Commodities: Global
OPEC Surprised Oil Markets in early April as the cartel agreed to raise production by three times the amount expected beginning in May, increasing output by 411,000 barrels per day (bpd) instead of only 135,000 expected. That plus the Trump tariffs knocked oil prices down by 6% in the new month. The increase was a partial unwind of the 2.2 million bpd (mbpd) tranche of cuts, which was in addition to the original 3.65 mbpd of cuts from 2022. The total 5.85 mbpd is about 5.7% of global supply. US sanctions against Iran seem to have only marginal effect as its crude output remains resilient, averaging 3.2 mbpd in February, slightly up from January. Donald Trump imposed sanctions on Chinese companies over Iranian oil shipments last month but so far to little effect. In March, President Trump announced a 25% tariff starting April 2nd on countries importing oil and gas from Venezuela. China’s imports of Venezuelan crude and fuel are said to be about 0.5 mbpd, about 55% of Venezuela’s exports. Reportedly Chinese firms decided to refrain from buying any April shipments. Additionally, the US gave Chevron until May 27 to “wind down” its operations in Venezuela, which could reduce production in the country by about 0.2 mbpd, about 20% of its total production.
US Crude Oil Imports from Canada fell to the lowest in two years after President Donald Trump’s administration imposed tariffs on imported crude from its northern neighbor. Despite the fall in imports, U.S. crude inventories rose more than expected in March as domestic crude production stayed near a record high at 13.6 million barrels per day. With markets fearful over economic slowdown due to tariffs, oil futures have fallen over 15% in early April. US operating oil rigs fell to 484 as of March 28th, a decline from 486 as of February 28th. US inventories of crude oil rose during the month by about 7 million barrels (a little less than 1%). Per AAA, US average regular unleaded gasoline prices per gallon ticked higher to $3.20 (+8¢) at the beginning of April. California was $4.85 in comparison.
The Latest US Planting Intentions showed farmers looked to plant 95.3 million acres of corn, the biggest planted acreage since 2013, when corn prices at the farm were averaging $7 per bushel. This time around, corn prices have risen from $3.85 per bushel in last August to $4.58 in February. Corn production swung about 4.5 million acres in its favor, mostly at the expense of soybean acreage. Rabobank
predicted that Brazil will harvest a record soybean crop in 2024/25, saying that output of the oilseed should total 170 million metric tons this season – 15 million tons more than in 2023/24. Argentina’s farm exports brought in a total of $2.18 billion in February, a +45% increase compared to the same month a year earlier. China has let lapse registrations of dozens of American meat plants that ship to China, affecting than $3 billion in US beef, pork and poultry exports. Again the Chinese preference is shifting South American meat as the tariff war heats up. However, live cattle prices continued to rise as feeder cattle imports from Mexico were expected to be hit by Trump’s tariffs, despite the border being reopened with the containment of New World Screwworm in Mexican herds.
Cocoa Supplies Saw a Partial Recovery as #2 supplier Ghana’s warehouse deliveries were running roughly 70% ahead of last season, helped by an increased harvest and efforts to reduce smuggling. About 560,250 tons of beans arrived at the industry regulator’s warehouses between the start of the 2024-25 season and February 13th as compared with some 330,000 tons of arrivals at Ghana Cocoa Board depots by the same time last year. Cocoa production in Ghana was projected to grow +32% in the 2024/25 season (Oct-Sept) to 700,000 metric tons, per the USDA. However, the top producer, Ivory Coast, will slash the amount of cocoa it sells on international markets from the upcoming crop, according to two regulatory sources, as the world’s top producer of chocolate’s main ingredient grappled with a second year of output decline. They said the regulator will cut contract sales limit to 1.3 million metric tons for the 2025/26 cocoa season from the usual 1.7 million tons after two weaker crops caused by climate change, ageing plantations and the spread of plant diseases. Chocolate lovers must continue to be patient.
Gold Broke the $3,000 Level in mid-March, rose to a record high above $3,100 an ounce as an escalation in Middle East tensions underscored its haven appeal, and investors weighed data that fueled concern the US economy is slowing down. Even with the market collapse in early April, gold prices gave back only a few percent, much less than the losses in silver which has widespread industrial uses and thus vulernable to a economic slowdown.
Finally, just a reminder that buried treasure is still out there, an ultra-rare gold coin collection that was hidden from the Nazis will start to reach the auction block on May 20th. 15,000 rare coins from over 100 regions including a massive 348.5-gram gold coin worth $1.35 million will be offered in total. This link is not the most extensive in telling the story of the “Traveler Collection” but it has the best photos: https://www.dmarge.com/luxury-lifestyle/160-million-gold-treasure-found-after-50-years-underground
All the best in your investing!
David Burkart, CFA
Coloma Capital Futures®, LLC
www.colomacapllc.com
Special contributor to aiSource