Baseline commodity views – ING

By FXStreet FXStreet (Delhi) – Research Team at ING, presents their baseline views on commodities.

Key Quotes

“Crude oil (CAD) – Slow recovery

The Middle East is likely to maintain the discounts being offered for crude in a bid to secure contracts in a well-supplied market (though Iran and Venezuela have voiced concerns about pursuing this strategy indefinitely). Lower US rig counts and lower capex plans are being seen along with a rising call on OPEC for supply cuts. Falling investment (projects on hold in Gulf of Mexico, Alaska and Russia) and increasing automobile base in China improves medium-term outlook.

Iron ore and coal (AUD) – Few reasons to be positive

Despite the sharp drop in iron ore prices, new mines have been coming online – with existing mines also ramping up production as producers enforce supply chain efficiencies to reduce costs. We see little upside in the near-term; production cost curves for Rio Tinto and BHP sit in the $28-30/metric tonne area, and combined they could produce 185mn metric tonnes at those prices. Any iron price floor looks soft.

Dairy prices (NZD) – Scope for a bounce

European producers have been chasing US and other markets to maintain exports in light of Russia export ban. Downside pressure …read more

Source:: FX Street