New Wave COVID Angst

LME 3M copper tumbled more than 2.2% during London sessions to an intra-day low of US$8,702/tonne while the other base metals also traded lower but in a narrower range. For most of this week, gold has held relatively steady amid calmer Treasury yields, but is now facing headwinds from the strengthening greenback. Yesterday, gold was relatively resilient but only until the US Treasury 7y note auction result spurred yields higher again and weighed heavily on gold.

For Copper, China’s top copper smelters on Friday skipped setting their floor treatment and refining charges (TC/RCs) for copper concentrate in the second quarter. The floor price agreed for the first quarter is $53/t (5.3¢/Ib), while spot TCs have slid to around $30/t this month. Turning to aluminum, the latest data on Japan's shipments of rolled aluminum products add to the signs that demand from outside China recovering this year. February shipments posted a positive year-on-year change for the first time in 19-months, thanks to firmer demand from the auto industry.

Agriculture

In its latest weekly update, the Buenos Aires Grain Exchange left Argentina corn and soybean production estimates unchanged at 44mt and 45mt respectively. The exchange reported 7% of the current corn crop being harvested to date as against 15.8% at this stage last year and the 5-yr average of around 14% - due to heavy rains over recent weeks which have delayed the harvest. In Brazil, the latest UNICA data shows that sugar cane crushing in Center-South Brazil dropped to 1.7mt over the second half of March 2021 compared to c.3mt over the same period last year. However, sugar production in the region still increased by 24% YoY to 51kt, as millers continue to allocate a large share of cane towards sugar production.

Looking ahead for the next week, the USDA is scheduled to release its Prospective Planting report on Wednesday and expectations are that the USDA could increase its acreage estimates for both corn and soybean for 2021/22 compared to its initial estimates made in February 2021. According to a Bloomberg survey, the USDA could increase its corn acreage estimates to 93.1m acres in 2021/22, compared to its earlier estimates of 92m acres and acreage of 90.8m acres for 2020/21. The survey also shows that soybean acreage estimates could be revised higher to 90.1m acres for 2021/22 compared to 83.1m acres planted this year.

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Disclosure: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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