The net longs by “Specs” in Agri Commodities, as of 23 May 2023 was 35% lower than December 2022. Some Commodities “suffered” more. We had long liquidation or greater shorts like Corn53%, Soy Complex45%, Wheat 10%, but Sugaronly9%. We also had some “good” news for Coffee with greater longs as well Cocoa and short covering for Cotton.
POSSIBLE PRODUCTION SETBACKS We are running into possible production setbacks with the return of the El Nino, but the later it develops the lower the risk for crops this year.
Freight When it comes to logistics risk, freight is still struggling to recover from hefty drops in the past 12 months, but we are still running some routes at higher levels than before the pandemic.
Crude Looking at Crude which tends to lead the general appetite for Commodities, well Crude is also struggling to make a comeback as most players are paying greater attention to a slower demand recovery than the risk of lower production than expected demand, later on. Crude perhaps has a good underlying story with the risk of production disruptions in the Gulf of Mexico as we start the hurricane season in June that will last till November.
The US is also expected to re-build their strategic petroleum reserves and some US politicians are asking for the US to stop Crude Oil exports again.
In general terms, OPEC+ is trying to keep the S&D tighter by cutting production to the point the world demand keeps exceeding supply and prices reflect the tighter market. For the time being “Specs”, which could help OPEC+ cause are not playing the game!
THE US IS ALSO EXPECTED TO RE-BUILD THEIR STRATEGIC PETROLEUM RESERVES AND SOME US POLITICIANS ARE ASKING FOR THE US TO STOP CRUDE OIL EXPORTS AGAIN.
19 | ADMISI - The Ghost In The Machine | Q2 Edition 2023
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