Latest news with #OleHansen
Mid East Info
19 hours ago
- Business
- Mid East Info
Wheat rise on short covering and weather woes, but fundamentals still lacking – Saxo Bank MENA - Middle East Business News and Information
Ole Hansen, Head of Commodity Strategy, Saxo Bank Wheat futures in Chicago surged to a two-month high on Wednesday, driven by adverse weather across key growing regions in the U.S., Europe, and Russia, alongside signs of robust export demand—particularly into North Africa. The rally, which comes ahead of the U.S. holiday, has been amplified by hedge funds reducing long-held short positions in both CBOT and Kansas HRW contracts. Images of combine harvesters stuck in muddy fields underscore the slow start to the U.S. winter wheat harvest. Persistent rains across the southern Plains—especially in Oklahoma and Kansas—have delayed progress. In Oklahoma, just 5% of the crop had been harvested by early June, down sharply from 44% last year and well below the five-year average of 23%. Nationwide, only 10% of the winter wheat crop has been harvested—the slowest pace since 2019—compared with the seasonal norm around 18%, according to USDA. Despite the harvest delays, early crop quality and yields have exceeded expectations. The USDA this week also lifted its spring wheat condition rating to 57% good or excellent, up from 53%, suggesting no immediate threat to overall production. On the charts, the most traded September and December CBOT wheat contracts have approached key trendline resistance, at USD 5.94 and USD 6.19 respectively, with last trades at USD 5.905 and USD 6.12. Elsewhere, weather challenges continue to unfold. In Russia, drought-hit regions such as Krasnodar and Rostov have declared emergencies, fuelling protective buying in Europe. In Western Europe, spring rains have improved crop conditions but delayed ripening and harvest, while also raising the risk of disease. In response, the benchmark Paris Milling Wheat contract recently broke back above EUR 200/ton, last trading near a one-month high around EUR 208. Whether these developments mark a sustainable bottom around USD 5 (CBOT wheat) remains to be seen. So far, the main bid has come from funds reducing bearish exposure. Hedge funds have maintained a net short in CBOT wheat for three consecutive years, and in Kansas HRW since August 2023. In the four weeks to June 10, managed money cut its CBOT net short by 26% to 94k contracts, while the Kansas net short was trimmed by just 7% to 75k. As per the charts above, additional price strength leading to an upside break may add further momentum to the rally, not necessarily due to price-friendly fundamentals, but first of all due to buying as wrong-footed longs scale back bearish bets. For the rally to become more sustainable, thereby signalling a low in the market following three years of weakness, the global production outlook needs to deteriorate further, so for now we view the rally as technically more than fundamentally driven.
Mid East Info
3 days ago
- Business
- Mid East Info
Commodities strengthen into midyear as demand for hard assets heat up – Saxo Bank MENA - Middle East Business News and Information
Ole Hansen, Head of Commodity Strategy, Saxo Bank The commodities sector is closing in on a strong first half of 2025, with the Bloomberg Commodity Total Return Index rising 3% over the past week and up 10% year-to-date—marking its highest level since September 2022. This rally significantly outpaces other US dollar-denominated assets, with both equities and bonds lagging behind. Unlike typical commodity bull runs driven by economic expansion, the current upswing is being fueled by safe-haven demand, geopolitical tension, and renewed investor appetite for hard assets amid macro uncertainty. Broad gains despite macro headwinds The double-digit year-to-date return on the index, which comprises 24 major futures markets, split almost evenly between energy, metals, and agriculture, excluding platinum, the current star performer on 40%, has, as mentioned, been achieved despite heightened economic growth concerns, especially in the US and China, the world's top consumers of raw materials. In the chaotic days that followed Trump's 'Liberation Day' tariff attack on major trading partners, the index suffered a top-to-bottom drawdown of 9% before embarking on a recovery that now has led to a fresh high being reached, and in the last week supported by gains across all three sectors, led by crude oil, fuel products, gold, silver, soybeans, and wheat. Note: besides platinum, the star performer, the bottom three are not included in the BCOM TR Index. In comparison, the S&P 500 trades up by less than 2% and the Nasdaq by around 3% after suffering significant February to April drawdowns of 19% and 23%, respectively. Highlighting the reasons why a diversified approach to commodity trading and investment reduces the overall volatility, making it easier from a risk management perspective to maintain an exposure through peaks and troughs. Precious metal: Safe-haven star performers Precious metals are leading the charge, with platinum, gold, and silver at the top of the performance table. Silver recently broke above USD 37 per ounce, its highest level in 13 years, while platinum is up more than 40% year-to-date after breaking a 17-year downtrend last month. Gold, which back in April hit a record high at USD 3,500, has moved into a consolidation phase while awaiting the next potential bullish trigger. Despite the current lull, bullion continues to attract strong demand from central banks and long-term investors concerned about sovereign debt, inflation risks, and the weakening US dollar. Despite silver's recent period of strength, the gold-silver ratio remains elevated near 91, well above its 5-year average closer to 80, highlighting silver's relative catch-up potential if macro and technical tailwinds persist. Growing concerns around US fiscal sustainability, softening labour market data, and the threat of tariff-driven supply disruptions are reinforcing the case for hard assets. These conditions also strengthen the possibility of a more dovish shift from the Federal Reserve, potentially opening the door to rate cuts sooner and deeper than previously expected. In this environment, gold pushing toward the USD 4,000 mark over the next 12 months is no longer out of the questions. Energy: Geopolitical risk premium returns In the energy sector, prices have rebounded strongly this month, initially buoyed by seasonal summer demand tightening supply. This has helped offset bearish factors such as rising OPEC+ output and macroeconomic uncertainties. What began as a steady recovery—partly fueled by short-covering—turned volatile last week when Brent crude spiked as much as 13%, reaching USD 78.50 per barrel, after Israel launched a prolonged series of airstrikes on Iranian nuclear and ballistic missile facilities. Thereby reducing the chance of a negotiated solution between the US and Iran, which have centered almost exclusively on Iran's rapidly advancing nuclear program, with the core objective of these talks to limit Iran's nuclear activities—particularly uranium enrichment—in exchange for relief from US-imposed economic sanctions. With Iran vowing to respond with missiles and drone attacks and rising fears of US involvement in strikes on Tehran and its underground nuclear facilities, the escalation has once again raised fears of broader conflict in a region responsible for a third of global oil output. Tensions around the Strait of Hormuz—through which over 20 million barrels of oil transit daily—are the main focus. Pricing a market that on balance—without a disruption—should trade closer to or below USD 70 is difficult, which is why the options market is increasingly being used by professionals to hedge the outside chance of a disruption spike, with the cost of buying calls now exceeding puts by a bigger margin than they did after Russia's 2022 invasion of Ukraine. Agriculture: Biofuel link, weather, and short covering offering support Agricultural commodities continue to trade mixed, with a small 2.3% year-to-date gain in the Bloomberg Agriculture Index being primarily driven by strength across the livestock sector, while the index-heavy grain and soybean sector trades close to flat on the year. However, just in the past week, some strength has emerged with soybeans and corn catching a bid on the back of stronger energy prices, given the crop's role in the production of biofuels, while CBOT wheat touched a one-week high after a slow start to the US winter wheat harvest. Speculators—net short in wheat for three consecutive years—were forced to unwind positions, despite the broader grain complex still showing mixed performance year-to-date. Together with an extended short position in corn, traders of these two crops will look for signs of additional strength, forcing additional short covering from a technical and momentum-driven perspective. Looking ahead: Risks to second-half momentum Finally, it's worth mentioning that while we see the commodity market being in the early stages of a multi-year super-cycle, several obstacles may prevent the sector from achieving a similar return in the second half. The energy sector may turn lower on a solution to the Middle East war, while the global economic impact of Trump's tariff war, especially in the US, may have a dampening impact on the global economic outlook. Inadvertently, if materialise such weakness may drive down the dollar further while triggering a fresh round of US rate cuts, thereby supporting demand for hard assets through a reduction in the cost of holding a non-coupon or dividend-paying asset.
RTÉ News
3 days ago
- Business
- RTÉ News
Oil rises as Iran-Israel conflict keeps floor under prices
Oil prices rose today, with analysts saying that uncertainty would keep prices elevated, even as there were no concrete signs of any production losses stemming from the Iran-Israel conflict. Brent crude futures climbed 82 cents, or 1.1%, to $74.05 a barrel this morning, while US West Texas Intermediate crude was up 77 cents, or 1.1%, at $72.54. Both contracts rose more than 2% earlier in the trading session but also notched declines before bouncing back in volatile trading. Iran is the third-largest producer among members of the Organization of the Petroleum Exporting Countries and there is widespread concern the fighting could affect exports from there. Additionally, investors are watching for signs shipments through the Straits of Hormuz, through which flows about 19 million barrels per day of oil and oil products, may be impacted. "The market is largely worried about disruption through Hormuz but the risk of that is very low, said Saxo Bank analyst Ole Hansen. There is no appetite around closing it since Iran would lose revenue and the US wants lower oil prices and wants to lower inflation, he added. There have been no signs of supply losses but ships moving in the vicinity of the Strait and the Gulf have been affected by electronic warfare measures that have interfered with navigation systems. Earlier today, shipping sources said a vessel collided with two other ships sailing near the Strait of Hormuz, highlighting the risks to companies moving oil and fuel supplies in the region. Despite the potential for disruptions, there are signs oil supplies remain ample amid expectations for lower demand. In its monthly oil report released today, the International Energy Agency revised lower its world oil demand estimate by 20,000 bpd from last month's forecast, while increasing the supply estimate by 200,000 bpd from last month's estimate to 1.8 million bpd. Investors are also focusing on central banks' interest rate decisions, Tamas Varga, analyst at PVM Associates said in a note, with the US Federal Open Market Committee, which guides the Federal Reserves rate movements, set to meet later today.
Global News
3 days ago
- Business
- Global News
G7 leaders ‘vigilant' for energy impacts from Iran-Israel conflict
The leaders of the G7 are urging a resolution between Israel and Iran amid escalating rounds of strikes, saying they will 'remain vigilant' and respond if the conflict impacts international energy markets. 'We will remain vigilant to the implications for international energy markets and stand ready to coordinate, including with like-minded partners, to safeguard market stability,' a joint statement from the G7 leaders reads. In the statement, the leaders said they affirm that Israel has a right to defend itself and reiterated their support for the country, while stressing the importance of protecting civilians. They added they're hopeful a resolution could lead to a 'broader de-escalation of hostilities in the Middle East, including a ceasefire in Gaza.' 'Iran is the principal source of regional instability and terror,' the joint statement reads. 'We have been consistently clear that Iran can never have a nuclear weapon.' Story continues below advertisement The joint statement from G7 leaders came Monday evening following meetings in Kananaskis, Alta. Oil prices were driven higher on Tuesday as the conflict continued, though major oil and gas infrastructure and flows had been spared from substantial impact. Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy Though there has been no noticeable interruption of oil flows, Iran partially suspended gas production at the South Pars field that it shares with Qatar following an Israeli strike started a fire on Saturday. Saxo Bank analyst Ole Hansen told Reuters the market was largely worried about disruption through the Strait of Hormuz, though the risk was low. 1:51 Middle East air travel disrupted as Israel-Iran conflict escalates There is no appetite for closing the waterway, given that Iran would lose revenue and the U.S. wants lower oil prices and lower inflation, Hansen added. Story continues below advertisement Despite the potential for disruption, there are signs oil supplies remain ample amid expectations of lower demand. In its monthly oil report on Tuesday, the International Energy Agency revised its world oil demand estimate downwards by 20,000 barrels per day (bpd) from last month's forecast and increased the supply estimate by 200,000 bpd to 1.8 million bpd. U.S. President Donald Trump spoke about the conflict before a meeting with Prime Minister Mark Carney, reiterating his comments that Iran should have made a nuclear deal with the U.S. early and said Tehran should 'talk immediately before it's too late.' He then left the G7 late Monday, with the White House telling reporters he was leaving due to the escalating conflict in the Middle East but not elaborating further. However, French President Emmanuel Macron told reporters Monday evening that discussions were underway on a ceasefire between Israel and Iran, though Trump denied that he was working on such a move. He said Macron 'mistakenly said that I left the G7 Summit, in Canada, to go back to D.C. to work on a 'cease fire' between Israel and Iran. Wrong.' Trump went on to say he was heading to Washington for something 'much bigger' that has nothing to do with a ceasefire. Story continues below advertisement The president also, early Tuesday morning, said on Truth Social that he had not reached out to Iran for ''Peace Talks' in any way, shape, or form.' — with files from Reuters and The Associated Press
Business Recorder
4 days ago
- Business
- Business Recorder
Oil prices rise as Iran-Israel conflict escalates
LONDON: Oil prices were driven higher on Tuesday by the Iran-Israel conflict, though major oil and gas infrastructure and flows have so far been spared from substantial impact. Brent crude futures gained $1.56, or 2.1%, to $74.79 a barrel by 1202 GMT. U.S. West Texas Intermediate crude was up $1.42, or nearly 2%, at $73.19. Both contracts rose more than 2% early in the session but also retreated in volatile trade before bouncing back. While there was no noticeable interruption to oil flows, Iran partially suspended gas production at the South Pars field that it shares with Qatar after an Israeli strike started a fire there on Saturday. Israel also hit the Shahran oil depot in Iran. 'The market is largely worried about disruption through (the Strait of) Hormuz, but the risk of that is very low,' said Saxo Bank analyst Ole Hansen. There is no appetite for closing the waterway, given that Iran would lose revenue and the U.S. wants lower oil prices and lower inflation, Hansen added. Oil prices fall more than $2 barrel Two oil tankers collided and caught fire on Tuesday near the Strait of Hormuz, where electronic interference has surged, highlighting the risks to companies moving oil and fuel supplies in the region. Despite the potential for disruption, there are signs oil supplies remain ample amid expectations of lower demand. In its monthly oil report on Tuesday, the International Energy Agency revised its world oil demand estimate downwards by 20,000 barrels per day (bpd) from last month's forecast and increased the supply estimate by 200,000 bpd to 1.8 million bpd. Investors were also focused on central bank interest rate decisions, PVM Associates analyst Tamas Varga said in a note, with the U.S. Federal Open Market Committee set to discuss rates later on Tuesday.
