Commodity Morning Call: Forecast rise in inventories sends crude lower

Brent crude futures fell during Asian trading as attention centred on US crude stock data. A Bloomberg survey pointed towards a US crude stock gain of 2.2 million barrels last week. Last week traders were caught out by a 7.1 million barrel rise in crude inventories, three times larger than expected. Increased stocks provide further evidence that the US consumer may be baulking at further gasoline price increases. A rise in oil prices doesn’t seem to have affected US manufacturers yet though. Crude futures rose yesterday after the ISM PMI suggested manufacturing activity in March was stronger than expected.

Cotton futures continued to edge down overnight as the bearish data from the USDA Prospective Planting report weighed on the market. In response to the release, Goldman Sachs lowered its 12-month average cotton price forecast to US0.75 per lb.

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Commodity Morning Call: Markets stable following conflicting Chinese data

Brent crude futures rose during Asian trading on Monday following the release of the official Chinese Purchasing Managers Index for March. Data showed manufacturing activity rose to the highest level in a year and significantly above forecasts. The data offered some assurance that Chinese economic growth is not suffering a ‘hard landing’ and that demand for crude in the second biggest consumer will remain relatively strong. However, as we discuss here a competing measure of Chinese manufacturing activity for March tells a different picture. Meanwhile hedge funds and other large speculators trimmed back bets on rising oil prices by 2.6% in the week ending 27 March, according to the latest CFTC Commitment of Traders Report.

Cotton futures were broadly unchanged. The chart below shows the markets reaction to the first the release of the HSBC China PMI and then the official PMI.

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Commodity Morning Call: Cotton Futures At 2-Month High Ahead of USDA Data

Brent crude futures rebounded during Asian markets after yesterdays sharp sell-off in crude prices was seen as dropping too far. Prices had dropped on a large rise in US crude stocks and speculation that the US, France and the UK will stage a release of some of their strategic oil reserves. Meanwhile US lawmakers yesterday introduced the latest bill seeking to expand sanctions on Iran.

Cotton futures traded around 94c per lb during Asian markets, the highest level in nearly two months ahead of US Department of Agriculture reports published Friday. These include the USDA’s World Supply and Demand Estimates report which is likely to show an upward revision to US export figures. Weekly US export data will also be released, with traders especially interested in Chinese demand for US cotton. Finally the USDA is also scheduled to release the Prospective Plantings report which gives an indication of US farmers cotton planting intentions.

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