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Commodities

Commodity Strategy Comment — What to expect from an extra OPEC meeting

The extraordinary OPEC meeting planned for this month has sent oil prices higher as markets have increased hope that OPEC will reduce output and finally agree on a production cut. However, expectations have faded recently after Saudi Arabia's crown prince made its actions conditional upon Iran freezing output as well. We maintain our view that it is too early to cut production and argue that the US shale oil industry will first have to be ice cold and that Iran must regain its lost market share before OPEC will be able to do so. To us, this means the cut could take place in 2017, if at all, and prices could slide back to the low of USD 30.

Martin Jansson, Strategist | nija03@handelsbanken.se

Commodity Bulletin — Commodities hit rock bottom

Lower oil prices in next movement
After the oil price rise in March, we are now seeing several signs that this journey is reaching the end of the road and that the next movement will be downward. Shale oil is no longer flowing, Nigeria and Iraq have had production disruptions and let us not forget that the market is speculating about decreased production from OPEC and Russia. We are contrary to the consensus opinion and believe that all these forces are behind us and that the price will reach USD 30 rather than USD 50.

Mining companies strengthen base metals

While the oil price bottom is still ahead of us, we believe that base metals have hit the cyclical bottom after four years of decline - at least as a group. Copper production still looks a bit too high but for zinc, nickel and aluminium, there has been a massive rebalancing of the market on the producer side. We see zinc as the base metal with the best fundamentals and raise our forecast to USD 2,100.

The Fed caught in a trap

The Fed's weak rate hike has led to the largest rise in gold over three months since the euro crisis was at its peak. The feeling that the Fed has ended up in a situation where it cannot control the economy by means of the interest weapon creates a strong need by investors to park some of their money in a safe-haven. We do not believe that the Fed's situation will improve in the next six months, and although gold has already passed our strong belief of a 12% higher price this year, we are raising our forecast to USD 1,300.

Spring rally for coffee but weak wheat prices

After the winter, wheat prices have come under pressure, with high safety stocks worldwide and good conditions for the new harvest to be good. Coffee prices have jumped by 18% in March. Rising coffee prices in the spring are not unusual and according to the seasonal pattern, the price usually holds up until May.

Martin Jansson, Strategist | nija03@handelsbanken.se

Råvaruplanket — Bottenkänning för råvaror

Lägre oljepris i nästa rörelse
Efter mars månads oljeprisuppgång ser vi nu flera tecken på att resan närmar sig vägens slut och att nästa rörelse blir nedåt. Skifferoljan flödar inte längre, Nigeria och Irak har haft produktionsstörningar och inte minst spekulerar marknaden i en minskad produk-tion från OPEC och Ryssland. Vi går på tvären mot konsensus och tror att alla dessa drivkrafter ligger bakom oss och att priset når 30 snarare än USD 50.

Gruvbolagen stärker basmetallerna

Om oljeprisbotten fortfarande ligger framför oss tror vi att basmetallerna träffat den cykliska botten efter fyra års nedgång, i alla falla som grupp. Kopparproduktionen ser fortfarande något för hög ut men för zink, nickel och aluminium har det skett en massiv rebalansering av marknaden på producentsidan. Vi håller zink som den basmetall med bäst fundamenta och höjer prognosen till USD 2100.

Fed fångad i fällan
Fed:s magra räntehöjning har gett den största guld-uppgången över tre månader sedan eurokrisen härja-de. Förnimmelsen av att Fed hamnat i en situation där man inte kan styra ekonomin med räntevapnet skapar ett starkt behov hos investerare att parkera en del av pengarna i en säker hamn. Vi tror inte Fed:s situation kommer förbättras de kommande sex månaderna och trots att guld redan passerat vår starka tro på 12% högre pris i år så höjer vi prognosen till USD 1300.

Vårrally i kaffe men svaga vetepriser
Efter övervintringen har vetepriset kommit under press, med höga säkerhetslager världen över och goda förutsättningar för en ny bra skörd. Kaffepriserna har rusat med 18% under mars, inte helt ovanligt med stigande kaffepriser på våren och enligt säsongsmönstret brukar priset vara starkt fram till maj.

Martin Jansson, Strategist | nija03@handelsbanken.se

Shale to fail — Survival of the fittest

• We see zero chance of OPEC agreeing to cut production this year
• US shale oil is the new Chinese steel industry - full of zombies
• Short-term upside, but long-term downside in crude oil prices

Martin Jansson, Strategist | nija03@handelsbanken.se