Commodities: WTI and copper slip amid hawkish stance from White House on trade
By Alexander Bueso
Date: Sunday 02 Sep 2018
(Sharecast News) - Big gains for grains more than offset a dip in energy and copper futures at the end of the week as the US dollar bounced back, helped by the US administration's still unfriendly stance on trade vis-a-vis the EU and China overnight.
December 2018 futures for corn on the Chicago Board of Trade jumped 2.38% to close at $3.65 a bushel, alongside a gain of 1.96% for the similarly-dated wheat contract to $5.4550 a bushel.
ICE-traded cocoa clocked-in with large gains as well, jumping 2.68% to $2,336.0 per metric tonne.
Trade talks between the US and Canada were very much in the market spotlight on Friday, with both countries failing to ink a revision of the NAFTA trade deal on Friday, even as US President Donald Trump notified Congress of his intention to sign a deal with Mexico (and Canada, if Ottawa changed its mind) in the next 90 days.
That, in turn, put in motion a 30-day deadline to publish his proposed agreement.
Overnight, the White House had indicated the European Union would need to do more than just lower auto tariffs to zero if it wanted to avoid US tariffs even as markets' attention was already increasingly on the expiry, next Friday, of a public consultation period on the White House's proposed tariffs on another $200bn-worth of Chinese-made goods.
Against that backdrop, by the end of trading, the Bloomberg commodity index had edged higher 0.14% to 83.74 even as the US dollar spot index gained 0.44% to 95.14.
In the energy complex meantime, October West Texas Intermediate fell 0.64% to $69.80 a barrel on the NYMEX, after Baker Hughes reported that the number of oil rigs in operations in the States increased by two over the week ending on 31 August.
Three-month copper futures on the LME ended the session at $5,975 per metric tonne after opening from $6,044.
"China PMI data for August released overnight was slightly stronger than expected with the manufacturing index at 51.3 and non- manuf at 54.2 - although the economy will surely experience headwinds if the trade war with US escalates. Further strong rhetoric from Pres," said traders at Sucden Financial.
"Trump towards China, Canada and Europe in recent days put major equity indices on the defensive and led to nervous and volatile conditions on LME for the month end and ahead of the US Labour Day holiday on Monday [...] Be aware - China Caixin PMI data for Aug due early Monday."
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