What to Watch in Commodities: OPEC+, Nickel, Crops, Lithium, ECB

LAGOS (Capital Markets in Africa) – Commodities investors are in line for a comprehensive update on the state of energy, metal and agricultural markets this week. Leading the charge, the World Energy Council kicks off Monday in Abu Dhabi, with ministers and executives attending, while OPEC+ officials meet on the sidelines later in the week. Those events will carry extra significance following the installation of Prince Abdulaziz bin Salman as Saudi Arabia’s new energy minister.

There’s a triple hit in crops, with the USDA’s World Agricultural Supply and Demand Estimates report to land on Thursday, with attention focused on corn yields. That comes the same day China releases its homegrown version for local figures, while on Tuesday, France updates grain output estimates.

On top of that menu, investors will learn whether nickel’s impressive rally is set to go on, as insiders from the industry huddle in top producer Indonesia. Among corporates, lithium heavyweights SQM, Albemarle Corp. and Livent Corp. may offer their take on a challenging market. And for gold, additional stimulus from the European Central Bank, if that’s announced, may well stir the market.

Taking Stock
Oil has languished near $60 a barrel throughout the summer, and this week the market will learn how OPEC and its allies feel about that. Saudi Arabia, Russia and other key nations in the coalition will meet in Abu Dhabi on Sept. 12 to review the impact of the production cuts they’ve made this year to stop the market from tipping into surplus. The session will attract even more attention than usual as Saudi Arabia’s King Salman Bin Abdulaziz just named his son, Prince Abdulaziz, as the country’s energy minister, replacing Khalid Al-Falih.

With prices still below the levels they prefer, the producers are likely to signal they’ll continue with supply restraints for as long as necessary. They may even hint at whether they’re prepared to cut supplies further, a measure the Saudis have reportedly discussed with some of their partners. In the days leading up to the meeting, ministers from several OPEC nations will speak at the World Energy Congress in the emirate and give markets a taste of what to expect.

In the Lion City’s Den
At the same time that the energy market goes under the microscope in the Gulf this week, Asia’s biggest gathering of oil traders and executives will be under way in Singapore. Attendees at the Asia Pacific Petroleum Conference, organized by S&P Global Platts, will size up the outlook for crude prices, the impact of the trade war, and try to scope out the consequences of new rules outlawing high-sulfur fuel at sea, which are due to kick in on Jan. 1. The shift in personnel behind Saudi Arabia’s oil policy will also be a key talking point.

While traders at the event a year ago were talking up the return of $100 oil, attendees this year are staring at prices in the $50s in a sign of how much the industry’s fortunes have been suffering. Should anyone need to drown their sorrows, there’s an inviting docket of after-hours events. Brokerages and companies have organized more than 40 lunches, dinners and soirees at some of the city-state’s most iconic bars, hotels and museums.

Feast on This
There’s an impressive spread of market intelligence this week in agriculture. The main event comes Thursday when the USDA is set to release its WASDE report. Last month, the agency said corn planted acreage and yields would be larger than analysts estimated.

While farmers have been frustrated by the USDA’s relative optimism, a crop tour last month indicated that the Corn Belt may not have been impacted as much as feared by record rainfall during planting and a subsequent dry spell. In Europe, the French Agriculture Ministry will update grain production estimates with the focus on how corn crops are faring after summer drought and the demand outlook for France’s bumper wheat harvest. In China, authorities release the nation’s agricultural supply and demand forecasts.

Awesome Ore
Right now nickel is worth a lot more dimes. The metal is one of this year’s standout performers among commodities, soaring more than 60% as Indonesia plans to bring forward a ban on ore shipments. This week, investors will find out how severe the impact of that move will be as executives from leading producers including MMC Norilsk Nickel PJSC gather for an industry conference in Jakarta from Wednesday to weigh the outlook.

Among speakers at the Fastmarkets event is Anton Berlin, Nornickel’s long-time market soothsayer. While nickel has traditionally been used in stainless steel, it’s garnering plenty more attention for its new role in battery technology, with Vale SA’s Indonesian unit among companies set to spend billions on local projects to tap rising demand. The gathering will throw up insights into the market balance and whether more price gains are in store.

Lithium, Unplugged
The first monthly decline in global electric-car sales on record has fueled market anxiety over the outlook for lithium — used in making rechargeable batteries. That sent shares of producers including Albemarle Corp., Sociedad Quimica y Minera de Chile SA and Livent Corp. tumbling. SQM’s executives may offer clues whether those concerns were valid when the company holds its Investor Day in New York Tuesday. China has been cutting subsidies for electric vehicles, potentially dimming the short-term outlook for lithium producers.

Still, China, the world’s largest car market, may soothe investor woes. The Asian nation is considering setting a target for 60% of all autos sold in the country to run on electric motors by 2035, a 12-fold jump from the current level, according to people familiar with the matter. That helps boost Albemarle’s appeal as the company embarks on a marketing roadshow on Friday in Boston. The largest lithium producer and Livent are among the companies invited to deliver presentations at the Credit Suisse annual basic materials conference in New York on Wednesday.

Easy Peasy
Gold’s credentials as an attractive asset during times of slowing growth and central bank easing will get a fresh examination over the coming 10 days. While prices are down from recent six-year highs, they remain solidly up year-to-date. On the calendar, European Central Bank policy makers meet this week for what will be President Mario Draghi’s swan song, followed next week by the Federal Reserve. More stimulus from the ECB — as is widely expected on Thursday — will strengthen the narrative that bullion is well-placed.

More than 80% of economists surveyed by Bloomberg predict that ECB officials will announce more quantitative easing. Draghi leaves his post in October, and will be replaced by outgoing IMF chief Christine Lagarde. After the ECB is done, investors will turn their attention to the Fed’s rate-setting meeting, at which another U.S. cut is expected.

Bulls & Bears
Traders and analysts surveyed by Bloomberg were mostly bullish on gold. The positive price outlook was reinforced by data released Friday signaling the U.S. labor market’s slowdown is deepening. That bolstered the case for the Federal Reserve to keep cutting borrowing costs, boosting the appeal of the non-interest-bearing precious metal.

Sentiment turned bullish for raw sugar for the first time in a month amid forecasts for a supply deficit in the season beginning October. In the copper market, traders and analysts were broadly split on the outlook.

Source: Bloomberg Business News