Texas Production Makes A Comeback

Moving away from the LME market structure, there is not much in the way of fresh developments on the fundamental side. The treatment charges squeeze has been weighing on smelters margins, and there have been media reports that China Copper, the top copper smelter based on aggregated capacity, is said to be considering production cuts. Such news only adds to the tighter outlook spilling from the concentrate market to the refined market, should meaningful cuts go ahead.

Lastly, the latest CFTC data shows that speculators decreased their net long position in COMEX copper marginally, selling 359 lots over the last reporting week, and leaving them with a net long of 87,312 lots as of last Tuesday. For precious metals, speculators reduced their net long in COMEX gold by 22,270 lots, to leave them with a net long of 83,581 lots, while increasing their net long in silver by 1,299 lots.

Agriculture

In its first estimates for 2021/22, the USDA expects that soybean ending stocks in the US could increase by around 25m bushels next year, after falling by around 405m bushels this year on the back of higher shipments to China. For next year, production could increase by around 400m bushels as higher prices prompt farmers to plant more soybeans, while demand remains stable at higher levels. Exports are expected to remain elevated at around 2.2b bushels, mainly on firm demand from China. Similarly for corn, the USDA expects ending stocks to increase by around 50m bushels to 1,552m bushels at the end of 2021/22, after the withdrawal of 417m bushels in 2020/21. The agency estimates that corn production in the US will increase by around 1b bushels next year on a very strong yield of 179.5bu/acre (+4.4% YoY) along with a recovery in acreage to 92mn acres. Exports are also likely to remain firm next year at around 2.65b bushels.

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