2023-12-29 05:38
Cocoa rose 72% in 2023 to 46-year high on supply disruptions Iron ore gains driven by Chinese purchases, stimulus hopes El Nino dry weather reduced global rice supplies, lifting prices Power fuels set to end 2023 in deep red amid rising supplies SINGAPORE, Dec 29 (Reuters) - Cocoa and iron ore prices surged in 2023, while natural gas and coal prices tumbled, with most agricultural products expected to outperform energy and industrial metals in the New Year amid supply constraints and dry weather. The Thomson Reuters/CoreCommodity CRB Excess Return Index (.TRCCRB), which includes more than a dozen commodities such as oil, gold, sugar and copper, is set to fall 4% for 2023 after interest rate hikes dampened global growth and shook financial markets. Cocoa prices rose 72% to multi-decade highs because of constrained supplies and iron ore was up nearly 55% as China looked to shore up its property sector. But the prices of natural gas and coal tumbled from 2022's record highs after Russia's invasion of Ukraine and were among the biggest losers as producers ramped up supplies and demand eased. "A warm start to this winter has kept prices deflated so far, and if it remains warm as forecast, most regions will be able to tide through this winter comfortably, with even more to spare for next year's winter," said Rystad energy analyst Lu Ming Pang. Macquarie analysts said in a note they expect aggregate commodities price weakness to continue in 2024, with U.S. economic growth to soon stall and European and Chinese growth likely to remain tepid at best. STANDOUT PERFORMERS New York cocoa futures rose to a 46-year high this year and are expected to remain strong in 2024, buoyed by a poor harvest in the key producing region, West Africa, where the spread of viral swollen shoot disease has hit crops. Capital Economics said in a note that constrained supply combined with high seasonal demand was likely to support high cocoa prices through 2024 until new supply arrives in October, the start of the next growing season. For iron ore, efforts by China to revive its beleaguered property sector and shore up a patchy post-pandemic economic recovery boosted prices, with more gains expected in early 2024. "Supportive policies on the property market, coupled with expectations on further economic stimulus during the top decision-making meetings in December acted as tailwinds," said Pei Hao, a Shanghai-based analyst at brokerage FIS. FOOD SUPPLY SHOCKS Hot and dry weather due to El Nino has taken a toll on global rice, coffee and sugar production, supporting prices. Supply shocks in the rice market prompted India, the biggest supplier globally to restrict exports, driving prices of the world's most widely consumed staple to 15-year highs and triggering food inflation pressure. Rice prices in Asia's key exporting centres , have climbed more than 40% in 2023 and adverse weather is expected to further reduce output early next year. Shrinking supplies also triggered a rally in coffee prices with robustas gaining almost 60% in 2023. Sugar production in India is set to lag consumption for the first time in seven years and lower plantings could force the world's No.2 producer to turn into a net importer. Wheat , corn and soybeans are headed for losses in 2023, but prices remain vulnerable to adverse El Nino weather, export restrictions and higher biofuel mandates. Palm oil production is likely to fall next year due to El Nino, supporting cooking oil prices that dropped more than 10% in 2023. RISING ENERGY SUPPLY Rising oil, gas and coal supply could weigh on prices for a second year in 2024. Brent and West Texas Intermediate (WTI) crude futures are down around 7% this year, falling for the first time in three years, despite record global oil demand and deeper supply cuts from OPEC+. Non-OPEC production growth is set to dominate in 2024, with S&P Global Commodity Insights forecasting record crude and liquids production in the U.S., Brazil and Canada. Macquarie expects Brent and WTI prices to average at $77 and $73 a barrel in 2024. Asia spot liquefied natural gas and Australia Newcastle coal futures tumbled more than 50% from last year's record highs, as demand from Europe eased while China and India ramped up coal output to prevent a repeat of last year's energy shock. MIXED OUTLOOK FOR METALS A softer U.S. dollar and Treasury yields amid growing expectations that the Federal Reserve will end its monetary policy tightening helped gold race towards its best year in three and saw prices scale all-time highs above $2,100 this month. Citi expects gold and silver prices to rise by mid-2024 on strong demand for the metals as a hedge against downside risks in developed market equities and property. For industrial metals, nickel , down more than 40% in 2023, was the biggest loser, pressured by higher supplies in top producers Indonesia and China. Prices are expected to remain under pressure in 2024 amid a global surplus for the metal used in stainless steel and electric vehicle batteries. Softer-than-expected Chinese demand and U.S. interest rate hikes weighed on prices , which recovered some ground in recent months due to supply disruptions by mine closures in Panama. https://www.reuters.com/markets/commodities/strong-gains-cocoa-iron-ore-2023-energy-prices-dip-2023-12-29/
2023-12-29 05:04
MUMBAI, Dec 29 (Reuters) - The Indian rupee was little changed on Friday, and is on course for its smallest annual percentage change in 20 years, on the back of sustained foreign exchange interventions from the Reserve Bank of India. The rupee was at 83.1550 against the U.S. dollar as of 10:30 a.m. IST, compared to its previous close at 83.1650. The rupee is down about 0.4% year-on-year, the smallest percentage change in at least the last 20 years. An uptick in Asian currencies helped the rupee gain on Friday, amid growing U.S. interest rate cut expectations. The dollar index was steady near 101.2 after recovering slightly from a 5-month low, but is down about 2% in December so far, extending its 3% decline in November. Even though the local unit hit a record low of 83.42 in 2023, it's depreciation was sharply milder compared to its drop of about 10% last year. The rupee remained largely steady in the face of volatility in global cues amid the RBI's interventions via spot, forwards, non-deliverable forwards, and futures markets, traders said. The rupee is likely to stay in its "prevailing zone" on Friday, wedged between month-end importer dollar demand and broadly positive Asian cues, a forex trader at a foreign bank said. The rupee's stickiness has also hurdled gains amid dollar weakness and a sharp pickup in inflows into India markets towards the end of the year. Overseas investors bought Indian equities and bonds worth$27.8 billion over 2023, about $9.3 billion of which was in December alone, according to NSDL data. "Rupee has been moving amidst thin holiday trades and is expected to be in a range of 83.05 to 83.30 (on Friday)," Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors said. https://www.reuters.com/markets/currencies/rupee-flat-set-smallest-annual-change-20-amid-cenbanks-hands-on-approach-2023-12-29/
2023-12-29 04:48
BEIJING, Dec 29 (Reuters) - Year-end holidaymakers across China were bracing for possible transport disruptions after the weather bureau on Friday warned that heavy fog and haze would shroud areas from Hebei province in the north to southern Shanghai for more than 24 hours. The Central Meteorological Observatory issued its first red alert for fog since 2017. Conditions were expected to improve from Saturday evening, when a cold wave of air is expected to blow over the country. More than 600 flights were delayed in various cities including Urumqi, Hebei's Shijiazhuang, Shandong's Qingdao and Shanghai, tracking app Flight Master showed. Severe fog was expected in parts of northern province Hebei, central province Henan, eastern provinces Anhui, Jiangsu, Zhejiang and Shandong as well as in the municipalities Shanghai and Chongqing from Friday morning, the National Meteorological Centre said. Dense fog in predicted in parts of Hebei, Shandong, Anhui, Jiangsu and Shanghai leading to low visibility of less than 200 metres, and less than 50 metres in some areas. In the north, around the capital of northwestern Xinjiang region, Urumqi and areas between the Yellow River and Huai River, light to moderate haze is forecast, with heavy haze affecting Tianjin, Hebei, Shandong and Henan. The severe weather was due to high humidity and poor atmospheric diffusion conditions, the forecaster said. China has experienced a year of climate extremes. Last week, most of the country was hit by a cold snap that rewrote records with sub-freezing temperatures, in contrast to the summer, when scorching heat that breached 52 degree Celsius (125.6 Fahrenheit) in the northwest blistered the country. Summer storms also brought record rainfall to Beijing and flooding elsewhere. On Friday, the central observatory told the public to tune into weather and traffic alerts, and advised them to reduce time outdoors. Residents in parts of Shandong, Anhui and in Jiangsu should avoid going out unless necessary, it added. In Shanghai, some ferry routes were temporarily suspended and some sections of highways, as well as a bridge to a container port, were temporarily closed. Earlier, a thick grey fog had all but obscured the city's colourful skyscrapers but skies were now clearer. "I have never see the Pearl Tower in the fog before. Now the fog has completely dispersed. I have been recording photos of the Oriental Pearl Tower," said 25-year-old tourist Xu Lejun from Jiangxi province. In Jiangsu, some sections of several expressways remained shut since Thursday evening, while Hebei and Henan temporarily closed segments of multiple highways on Friday morning, citing weather conditions, according to state television CCTV and provincial capital authorities said. https://www.reuters.com/world/china/fog-haze-china-new-year-travellers-brace-potential-disruptions-2023-12-29/
2023-12-29 03:41
U.S., global shares tick down after year of gains Treasury yields finish little changed from January levels Dollar notches 2% loss for 2023 Oil prices choppy, 10% lower on year Dec 29 (Reuters) - Global shares pulled back on the last trading day of the year but notched their biggest annual rise since 2019, while U.S. Treasuries finished the year broadly where they started after major swings for the benchmark in 2023. Shares around the world have risen sharply in the last two months of the year as benchmark bond yields fell on expectations of central bank rate cuts in 2024. "In a slow holiday week, there was little to change the backdrop of resilient if slowing activity, underlying inflation still stuck around 3-4%, but a Fed that will be cutting rates regardless in 2024," Citi analysts wrote in a note Friday. The S&P 500 (.SPX) fell about 0.3% on Friday, just shy of its record closing high reached on Jan. 3, 2022. The index finished up about 24% this year, thanks to a massive rally in megacap tech stocks. The Dow Jones Industrial Average (.DJI) and the Nasdaq Composite (.IXIC) both dipped on Friday but were 13.7% and 43.4% higher for the year, respectively. European shares ended 2023 with an annual gain of almost 13% on hopes of softer monetary policy from major central banks next year, while MSCI's world share index posted a 20% gain, its most in four years (.MIWD00000PUS). "We have eaten a lot of the returns that were expected in 2024. The positive momentum in markets is obviously associated with the fall in yields, and so now the question is, how long can this trend continue?" said Samy Chaar, chief economist at Lombard Odier. Chaar said future returns "are probably more moderate" than they were at the beginning of November, but if long-term U.S. interest rates settle around 3.5% or 4%, there is "little danger of a big U-turn", and continued corporate profits might add "a few percent of upside". The benchmark 10-year Treasury yield was at 3.866%, up 1.6 basis points on the day and right around its level at the start of the year. That yearly performance masks some major swings, as the note's yield reached 5.021% in October, its highest since 2007, before retreating and driving the share rally. Behind the move lower in yields has been a sustained decline in inflation around the world that has driven expectations that central banks will cut interest rates early next year. The U.S. economy has remained strong, feeding hopes for a "soft landing". Markets are now expecting the U.S. Federal Reserve to start rate cuts in March, according to the CME FedWatch tool, a shift from assumptions just last month. Traders are also pricing in more than 150 basis points of easing next year by the Fed, the European Central Bank and the Bank of England. CHINESE UNDERPERFORMANCE Chinese markets underperformed in 2023, despite optimism at the start of the year when Beijing ended its zero-COVID policy. Both Hong Kong's Hang Seng Index (.HIS) and China's onshore blue chip index (.CSI300) lost more than 10% in the year on waning investor confidence in the world's second largest economy. Those losses compare to Japan's Nikkei 225 Index (.N225), which gained 28% on the year. In the currency markets, the dollar ticked up on Friday but suffered a roughly 2% decline in 2023 after two years of strong gains, with declines mirroring the fall in U.S. yields. In commodities, Chicago wheat and corn futures saw their biggest annual drop in a decade as easing supply bottlenecks in the Black Sea region and higher production weighed on prices. Oil prices were due to end 2023 down 10% after a year of wild swings driven by geopolitical concerns, production cuts and global measures to rein in inflation. On Friday, U.S. crude fell 0.57% to $71.36 per barrel and Brent was at $77.08, down 0.09% on the day. Gold prices ticked down on Friday to $2,062 an ounce as they headed towards their best year since 2020, buoyed by hopes the U.S. Federal Reserve could cut interest rates as early as March. https://www.reuters.com/markets/global-markets-wrapup-1-2023-12-29/
2023-12-29 03:37
SHANGHAI, Dec 29 (Reuters) - Zeekr, owned by China's Geely, has signed an agreement with a Singaporean company to distribute right-hand drive Zeekr 009 MPVs and Zeekr X urban SUVs to customers in the island nation, a Zeekr spokesperson for the automaker said on Friday. The automaker plans to begin delivering the cars in the second half of 2024, the spokesperson said. Zeekr has previously announced plans to sell cars in Europe, the Middle East and some Asian markets. https://www.reuters.com/sustainability/chinas-zeekr-begin-selling-evs-singapore-second-half-2024-2023-12-29/
2023-12-29 02:47
MUMBAI, Dec 29 (Reuters) - The Indian rupee is expected to open marginally higher on Friday, tracking an uptick in Asian peers on bets of a Federal Reserve pivot as early as next quarter. Non-deliverable forwards indicate the rupee will open at around 83.12-83.14 to the U.S. dollar compared with 83.1650 in the previous session. The offshore Chinese yuan climbed to the highest since June to 7.0910 to the dollar, while other Asian currencies rose 0.2% to 0.5%. Since last month, Asian currencies have been propped up on expectations that slowing inflation will allow the Fed to cut rates several times next year. The Korean won and the Thai baht are up 5% since November, and the offshore yuan has climbed more than 3%. It has been a different story for the rupee, with the currency up about only 0.1% in this period, thanks largely to a central bank that has insisted on a narrow range, according to traders. "The biggest question for the rupee heading into 2024 is not about flows or the Fed. It's about the RBI (Reserve Bank of India)," a senior treasury official at a bank said. "The RBI's heavy intervention, particularly in the latter half of the year, has implications far beyond (USD/INR) spot." On Friday, muted crude oil prices and foreign inflows are likely to offer support to the rupee, Dilip Parmar, a foreign exchange research analyst at HDFC Securities, said. Brent crude has declined more than 4% over the last three days to slip below $77.50 per barrel. Overseas investors have bought Indian bonds and equities worth $9.3 billion in December, the highest monthly tally this year. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.24; onshore one-month forward premium at 8.50 paise ** Dollar index down at 101.10 ** Brent crude futures up 0.3% at $77.4 per barrel ** Ten-year U.S. note yield at 3.83% ** As per NSDL data, foreign investors bought a net $384.4 mln worth of Indian shares on Dec. 27 ** NSDL data shows foreign investors bought a net $74 mln worth of Indian bonds on Dec. 27 https://www.reuters.com/markets/currencies/rupee-follow-asian-fx-higher-rbi-key-factor-2024-2023-12-29/
