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General news

  • The Bank of England has indicated that up to 75,000 jobs could be lost in financial services following Brexit if there is no specific UK-EU financial services deal.

  • Last week saw the Bank of England increase UK interest rates for the first time since 2007. The cost of borrowing was increased from 0.25% to 0.5%, reversing the emergency action taken after the Brexit vote.

Agriculture

  • Palm oil prices have suffered their biggest intraday drop in 2 weeks, following 4 consecutive sessions of gains, due to the weakening of the price of other edible oils. Palm oil however remains on track for its third monthly gain having risen 4.6% so far in August. Palm oil for January 2018 delivery on the Bursa Malaysia Derivatives Exchange is currently trading at 2815 ringgit a tonne.
  • Wheat prices have edged upwards having touched a 2-month low yesterday. The price gains following the news from the USDA that the condition of the crop was below market expectations. Front month CBoT wheat, the most active CBoT contract, is currently at 425.75 cents a bushel.
  • According to the International Grains Council the price of wheat is likely to drop next year due to 2017’s strong crops.
    • 2017/18 wheat production is expected to be 748.5m tonnes, just 5.6m tonnes short of last year’s record.
    • The year’s strong crop has been accredited to the rainy season in Europe, especially around the Black Sea region.
  • Although butter prices have been on the decline since mid-September having peaked at €7,000 a tonne, and dropped down to below €5,000 a tonne in October, prices are now edging upwards thanks to a pick-up in demand.
    • The drop in price going into September came as a result of prices being so high that buyers started to favour alternatives with buyers going to the extent of adapting recipes.
    • The lower prices have re-stimulated demand, and prices are now picking back up as a result.
  • Prompted by good rain in Brazil, the world’s largest producer, and rising stocks in leading importers, traders have amassed near record bets that Arabica coffee prices will fall further.
    • Arabica coffee beans represent around 60% of the world’s production and is currently trading at around $1.28 a pound, down by a quarter from a year ago, following unexpected bumper harvests in Honduras and Uganda. Record stocks in the US, Europe and Japan also dragged on prices
    • The level of beds amassed raises the prospect of volatility if prices rise instead of falling. A rise in prices could be realised if exports slow due to problems at ports or with the roads, or if the rains recede in Brazil. The latter is becoming increasing likely with many anticipating La Niña which tends to bring some dryness.

Metals

  • Russia’s Norilsk Nickel has launched a copper, iron and gold mine 250 miles by rail from the Chinese border. China is the world’s largest iron ore consumer and it is anticipated that mined product will be exported to China.
  • China has one again expressed its disapproval at the US’s decision to impose antidumping duties of Chinese aluminium foil. The statement further heightens tensions between the world’s two largest economies ahead of Trump’s visit to China next week.
  • Iron ore prices rose yesterday as traders appeared to shake off concerns that steep output cuts would put a long-term dampener on demand for iron ore which is a key ingredient used in steelmaking. The price of iron ore rose as much as 5.7% on the Dalian Commodity Exchange, briefly climbing above $70 a tonne.
  • Mark Bristow, the chief executive of London’s biggest listed gold producer Randgold Resources, believes that gold prices are likely to push higher as a decade of loose monetary policy comes to an end. Gold is currently trading at around $1,278 a troy ounce but reached $1,350 in September on the back of geopolitical tensions with North Korea and lofty equity market valuations.

Energy - UK 

  • UK power prices have eased up by an average of £0.40/MWh across the four front seasons, supported by bullish coal and gas prices.
  • According to a report commissioned by the Energy Technologies Institute (ETI), the UK could save up to £30bn by implementing eight new route maps in district heating networks which supply heating and hot water to homes and businesses.
  • A new report from the Scottish Government shows that Scottish demand for renewable heat last year fell for the first time since records began in 2008. The report showed that Scotland generated around 5% of its non-electrical hear demand from renewable sources last year, slightly down from the 5.4% in 2015.

Energy - International

Oil

  • Sinopec, China’s state oil company, is in the process of assessing two projects which would boost output from the Gulf Coast and expand storage facilities in the Caribbean.
  • Asian imports of Iranian crude have risen for the third month in a row to their highest levels since March. The boost comes predominantly thanks to increased buying from China and South Korea who together with India and Japan imported slightly more than 1.9m barrels per day last month.
  • Oil has traded at over $60 for the first time since 2015 as rising demand begins to outstrip supplies.

Other

  • A warm weather forecast for November – January in France has reduced the country’s electricity import demands over winter.
  • A new platform called the RE-Source Platform has been launched for businesses to source renewable energy in the European market. The platform will pool resources and co-ordinate activities to promote a better policy framework for renewable energy sourcing at both an EU and national level.
  • Siemens has confirmed their £11m partnership with Grid Battery Storage Ltd. The firms will offer grid-scale storage to industrial energy users in order to help them benefit from onsite storage without capital investment and safe electricity costs.
  • According to the US Energy Information Administration (EIA), natural gas usage is expected to increase to 485bn cubic feet per day by 2040, from 340bn cubic feet per day in 2015, with the majority of the increase of consumption coming from Asia and the Middle East.
  • Russian Rosatom has announced it is to build and operate a nuclear power plant in Nigeria.