European Grain Harvests Expected to Jump on Better Weather -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil rises 0.1% to $82.79 a barrel.

--European benchmark gas rose 1.9% to EUR134.01 a megawatt-hour.

--Gold futures fell 1.6% to $1,790 a troy ounce.

--Three-month copper on the LME fell 1.1% to $8,427 a metric ton.

--Wheat futures edged up 0.4% to $7.53 a bushel.

TOP STORY:

European Grain Harvests Expected to Jump on Better Weather

Good growing conditions should boost Europe's grain harvests next year while sluggish economies would result in tepid demand for agricultural commodities, Strategie Grains said Thursday.

The French agricultural consultancy, in its first forecasts for the 2023-24 crop season, said corn production would jump to 63.7 million metric tons from 50.5 million tons in the previous season. The wheat harvest would also be larger, at 128.7 million tons compared with 125.5 million tons in the 2022-23 season, while the barley harvest would increase by 1.2 million tons to 52.5 million tons.

The strong harvest would be accompanied by small increases in demand--a result of modest economic growth--which in turn would see grains stocks rise and drive surpluses for wheat and barley higher.

OTHER STORIES:

China's Economic Activity Took Deeper Hit in November Due to Strict Covid-19 Measures

China's economic activity took a deeper hit in November, as strict Covid-19 measures disrupted factory production and weighed on consumption ahead of a sudden loosening of the country's long-running "zero-Covid" policy at the end of the month.

Retail sales, a key gauge of China's domestic consumption, fell 5.9% from a year earlier, compared with a 0.5% on-year decrease in October and below the 3.3% decline expected by polled economists, according to data released Thursday by the National Bureau of Statistics.

Industrial production rose 2.2% from a year earlier in November, slowing sharply from the 5.0% growth in October. Economists surveyed by The Wall Street Journal expected industrial production to have increased 3.7%.

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Bill Gates-Backed Startup Plans Large Solar Power Component Plant

A startup backed by investors including Bill Gates is racing to build what could be the first silicon wafer factory for solar panels in the U.S., the latest example of the influence of recent legislation offering tax credits for green-energy projects.

Silicon wafers are a key piece of the solar supply chain, and China controls 97% of it. There are currently no factories to make wafers for solar panels in the U.S., and the Energy Department has said building them should be a priority, since they could encourage faster development of other parts of the solar manufacturing industry as well.

The wafer startup, Massachusetts-based CubicPV Inc., plans to build a plant by 2025 that can produce enough material for 10 gigawatts of solar panels a year -- sufficient to supply roughly 80% of the large-scale solar projects installed last year -- at a cost of around $1 billion, said Frank van Mierlo, the company's CEO.

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UK Energy Watchdog Sets Out New Framework for Onshore Transmission Regulation, Funding

U.K. energy-markets regulator Ofgem said Thursday that it has published its Accelerated Strategic Transmission Investment, or ASTI framework, streamlining the onshore transmission regulatory approval and funding process.

The regulator said it has introduced the new framework in response to the U.K. government's Energy Security Strategy, accelerating the transition away from fossil fuels and setting out targets to promote energy security, including connection of up to 50 gigawatts of offshore wind capacity by 2030. However, the existing onshore transmission network can't support this substantial growth, Ofgem said.

MARKET TALKS:

European Natural Gas Supplies Rise Countering Higher Demand

1148 GMT - Natural gas supply to Europe has increased during the latest cold spell, likely keeping a lid on rising gas prices. Gas supplies have risen to 13.1 terawatt-hours a day, according to figures from SEB, compared to 10.5 TWh/day in early November. LNG imports have accounted for 1.6 TWh/day of that increase, while Norwegian and African pipeline supplies have also ticked higher. Still, the brief but frigid cold snap has boosted demand to 16.6 TWh/day in early December, compared to 13.7 TWh/day in late November, likely resulting in some drawdown of European stocks which nonetheless remain larger than average for the year. Benchmark TTF futures gains 2.2% to EUR134.44 per MWh. ([e-mail])

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Palm Oil Weakens After Recent Gains

1024 GMT - Malaysian palm oil ended lower, weakening after gains over the past two sessions. Concerns about global growth next year have again come to the fore after the Fed raised interest rates by 50 bps and signaled more increases next year. The prospect of a global recession holding back consumption might weigh on the vegetable oil's prices, analysts say, even if others expect supply risks to give support to the commodity's prices. The benchmark Bursa Malaysia Derivatives contract for February delivery fell MYR76 to MYR3,874 a metric ton. ([e-mail])

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Gold Slumps as Fed Signals Higher-for-Longer Interest Rates

0853 GMT - Gold prices tumble, reversing most of their gains from recent days after the Fed indicated higher-for-longer interest rates than most investors were hoping for after recent inflation data. Gold futures fall 1.5% to $1,790 a troy ounce. Gold had risen as high as $1,825 an ounce earlier this week as softer-than-expected inflation data boosted hopes that the Fed would slow the pace of its rate increases. While the Fed raised rates by a broadly expected 0.5 percentage points, officials indicated they expect rates to go as high as 5% to 5.5% and remain there until 2024. The dollar turned higher after the meeting, further weighing on gold. ([e-mail])

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Oil Halts Winning Streak After Fed Meeting

0837 GMT - Oil prices edge downward after Fed officials indicated they expect interest rates to reach higher-than-expected levels and keep them there until 2024. Brent crude oil weakens 0.7% to $82.11 a barrel, while WTI declines 0.9% to $76.53 a barrel. The declines threaten to halt three days of gains for Brent, the international benchmark for oil. The Fed's latest predictions on the course for interest rates come despite softening inflation data, which investors had hoped would make Fed officials less hawkish on rates. "Talk to any trader, and they will tell you they are at odds with the Fed inflation outlook," says Stephen Innes, managing partner at SPI Asset Management. ([e-mail])

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Copper Weakens; Analysts Still Upbeat on Demand-Supply Trends

0322 GMT - Copper prices are slightly lower in early Asian trade, in line with a broad downturn in base metals as risk appetite is weakened by the Fed's continued hawkish stance following a meeting overnight. But ANZ Research analysts reckon the metal's supply-demand dynamics look favorable. "China's reopening is sparking hopes of stronger demand in the not-too-distant future," they say. Supply concerns are also on the rise as Peru's political protests threaten to disrupt copper production and storage at a major mine. Three-month copper on the LME is down 0.9% at $8,437 a ton. ([e-mail])

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Chinese Iron Ore Gains, Extending Recent Uptrend

0257 GMT - Chinese iron-ore futures rise in early trade, building on recent gains amid expectations of stronger demand. Policy support for the property sector and easing Covid-19 curbs in the country are helping support prices of ferrous metals, Guotai Junan Futures says in a note. The most-traded May iron-ore contract on the Dalian Commodity Exchange rises 1.2% to CNY814.0 a ton. ([e-mail])

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(END) Dow Jones Newswires

12-15-22 0720ET