Precious Metals: Palladium soars amid robust car demand

Precious metals apart from platinum traded higher on Wednesday despite broadly stronger greenback after upbeat US jobs data. The commodity sector found support on talks the ECB and Fed will stick to their loose policies.

Gold climbed amid robust physical demand from central banks across the globe and speculation that the ECB and Fed will continue their easing measures. However, positive numbers from the US limited the upswing as improved outlook on the US economy may mean an end to bond-buying program by the Fed.

Silver moved higher amid strong physical demand from China. Barclays announced that China’s imports of the grey metal surged by annualized 36% in January, posting the biggest increase since May 2010.

Platinum was the only loser after miners, who went on an illegal strike at Lonmin’s Marikana platinum mine on Tuesday, returned to work.

Palladium rallied on signs of recovery of the global automobile industry. The latest data showed US car sales surged more than expected in January, while China’s car demand jumped 46% in 2012. Palladium also drew strength from fears that global deficit may be further exacerbated by falling sales from Russia.


Industrial Metals: Zinc plunged despite solid demand from China

Industrial metals were bearish on Wednesday despite positive news from the US. The latest data showed US employers increased hiring more than expected last month. Moreover, on Tuesday, China left its growth target at 7.5%, boosting demand prospects for the commodity group.

Aluminum sagged 1.16% after Sumitomo Corp. raised its forecast for the world’s aluminum surplus to a two-year high, saying that China’s demand is not likely to absorb new capacity. The company expects global surplus to attain 866,000 metric tonnes in 2013.

Copper fell on worries over elevated inventories at the LME. Stocks at the LME more than doubled since the beginning of October, while inventories at the Shanghai Futures Exchange reached a one-year high last month.

Nickel retreated amid weak demand from alloy industry and solid greenback. However, losses were limited by expectations for an increase in China’s demand ahead of Indonesian nickel ore export ban due to take effect in 2014.

Zinc was the top loser despite signs of robust demand from China. China’s imports of refined zinc increased 7.8% year on year in January.


Energy: Heating oil inched up after EIA weekly report

Energy futures except for heating oil finished in red after bearish EIA inventory data. However, uncertainty whether the next president of Venezuela will use oil as a political weapon, like his predecessor Hugo Chavez, restricted the downward trend of the commodity complex.

Crude oil slid after the EIA data showed inventories rose much more than expected last week. Stockpiles climbed 3.8 million barrels last week, compared to forecasts of a 0.9-million-barrel increase.

Brent oil slumped amid a buildup in the US inventories. However, the downswing was capped by uncertainty over situation in Venezuela.

Natural gas dropped ahead of the EIA inventory report due on Thursday. Experts predict a 135-billion-cubic-feet decline in the US inventories, compared to fall of 171 billion cubic feet in the preceding week.

Heating oil was the only commodity in the sector to post a mild gain. Heating oil was boosted by a larger-than-expected decline in the US distillate fuel stocks. Inventories dropped 3.8 million barrels last week, while analysts expected only a 1.3-million-barrel decline.


Agriculture: Coffee edges up on Central American crop concerns

Farm commodities were mixed on Wednesday, with softs advancing and grains declining. Softs found support on speculation about possible increase in Brazilian ethanol production and threat of coffee leaf rust in Central America. At the same time, improving weather conditions in the US put heavy pressure on grains.

Wheat led losses, tumbling to a seven-month low as rain and snow improved conditions for the US winter crop. National Weather Service reported that normal amount of precipitation fell in the area from central Kansas through Oklahoma.

Corn dipped after the data showed US ethanol production dropped 7,000 barrels last week. Ethanol production level remains below the USDA forecast for 2013-14.

Sugar extended gains despite expectations that Indonesian cane output may rise by annualized 4.3% in 12 months starting May 1, reported the USDA. Meanwhile, the sweetener remained well-supported as Brazilian farmers may use more cane to produce ethanol instead of sugar.

Coffee climbed on fears that spreading coffee leaf rust may significantly reduce Central American harvest. However, gains were cut by talks that Colombia may harvest by 30% more coffee this year.


EXPLANATIONS

Commodities

  • Gold - spot 995 fine gold

  • Silver - spot 999 fine silver

  • Platinum - spot platinum with minimum purity 99.95%

  • Palladium - spot palladium with minimum purity 99.95%

  • Aluminium - three-month forward contract on the London Metal Exchange

  • Copper - three-month forward contract on the London Metal Exchange

  • Zinc - three-month forward contract on the London Metal Exchange

  • Nickel - three-month forward contract on the London Metal Exchange

  • Crude oil - light, sweet crude oil active contract on the New York Mercantile Exchange

  • Brent oil - Brent oil active contract on the New York Mercantile Exchange

  • Natural Gas - natural gas active contract on the New York Mercantile Exchange

  • Heating oil - heating oil active contract on the New York Mercantile Exchange

  • Sugar - white sugar active contract on the Chicago Board of Trade

  • Wheat - wheat active contract on the Chicago Board of Trade

  • Coffee - benchmark Arabica coffee active contract on the NYB-ICE Futures Exchange

  • Corn - corn active contract on the Chicago Board of Trade

Indices

  • Dow Jones-UBS Precious Metals Subindex Total Return - commodity group subindex composed of gold and silver; the index reflects return on underlying commodity futures price movement

  • Dow Jones-UBS Industry Metals Subindex Total Return - commodity group subindex composed of futures contracts on aluminium, copper, nickel and zinc; the index reflects return on fully collateralized futures positions

  • Dow Jones-UBS Energy Subindex Total Return - commodity group subindex composed of futures contracts on crude oil, heating oil, unleaded gasoline and natural gas; the index reflects return on fully collateralized futures positions

  • Dow Jones-UBS Agriculture Subindex Total Return - commodity group subindex composed of futures contracts on coffee, corn, cotton, soybeans, soybean oil, sugar and wheat; the index reflects return on fully collateralized futures positions

Chart

  • SMA (20) - Simple Moving Average of 20 periods

  • SMA (60) - Simple Moving Average of 60 periods

  • Correlation - a statistical measure of the linear relationship of two random variables. It is defined as the covariance divided by the standard deviation of two variables

Indicators

Daily Ranked Price Moves - daily price changes in an ascending order for positive changes and in a descending order for negative or mixed changes

Monthly Ranked Price Moves - monthly price changes in an ascending order for positive changes and in a descending order for negative or mixed changes