Commodities: Wheat boosted by arctic blast, aluminium by Trump tariffs
By Alexander Bueso
Date: Thursday 01 Mar 2018
(ShareCast News) - Big gains for soft commodities on the back of the blast of Arctic weather sweeping through Europe helped insulate the entire complex from the impact of strength in the Greenback.
Natural gas and aluminium futures also found a bid, with the latter benefiting from speculation that the White House was about to announce tariffs on imports of steel and aluminium.
Against that backdrop, as of 2054 GMT, the Bloomberg commodity index was edging higher by 0.07% to 88.20 as the US dollar spot index advanced 0.40% to 90.25 on the back of better-than-expected readings on weekly US unemployment claims and after the ISM's closely-followed factory sector gauge for the month of February printed well ahead of economists' forecasts.
May 2018 CBoT wheat leaped 4.14% higher to $5.1550 a bushel amid forecasts calling for a second blast of arctic air to slam into the Continent, with unusually low temperatures now seen lasting until mid-March or even April.
Natural gas futures were also bid higher, with the April 2018 NYMEX contract climbing 1.05% to $2.70/MMBtu.
In the background, the Department of Energy projected that American industry would increase its consumption of natural gas by 40% come 2050, to reach 13.7 quadrillion Btu per year.
Among base metals, outside of aluminium all the major three-months futures contracts were lower at the LME close in London, with copper seeing the day out from $6,859 per metric tonne, versus $6,930 per tonne at the opening bell.
Aluminium on the other hand gained from $2,131 per tonne to $2,147.
Just before the market close, news broke that US President Donald Trump intended to impose a 25% tariff on US steel imports and a 10% duty on those of aluminium.
His announcement drew an angry rebuke from officials in Ottawa, the largest supplier of steel to the States, who said it would "react firmly" in the coming days.
According to analysts at SP Angel, America's 10 largest suppliers of steel were Canada, Brazil, South Korea, Mexico, Russia, Turkey, Japan, Taiwan, Germany and India.
Commenting on the day's action, analysts at Sucden Financial said: "Trading conditions were choppy through the pm session as prices recovered from the earlier lows but turnover was moderate at best. The overhanging threat of US trade tariffs on Ali and steel is also adding to the current risk off sentiment while comments from Jerome Powell's 2nd speech to congress saw major equity indices fluctuate +/-."
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