil industry...

Saudi Aramco announced its net profit in the first quarter to have declined by 25% on Tuesday. The company’s quarterly dividend, however, matched its plan of paying £60.74 billion to its shareholders in base dividends in 2020. Analysts had anticipated Aramco to slash government payout but maintain its dividend for minority shareholders. In the quarter that ended on 31st March, Aramco reported a net profit of £13.48 billion after tax and zakat tha...

Silver, whose price is generally joined at the hip with that of gold, is struggling to catch up with its wealthier cousin. There is a yawning gap in the pricing ratio between the two precious metals. So much so that, as on Monday, the gold-silver ratio traded at around 109. This means that 109 ounces of silver equal in value to one ounce of gold. This ratio had trended as high as 120 in recent times. The price of silver has never been so cheap re...

Data from the U.S. Labor Department showed that April nonfarm payrolls declined by 20.5 million jobs, while the unemployment rate surged to 14.7%, the highest level since the early 1930s. Contrary to expectations, as markets are wont to do, the dismal data sparked a rally in stocks with the S&P 500 index closing 1.69% higher. On the other hand, the Comex June future contract for gold fell by $11.90, or 0.7%, to $1,713.90 an ounce. The only ex...

The coronavirus pandemic has turned the U.S. food supply chain on its head. Meat, produce, or dairy is sitting in farms, becoming a huge overhead for farmers, even as shortages mount on supermarket shelves. As a result, beleaguered farmers are having to give away produce, euthanize livestock, or in the case of milk, simply draining it away. According to a Reuters report, farmers in the potato producing state of Washington have so much potato on t...

Barrick Gold Corp (NYSE: GOLD) doesn’t want to be known as a gold mining company, rather a provider of a hedging tool for investors to protect their other assets against a global financial crisis, CEO Mark Bristow said Wednesday during a CNBC interview. ‘Pressure on paper money’ The global COVID-19 pandemic forced central banks across the world to take drastic measures to support their economies. In the U.S., the Federal Reserve has taken its qua...

Oil prices are on a rally as producer supply cuts kick in and hopes rise of a gradual normalisation as lockdowns are lifted across the globe. Crude oil prices fell to record lows amidst a destruction of demand due to the coronavirus pandemic, while OPEC plus producers could only agree to supply cuts effective Friday, May 1. WTIC June futures closed Tuesday at $ 24.56 per barrel, up $ 4.17, or 20.5%. The contract logged its fifth consecutive run o...

Smithfield Foods Inc, reopened a massive pork plant at Sioux Falls, South Dakota on Monday, according to a union representing plant employees. A spokeswoman for the United Food and Commercial Workers said the plant started operating its ground seasoned pork and night cleanup departments, according to Reuters. The pork processing plant had shut down indefinitely about three weeks ago amidst the coronavirus pandemic. The plant is linked to 1,098 vi...

Total (EPA: FP) said on Tuesday that its net quarterly profit saw a decline ascribed to historically low oil prices as Coronavirus swept off demand. At £1.44 billion, Total’s net profit in the first quarter came in 35% lower than £2.25 billion in the same quarter last year. It was, however, stronger than the experts’ forecast of £1.12 billion, as per Refinitiv. Total declares a 58 pence per share of quarterly dividend The French oil major also de...

Canada’s oil and gas industry is still reeling from the double whammy of demand destruction from the coronavirus and the overwhelming supply from warring producers such as Saudi Arabia and Russia. With storage likely to brim by mid-May, the outlook for global crude prices is still grim, though WTIC futures, currently trading at $21.24 a barrel, are showing signs of recovery as production cuts take effect. Still, they are down a massive 70% over t...

Chevron Corp. (NYSE: CVX) released its quarterly financial results on Friday and warned that its performance is expected to keep under pressure unless oil prices recover. The company also slashed its 2020 capital expenditures further on Friday. In the first quarter, Chevron generated £25.14 billion in revenue as compared to £28.09 billion in the same quarter last year. On the earnings front, the company made £1.54 per share in Q1 versus the year-...

British Petroleum (LON: BP) announced its net profit to have significantly plunged in the first quarter on Tuesday. The company cited low oil prices attributed to the Coronavirus and shrinking storage capacity for downbeat results. The London-headquartered oil and gas company recorded its underlying replacement cost profit at £642 million in Q1. The measure is a reliable proxy for net profit. In the comparable quarter last year, BP reported...

At the time of writing the London gold spot price is trading at $1,705 per ounce while the Comex June future is at $1,719, showing a spread of $14. However, last month this spread had ballooned to as much as $100. According to one analyst, the futures price is being impacted by short-covering by bullion banks who have traditionally held large short positions. A fundamental change in large positioning has probably disrupted a supply squeeze in the...

British Petroleum (LON: BP) announced a few changes in the financial terms of its Alaska deal on Monday. The oil major is seeking to sell its Alaska business to Hilcorp Energy for £4.5 billion. BP cited the recent crash in global oil prices for the changes that may result in a weaker cash boost than originally expected.   BP signed the deal with Hilcorp in August 2019 The revised deal, as per BP, doesn’t change the total consider...

Palladium prices have come off their February highs sharply as car sales slide amidst the unprecedented coronavirus pandemic. Palladium is extensively used in catalytic converters in gasoline vehicles to limit emissions from their combustion engines. Demand for palladium has declined even as mines that produce the metal are shut due to virus lockdowns. Norilsk Nickel (OTCMKTS: NILSY) confounded analysts this week with its projection that the pall...