Commodity Roundup: Oil prices fall; China’s soybean imports lowest since 2019 – data

March 7, 2024

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Crude oil prices changed course to tick lower on Thursday as investors assessed Chinese trade data and the Federal Reserve’s monetary policy path, with some market participants expecting a delay in rate cuts. Less than expected build in U.S. crude stocks had earlier helped lift oil prices.

Both oil benchmarks edged up about 1% on Wednesday after crude inventories rose for a sixth week in a row, building by 1.4 million barrels, about two-thirds of the 2.1 million-barrel rise analysts had forecast in a Reuters poll. Gasoline and distillate stocks fell more-than-expected, the EIA data also showed.

Meanwhile, recent trade numbers from China show that crude oil imports in the country rose 3.3% YoY to 10.74MMbbls/d over the first two months of 2024. “However, the overall buying trend remains soft as the purchases were lower when compared to imports of 11.39MMbbls/d in December. China has been slowing its overseas purchases primarily due to slowing demand from refineries, weak economic indicators, and higher inventories,” ING reported. Turning to agriculture commodities, soybean prices were trading lower, after data out of China suggested a drop in imports.

“China’s soybean imports fell 8.8% YoY to 13.04mt for the first two months of the year, compared to 14.3mt for the same period last year. These were the lowest imports for the period since 2019. Lower feedstock demand due to restrictions on pig production capacity is estimated to have hit soybean consumption in the country,” ING’s Ewa Manthey and Warren Patterson wrote. Wheat and cocoa prices were trading higher.

Stocks to watch out for: NextDecade (NEXT), Summit Midstream (SMLP), Kolibri Global Energy (KGEI), Dawson Geophysical (DWSN), Viper Energy (VNOM), W & T Offshore (WTI), ProFrac Holding (ACDC), Crescent Energy (CRGY).

Elsewhere, copper prices rose, while precious metals traded in mixed territory, with gold (XAUUSD:CUR) held firm after Federal Reserve Chair Jerome Powell reiterated the central bank likely will reduce interest rates this year. Spot gold was up +0.39% at $2,156.59 an ounce by 6 am ET.

As per ANZ, China’s focus on high quality development in new, emerging sectors is likely to see the country’s consumption of commodities continue to shift and evolve. Brokerage expects demand for high value-added commodities continuing to rise.