Commodities: Broadly positive as sentiment continued to improve - ANZ

Research Team at ANZ, notes that the commodities were broadly positive, with industrial commodities leading the gains as sentiment continued to improve.

Key Quotes

“The three day rally in crude oil prices came to an abrupt end as cracks emerged due to differences among OPEC members regarding a production cut agreement. A preliminary meeting ahead of next week’s OPEC gathering failed to resolve the issues around Iran and Iraq’s involvement in the production cut agreement. The issue will now be dealt with on 30 November. Investors have becoming increasingly confident an agreement will be reached. Despite this hiccup, we still expect the group to reach an agreement next week.”

“Copper hit a 16 month high as the rally in the industrial metals complex continued. Aluminium led the gains as investors continue to add to long positions built up over the past month. Iron ore surged higher as stronger steel prices supported the raw material sector. Further closures of steel capacity in the Hebei province in China due to pollution issues has seen steel prices rebound over the past few days, dragging iron ore prices higher.”

“Investors continue to reduce their exposure to gold, pushing prices lower. Gold held in ETFs fell 9.43 tonnes to 1,923.1 tonnes on Monday according to Bloomberg data. However, the rally in industrial commodities saw the PGM sector push higher. Palladium jumped nearly 2% on the back of a stronger auto sector in China.”

“Agriculture markets were mixed, with grains higher while softs suffered under some heavy selling. Wheat prices remain supported by increasing expectations of a weaker crop in the US. Sugar prices fell heavily on the back of speculative long liquidation.”