Crude oil closed the week higher. The focus for markets this week will be the 168th OPEC Conference on Friday, the bloc’s first conference since June. Saudi Arabia’s position so far has been to hold production steady in the face of declining prices. We don’t see this changing, despite some recent rhetoric that OPEC’s de facto leader – Saudi Arabia – was working to stabilise prices.
Base metal prices were weaker on Friday, helping to erase mid-week gains. In a volatile week, the rally initially appeared to be driven by short-covering as investors took profits after stellar gains. In one session alone last week, zinc open interest declined by 37,000 contracts, or 14% on the Shanghai Futures Exchange, as speculators closed short positions.
Iron ore prices rose back above USD44/tonne on Friday. Capesize freight rates continued to rise, consistent with a pickup in seasonal restocking from China. Unfavourable weather in North China has delayed some transfers of iron ore from ports to steel mills, leaving stocks uncomfortably low for some Chinese mills.
Wheat prices fell in Friday’s session on lower volumes than normal as part of the Thanksgiving long weekend. Weekly US wheat export sales were poor at just over 300,000 tonnes, or 30% below the average of last month. NZ milk powder futures fell on Friday as the market reacted negatively to NZ October milk production falling less than expected – down 2.7% y/y.
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