General News

North Korean tensions are starting to wane. After another round of escalating belligerence between North Korea and the United States the director of the CIA and a US national security advisor have publicly stated that they do not see the imminent threat of war breaking out between the two countries. There has been a small bounce in the South Korean and New York stock markets in the last few days in relation to this calming of tensions.

China macroeconomic data disappoints. Newly released Chinese economic data covering July were below analysists predictions and at their weakest level since July 2017. Retail sales, fixed asset investment and industrial production were lower than expected.

Britain launches push to move Brexit negotiations forward. The British government will publish several white papers on its vision for the relationship between the United Kingdom and the EU. The negotiations are stuck on the UK’s exit bill, the Irish border and EU citizens’ rights in the UK.

Donald Trump’s re-election campaign launches advert. After 7-months in office Donald Trump has begun campaigning to be re-elected in 3 years’ time. It is unusual for a re-election campaign to start so early into a President’s first term.

In island news, Irish consumer sentiment climbs and Japanese GDP grows at a 2-year high. Irish consumer sentiment reached its highest level in 17-months. Ireland has been the EU’s best performing economy for 3-years. Japanese GDP grew at an annualized rate of 4% in Q2 2017, strong consumer spending and investment has buoyed the islands’ economy.

US will begin investigating Chinese trade practises. In what is being touted as the first real salvo in a Trump led trade war between China and the US, Donald Trump has ordered US trade officials to investigate China’s intellectual property practises.

Bitcoin surges above $4000 in what commentators are saying is a clear bubble. Yet, the latest upswing is stirring interest. Goldman Sachs has suggested that its client not ignore cryptocurrencies. And a recently passed US law on foreign sanctions contains text to compel non-US governments under sanction to monitor and provide data on cryptocurrency transactions.

The world’s oldest man dies. Sadly, Auschwitz survivor Yisrael Kristal passed away a few weeks short of his 114th birthday in Israel. The mantle of oldest living man has been taken over by Spaniard Francisco Olivera at a sprightly 112. The oldest living woman is Jamaican Violet Brown at 117 years young.


2018 Coffee threatened by Brazilian Beetle revival. The Coffee Borer Beetle may reduce Brazil’s predicted 2018 60m-bag harvest. Reduced insecticide use in coffee plantations globally is seeing an increase in pests such as the beetle. Currently we are seeing lower-than-expected deliveries of high-quality coffee from Brazil, partly due to Borer Beetle infestations. Front month Arabica is trading at 137.5 c/lb.

US cotton output prediction pushed higher. A surprisingly high US Department of Agriculture’s estimate of US crop production saw a sell-off in cotton markets. The USDA expects a 20.5m bale crop this year vs analyst estimates of 18.83m bales. This would be the largest crop in 11 years. Egyptian cotton exports are expected to be at a 20 year high this year. Front month Cotton #2 is trading at 68.97 c/lb.

Corn, soy, wheat futures prices drop on harvest hopes. After running higher this year US corn, wheat and soy futures dropped lower last week as the latest US Department of Agriculture WASDE report showed higher estimates for global wheat, corn and soy stocks. The report showed an increase in soy stocks after previous estimates showed a drop. It also lifted the estimates on future wheat stocks on the back of bigger Russian harvests and on a smaller estimate for the drop in US wheat production for the 2017-2018 harvest. Previous estimates were for a 50m bushel fall in supply and the new estimate is for 21m bushel fall. Corn inventory estimates were also reduced, but less than analysts expected. Front month prices: Corn 356 c/bsh, Chicago Wheat 433 c/bsh, Chicago Soy 955 c/lb.

US crop prices show signs of stabilizing. Spot market farmgate prices in the US showed signs of stabilizing in Q2 2017 with prices growing from 1% to 3% vs Q2 2016 depending on the region and crop. This comes after 3-years of declines. This is prior to the recent fall in futures prices.

Glencore may buy-out Bunge this year. A merger between Swiss oil and metals trader Glencore and US agricultural trader Bunge could be possible this year according to Credit-Suisse. Credit Suisse released the note on the merger after examining Glencore’s debt position. Glencore first approached Bunge informally earlier this year for merger discussions. With rising metals and oil prices Glencore announced a return to profit this Thursday for H1 2017. Glencore lacks a foothold in agricultural trading infrastructure in the US. The current market value of Bunge is ~$11bn.

Malaysian palm oil output grows. Malaysian palm oil inventories reached 1.8m tonnes last month – the highest level since 2014. This was higher than market expectations. This comes a run up of a production which reached 1.83m tonnes in July which is the highest level since 2015 and the best July recorded. Malaysian Palm Oil output typically peaks in September-October which means we may see a record crop this year. Front month Malaysian palm oil is trading around MYR 2650/MT.


The Base Metals complex ignored July's poor Chinese macroeconomic data. Base metals in London and Shanghai were generally unaffected by the macro news with the London basket down 0.4% and the Shanghai basket down 0.6%. Copper remains in its first bull market in 4-years. Typically, base metals prices are highly sensitive to Chinese macroeconomic data. Yet, as China becomes more of a middle industry economy this is becoming less of a truism. As India and other emerging markets take over upstream manufacturing from China base metals will increasingly be impacted by macroeconomic movements in those economies. Copper is trading at: Chicago $3.16/lb, London $6378/tonne, Shanghai RMB 50,000/tonne.

The price of Lithium-ion batteries for laptops are steadily increasing alongside rising cobalt and lithium. Prices increased earlier this year and are expected to go up by 10% to 20% by the end of 2017. Overall lithium-ion batteries are declining in price but for battery types with stable forms and compositions increasing metals prices are pushing prices higher. Cobalt is trading at $56,500/tonne in London.

Ionic Materials habve unveiled a solid-state recheargabel alkaline battery that could replace lithium-ion batteries as the rechargeable storage method of choice. Alkaline batteries use Zinc and Manganese Dioxide with Zinc being substantially cheaper than the lithium and cobalt used in lithium-ion batteries. The technology is not in commercial development yet. Zinc is trading at $2,903/tonne in London.



A Spanish operated oil driller ship has left a Vietnamese oil prospecting block after a political row between Vietnam and China over sovereignty of the area. The prospecting block sits within the disputed South China Sea island chain. Continued sovereignty disputes over the area will keep oil exploration to a minimum for the foreseeable future.

Short-term global demand up, Nigerian instability up, oil prices up. Global crude oil inventories continue to decline with US crude and gasoline inventories falling last week. In Nigeria, an oil facility was overrun by local people looking for work. Nigerian jitters usually push up oil prices. Nigerian exports were set to reach a 17-month high in August but fell due production slowdowns related to the facility being overrun. Nigerian exports are expected to be below 2m BPD in August. Looking into the autumn we are likely to see market weakness as the North American summer driving season ends. Front month oil is trading at: WTI $48.92/bbl, Brent $52.10/bbl.

China oil refineries are running at their lowest daily rate since September last year. This is related to the country’s ample oil and petroleum product inventories. State-owned Sinopec is waging a price war with small-scale 'tin pot' gasoline refineries for business at Chinese petrol stations and all indications are that China has ample fuel and other petroleum products to meet current needs.


BP agrees to develop LNG resources off North-West Africa. BP and Kosmos Energy are sinking $916m into an LNG project in the Mauritania-Senegal basin. BP will have a ~65% stake and Kosmos will have a ~35% stake in the project. The parties expect to deliver gas to an LNG facility near-shore LNG facility. Senegal signed an agreement in March with Qatar’s Nebras Power and Mitsui to build a floating LNG facility and power plant. But its not clear if this is the facility that will receive gas from the BP and Kosmos' project.

Gas starts flowing from new BP fields in Australia and Trinidad. BP’s $2bn Juniper gas platform off Trinidad & Tobago and $1bn Persephone project off Australia have started pumping gas. They are two out of the several upstream LNG projects BP has planned. The others are the Angelin project off Trinidad planned for 2019, Tangguh Expansion off Trinidad planned for 2020, Trinidad Onshore Compression which started production earlier this year, and Western Flank B off Australia planned for 2019.

UK Gas prices dropped this week on near-term oversupply. With warmer weather Britain’s gas system was oversupplied over the last few days pushing prices lower. Oversupply was estimated at 7.2 mcm. Front month natural gas is trading at 42.20p/therm.


China will stop importing North Korean coal. China, North Korea’s biggest trading partner, will halt imports of North Korean coal, fish and iron ore. China is taking part in UN sanctions aimed at starving the North Korean government foreign exchange earnings. The imports will official stop on 5 September but the Chinese government is already pressuring iron ore traders to end shipments. The sanctions come as North Korea continues to develop its long range ballistic missile capacity. China has been aggressively trying to reduce its reliance on coal for power generation in recent years as its major cities are choked with smog.


A combined thermal solar and methane power station is planned for South Australia. A 150 MW power plant using a combination of solar thermal power and methane gas from garbage has been announced for the South Australian town of Port Augusta. The project is set for construction in 2018 for completion in 2020, at a budgeted cost of AUD$650m. The plant will use heat generated from burning methane and thermal solar power to feed into a shared turbine-interconnector to generate electricity. The South Australia government will pay a maximum price of AUD$78/MW for the plant’s output.