2024-10-31 11:30

NAPERVILLE, Illinois, Oct 30 (Reuters) - A recent deluge of U.S. corn and soybean export sales has prompted some market-watchers to question whether the demand boost is tied to uncertainties over the outcome of next week's U.S. presidential election. U.S. grains have been competitive on the global market this year amid bumper 2024 harvests and smaller output from rival suppliers, so healthy demand should be expected. Unfortunately for U.S. exporters, interest from key trade partner China has been lackluster, though they have sold enormous quantities of corn for delivery to top customer Mexico. This is noteworthy since trade with Mexico was targeted under the administration of former President Donald Trump, who is now the Republican candidate for president. Trump has proposed massive tariffs on Mexican vehicle imports as well as 60% tariffs on Chinese goods and 10% tariffs on those from all countries. Trump faces Democratic candidate Kamala Harris in next Tuesday's election. Trump's threats will not enthuse China, but could Mexican grain importers be front-loading U.S. exports due to fears of a possible trade war? Maybe, though there is no conclusive evidence to suggest this is the case. However, Mexico depends heavily on U.S. corn, which is probably why it continued importing large volumes of the U.S. grain the last time the two countries got caught in a trade dispute. MEXICO, USA AND CORN Trump spent much of his 2017-2021 presidential term working to revamp the previous North American trade pact, resulting in the U.S.-Mexico-Canada Agreement (USMCA) which took effect in 2020. But tariffs, retaliatory tariffs and escalation threats were all involved in the process. Although Mexico prepared to retaliate against all U.S. farm goods under a worst-case scenario, it generally continued at that time to secure and import record volumes of corn from the United States, retaining its overall share of U.S. corn exports. This is largely due to the proximity advantage of U.S. corn as well as its abundance. U.S. corn accounted for more than 85% of Mexico’s corn imports last year. There were fears a few years ago that Brazil could imminently steal a big portion of Mexican corn business from the United States. While this could pose a legitimate threat, Mexico has yet to account for more than 4% of annual Brazilian corn exports. Bolstered by an expanding livestock sector, Mexico is projected to be the world’s top corn importer in 2024-25, with volumes dropping slightly from record 2023-24 levels on a stronger harvest. Trump earlier this month said he would renegotiate USMCA if elected, which could stir up tensions between the two countries with historically strong trade relations. In 2022, cars accounted for 8% of the value of all Mexican exports to the United States while corn accounted for 1.6% of the total value of U.S. imports into Mexico. Refined petroleum was the top U.S. import by value at 13.4%. Behind China, Mexico was the No. 2 destination last year for U.S. bulk agricultural products such as corn and soybeans. That trade exceeded $10 billion in value and accounted for 17% of the annual total. CHINA Considering the U.S.-China trade war that began during Trump’s first term, some traders have said that Chinese buyers are shunning U.S. soybeans for January delivery and onward over tariff uncertainties, opting for sometimes-pricier Brazilian offerings. They are certainly not front-loading. As of mid-October, China’s U.S. soybean bookings for 2024-25 stood at a 16-year-low if excluding the two trade-war years. Only 43% of total U.S. soybean sales so far are explicitly to China, an 18-year, non-trade-war low. On the flip side, it might have appeared that China was stocking up ahead of the 2020 U.S. election, especially as it burst onto the U.S. corn market mid-year. But China’s domestic corn prices were surging as stockpiles dwindled, and global corn prices that year had dropped to decade-plus lows. In other words, China’s own interests were likely behind its rampant U.S. corn and soy export bookings in 2020. Additionally, Beijing gained some goodwill by appearing to fulfill the Phase 1 trade agreement it signed with Washington in January 2020. President Joe Biden maintained Trump-era tariffs on Chinese goods and even implemented new ones, so many analysts believe trade policies will remain status-quo should Harris win the election. Regardless, if the next U.S. president takes tougher measures against Chinese imports, it may not result in direct retaliatory tariffs on U.S. agriculture. But the move could instead motivate Beijing to further invest in South America and other key agricultural suppliers while phasing out U.S. ones, and the same logic could extend to Mexico or other U.S. trade partners if U.S. policies become a hindrance. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Sign up here. https://www.reuters.com/markets/commodities/are-election-fears-causing-top-us-corn-soy-customers-stock-up-early-2024-10-31/

2024-10-31 11:27

Oct 31 (Reuters) - PBF Energy (PBF.N) , opens new tab posted a bigger-than-expected third-quarter loss on Thursday as the U.S. refiner took a hit from weak fuel demand which shrunk refining margins. Globally, refiners have seen a drop in profitability due to soft consumer and industrial demand, especially in China. Bigger rivals Phillips 66 (PSX.N) , opens new tab and Valero Energy (VLO.N) , opens new tab posted drops in quarterly earnings, dented by weak margins, but still managed to beat analysts' estimates. The company said its gross refining margin, excluding special items, per barrel of throughput stood at $6.79 in the quarter, a 69.4% drop from last year. U.S. refiners are seeing their margins and profits normalize from recent record highs, following Russia's invasion of Ukraine in 2022. "PBF's financial results for the quarter reflect the broader macro headwinds brought about by weaker-than-expected global demand and higher-than-anticipated refinery utilization," PBF Energy's CEO Matt Lucey said in a statement. The company added it was conducting its last major turnaround at the Chalmette refinery in Louisiana and expects the work to be finished in November. The company said its reported quarter's crude oil and feedstocks throughput stood at 935,600 barrels of oil per day (bpd), compared with the previous year's 939,700 bpd. For the current quarter, it expects total throughput to be between 840,000 bpd and 900,000 bpd. PBF also announced a 10% increase in quarterly dividend to $0.275 per share. On an adjusted basis, the Parsippany, New Jersey-based company lost $1.50 per share in the third quarter, compared with estimates of a loss of $1.41 per share, according to data compiled by LSEG. Sign up here. https://www.reuters.com/business/energy/refiner-pbf-energy-posts-bigger-than-expected-q3-loss-margins-collapse-2024-10-31/

2024-10-31 11:23

2024 Brent forecast cut for sixth month in a row Global oil demand seen up 1 mln-1.5 mln bpd in 2025 For table of crude price forecasts, click Oct 31 (Reuters) - Concerns around demand from top consumer China, prospects of higher supply from key producers and easing geopolitical risks are likely to weigh on oil prices this year and next, a Reuters poll indicated on Thursday. The poll of 40 analysts and economists conducted in the past two weeks projected Brent crude would average $80.55 per barrel this year and $76.61 in 2025, down from estimates of $81.52 and $76.94 projected in September. U.S. crude is expected to average $76.73 a barrel in 2024 and $72.73 next year, compared with projections of $77.64 and $73.03 last month. "Geopolitical risks will continue to support gyrating markets, but overall the risk of an actual disruption remains very limited, hence the geopolitical related rallies have increasingly become a selling opportunity," said Ole Hansen, head of commodity strategy at Saxo Bank. Brent crude has dropped more than 9% in the last three weeks on easing fears that Israel might attack Iran's nuclear facilities or oil infrastructure. The global benchmark has averaged around $81 a barrel so far this year. Most of the analysts noted that despite geopolitical tensions in the Middle East, ample spare production capacity among key OPEC producers has mitigated any upward price movements. OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies such as Russia, is scheduled to raise output by 180,000 barrels per day in December. The group will meet on Dec. 1. Reuters has reported that OPEC+ could delay the planned oil production increase in December by a month or more. "We think that OPEC+ could delay the increase in supply until end of March/beginning of April of 2025, given that demand will drop in Q1 2025 from Q4 2024 because of seasonal factors," said John Paisie, president of Stratas Advisors. Global oil demand was expected to increase by about 0.8 million-1.2 million barrels per day in 2024 and by 1 million-1.5 million bpd in 2025, the poll showed. Earlier this month, the U.S. Energy Information Administration slashed its 2025 global oil demand growth forecast, citing weakening economic activity in China. OPEC also lowered its demand growth forecast for 2024 and next year. "Major factors that will impact the (demand) outlook are a continued industrial and manufacturing slowdown in China, a worsening of the recent geopolitical flareup and a global shift towards renewables in the energy mix," Sehul Bhatt, director of research at CRISIL, said. Sign up here. https://www.reuters.com/markets/commodities/sluggish-demand-supply-glut-worries-weigh-oil-2025-2024-10-31/

2024-10-31 11:22

Oct 31 (Reuters) - The Bank for International Settlements is leaving the cross-border payments platform Project mBridge, which can be taken forward by the central banks behind it, BIS General Manager Agustin Carstens said on Thursday. Project mBridge, a collaboration launched in 2021 between the BIS and the central banks of China, Hong Kong, Thailand and the United Arab Emirates, was joined by the Saudi Arabian central bank in June. The project has many more observing members. Carstens made his remarks after being asked whether mBridge could provide a basis for BRICS countries, which include Russia, to get around international sanctions, a notion he rejected. "The BIS is leaving that project not because it was a failure or not because of political considerations but mostly because we have been involved for four years, and it is at a level where the partners can carry it on by themselves," he said, speaking at a Santander banking conference. "At the same time I have to say that mBridge is not mature enough to start operating. So many, many years need to happen." The BIS, a global central bank umbrella organisation which oversees the project, said in June that mBridge had reached "minimum viable product" stage. Addressing the sanctions question, Carstens said: "mBridge is not the BRICS bridge and I have to say that categorically. mBridge was not created to cater (to) the needs of BRICS." The BIS does not operate with any countries subject to sanctions and this would remain the case, he stressed. "We need to be observant of sanctions and whatever products we put together should not be a conduit to violate any of these sanctions," added Carstens, a former Mexican central bank chief. Sign up here. https://www.reuters.com/business/finance/bis-leave-cross-border-payments-platform-project-mbridge-2024-10-31/

2024-10-31 11:04

Reuters poll graphic on interest rate cuts expected from major Asian central banks: BENGALURU, Oct 31 (Reuters) - Most Asian central banks will cut interest rates slower than the U.S. Federal Reserve over the coming year, Reuters polls showed, as solid growth has eased pressure to maintain currency stability against a persistently strong dollar. A jumbo 50 basis points Fed rate cut in September and expectations for two more quarter-percentage point reductions by end-year has provided wriggle room for central banks in Asian economies to consider their next moves. The Fed is expected to cut rates by another 125 basis points next year, much more than Asian central banks. But with the U.S. economy showing continued resilience, the greater risk is for the Fed to move more gradually than speed up. With inflation broadly within Asian central bank targets and growth still resilient, there is no urgency for most to be slashing rates much further. "Despite easing inflation at home, weak currencies had deterred policymakers from prematurely lowering rates, to prevent further compression in rate differentials," said Radhika Rao, senior economist at DBS in Singapore. "Each of them is really moving on their own beat and they are not going to match the Fed's moves one-on-one." Apart from the Indian rupee, which the Reserve Bank of India is actively managing to keep stable, as well as the Chinese yuan, most Asian currency losses this year range from 2-6% against the U.S. dollar. Excluding the People's Bank of China (PBOC), seven of eight important Asian central banks which hiked rates only modestly after the pandemic compared to developed economy peers, will hold rates for the rest of 2024 or cut by 25 basis points at most, according Reuters polls taken Oct. 1-29. Only Bank Indonesia was forecast to cut by another 50 basis points this year. So far only the Bank of Korea, Bank of Thailand and Bank Indonesia have cut rates by 25 basis points while the Philippine central bank reduced them by 50 basis points. The State Bank of Vietnam reduced rates in June 2023 and has been on hold since. Next year, only the Philippine central bank was forecast to cut rates by 100 basis points while the rest were expected to hold or at most cut 50 basis points in total. The PBOC is an outlier. It announced its most aggressive monetary easing measures since the pandemic in recent weeks to revive the economy, which grew 4.5% last quarter on a year earlier, lower than the 5% growth target. But it also changed its key benchmark interest rate. For the bulk of world economies where rates are falling, the risk remains they go lower than economists currently expect, the survey found, underpinning a solid global outlook. Much will depend on whether the Fed decides to move slower than currently expected. "We believe the main risk to our interest rate outlook for Asian central banks is the path of the Federal Reserve...If the Fed chooses to be cautious with rate cuts, it will mean a stronger dollar," said Alicia Herrero Garcia, chief economist for Asia-Pacific at Natixis. (Other stories from the October Reuters global economic poll) Sign up here. https://www.reuters.com/markets/asia/riding-growth-wave-most-asian-central-banks-go-slower-than-fed-rate-cuts-2024-10-31/

2024-10-31 10:48

TOKYO, Oct 31 (Reuters) - Japan's Electric Power Development (J-Power) (9513.T) , opens new tab said on Thursday it has decided to sell its 50% stake in a U.S. gas-fired power company as part of a reshuffle of its assets portfolio to improve capital efficiency. The Japanese utility will sell the stake, held by U.S. subsidiaries, in Tenaska Frontier Partners which operates an 830 megawatt (MW) gas-fired power station in Texas to investment fund ACR IV Frontier Holdings for $155 million. J-Power expects to book $93 million in investment income upon the transfer, though it is unclear if this will be reflected in the current or next fiscal year, the company said. In June, J-Power said it would divest its 50% stake in another U.S. gas-fired power generator, Green Country Energy, which operates a 795-MW gas power station in Oklahoma, selling it to Public Service Company of Oklahoma, a subsidiary of American Electric Power, for an undisclosed sum. "Under the current mid-term management plan, we aim to shift our portfolio to renewable energy, and these are part of our efforts," Executive Vice President Isshu Kurata told a news conference. J-Power on Thursday reported a net profit of 48.34 billion yen for the April-September quarter, up 74% from a year earlier, driven by higher margins in its power generation business at home. The company lifted its net profit forecast for the fiscal year to March 2025 by 52% to 64 billion yen, pointing to stronger gains in its thermal power business and a higher contribution from its stake in Australian coal mines due to firmer-than-anticipated coal prices. Sign up here. https://www.reuters.com/business/energy/japans-j-power-sell-stake-us-gas-power-company-2024-10-31/