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General news

  • Trump has retaliated against China’s announcement of tariffs on US imports by threatening an additional $100bn in tariffs on Chinese products. The announcement caused an immediate 1% drop in US stock futures and has continued to weigh on soft commodities with close attention now turning to whether China may next target American farm goods.

Agriculture

  • In an effort to provide some relief to its livestock farmers, China is to start selling off corn stocks from its state reserves earlier than initially planned.
    • Beijing amassed huge stocks of ageing corn during a multi-year state stockpiling programme and has since been selling off tonnes on an annual basis, but the sales have been brought forward by a month this year in order to help subdue corn prices which have soared in the wake of the increasing US-China trade tensions.
    • Feedmakers and pig farmers are facing escalated prices for key proteins with soymeal futures hitting a record high following Beijing’s proposed US import tariffs.
  • Hershey has announced it is investing $500m over the next 12 years to improve the sustainability of the cocoa it uses in its products.

Metals

  • The US has now moved to impose sanctions on several Russian billionaires and their companies, including Oleg Deripaska and his company Rusal which is one of the world’s largest aluminium producers.
    • The sanctions, announced last Friday, are the toughest Tump’s administration has unveiled on the Kremlin to date and the White House has said that they stem from Russia’s involvement in Crimea, Syria and Ukraine.
    • Russia is the second largest exporter of aluminium to the US after Canada.
    • The announcement caused LME aluminium prices to jump 2% to $2,046.5 with the charge to get immediate delivery of the metal to US warehouses jumping 3% to $0.18/lb, the highest level since the CME futures contract was launched 5 years ago.
    • The sanctions not only decrease the possibility of Russian aluminium arriving in the US, but also restrict buyers, such as Glencore, who buy directly from Rusal.
    • The sanctions could result in more Australian and European aluminium being imported into the US, with more Russia exports being sent to Asia and Europe.

Energy - UK 

  • Having eased on the back of increasing temperatures and anticipated delivery on LNG, British wholesale gas prices have risen this week on the back of a halt to flows from Grain, the LNG terminal, which has created an undersupplied system. Prices are also supported by the start of Norway’s summer gas field maintenance programme and record low stored gas reserves.

Energy - International

Oil

  • Crude prices remain supported by geopolitical tensions between Iran and the US and by Qatar’s comments supporting a continuation of OPEC-led supply cuts. Brent is currently trading at just below $68, with WTI at around $62.50.

  • According to GlobalData over $21bn is to be invested in Iranian oil projects over the next 4 years as the country aims to grow its oil production to 4.9m bpd by 2021.

Other

  • US Interior Secretary Ryan Zinke has expressed the Trump’s administration support for offshore wind development and its commitment to strengthening America’s power grids.
    • Zinke stated that despite the current low level of US wind generation, the White House is looking to adopt best practices from Europe and that it recognises that offshore wind is integral to helping the US achieve independent and reliable energy production.
    • Zinke also announced that Trump has called for an infrastructure bill for improving power grids.
    • According to a new report from UN Environment, UNEP Collaboration Centre and Bloomberg New Energy Finance, the global investment in 2017 in solar power was greater than that in fossil fuels. The report pointed to the falling costs of solar electricity and the economic benefits of investing in renewables as key factors which helped drive the increased deployment of solar projects.