Gold price surge adds glitter to tarnished miners
Gold miners are generating cash, boosting dividends and announcing plans to buy back shares.
Attention is fixed on Buenos Aires as Group of 20 leaders meet in Argentina and developments there in the coming hours will shape commodity trading over the next week. Presidents Donald Trump and Xi Jinping have a dinner date on Saturday to see if they can avert an escalation of the U.S.-China trade war. Also on the sidelines, Russia’s Vladimir Putin and Saudi Arabia’s Mohammed bin Salman are likely to discuss how to coordinate oil policy just days before the cartel’s producers meet in Vienna to discuss a possible supply cut in 2019.
Taken together, agreements, squabbles and comments made at the G-20 have the potential to trigger significant moves in everything from crude oil and copper to soybeans, LNG and gold. In a reflection of just how hard it is to call the result, Goldman Sachs Group Inc. said while continued escalation in the U.S.-China trade war is seen as the “most likely” outcome of the Trump-Xi session, a close second is a pause as the two sides agree to keep talking.
While the G-20 is the biggest item on the agenda, it’s not the only one. It’ll be a significant week for iron ore as mining giant Vale SA briefs investors in London and New York on the state of the global market and separately, Singapore Exchange Ltd. starts trade in a new contract for high-grade material. In Europe and the U.S., the future of agriculture is up for discussion. And lastly, there’s an update on what Elon Musk’s Tesla Inc. has been up to Down Under.
Hungry for Change
The outcome of Trump’s meal with Xi in Buenos Aires on Saturday has the scope to boost or trash commodities that have been buffeted all year by their trade stand-off. Officials from both sides have been working on the contours of a possible deal that the leaders can announce after the plates have been cleared away and critically, a road map for more talks to follow.
In the lead-up to the meal of the year, Trump has blown hot and cold, both talking tough and threatening to push on with his tariffs-driven strategy, while also opening the door to a deal between the world’s two largest economies. Still, even if a broad-brush agreement does come in Argentina, there’ll be a vast array of very tough details that still need to be fixed.
Saudi’s Tough Choice
OPEC ministers and delegates gathering in Vienna have paused working on draft communiques as they await clarity from the G-20 summit in Buenos Aires. That meeting is likely to shape the oil market in 2019 and affect everything from the war in Yemen to the share price of Exxon Mobil Inc.
The choice facing Saudi Arabia is dramatic: cut oil production and enrage Trump, or keep pumping and risk ultra-low prices blowing up its economy. Following the murder of Jamal Khashoggi in the Saudi consulate in Istanbul, Mohammed bin Salman, the kingdom’s crown prince and day-to-day ruler, needs Trump’s political protection. The other key player is Vladimir Putin, after Russia and Saudi Arabia spent the past two years working together to manage the oil market.
The Miner Details
It’ll be an important week for iron ore, which has been badly beaten up in November. Brazilian mining giant Vale will meet with investors in New York on Tuesday and in London on Thursday to discuss the company’s expansion plans and its outlook for demand. The world’s largest producer of the raw material used in steelmaking has benefited as Chinese mills boost purchases of higher grade ore that contains less impurities.
Aside from the miner’s take, investors will also track developments in Asia where Singapore Exchange Ltd. will on Monday introduce a much-anticipated futures contract that’ll allow bets on high-grade material — just the kind that Vale supplies. China’s moves to battle pollution have spurred rising demand for top-quality ore over the past two years, widening spreads between grades.
Switched On?
For better or worse, Elon Musk doesn’t do low key. The headline-grabbing entrepreneur famously won a bet with fellow tech billionaire Mike Cannon-Brookes that his company could install a 100-megawatt storage facility within 100 days Down Under to help support the South Australia’s blackout-plagued grid. Following that wager win, it’s now time for an update on operations at the plant that was touted then as the world’s biggest lithium-ion battery.
For stories related to Musk’s Tesla and Australia’s power crisis: Musk Wagers Tesla Can Quickly Fix South Australia Power Woes Musk’s Battery Boast Will Be Short-Lived as Rivals Go Bigger Where Cheap Power Matters More Than Risk of Climate Disaster.
While it may be hard for outsiders to grasp quite why Australia — laden with coal, blanketed by sunshine, and blessed with extraordinary troves of gas offshore — can’t manage to keep the lights on, Musk’s offering, owned by French company Neoen SA, helps to highlight the future as new forms of power and technology come to the fore. The briefing comes on Wednesday, and while Musk himself won’t be on hand, executives will provide their latest thoughts.
Feed Me
What could be more important than where our next meal is coming from at a time of trade-war disruption, climate change, new technology and shifting diets? All that, as well as immediate reaction to the outcome from the G-20 meet, will be scrutinized next week at two major conferences. In Brussels on Thursday, Phil Hogan, the European Commissioner for Agriculture and Rural Development, will feature in the opening session of the 2018 EU Agricultural Outlook Conference. The event will examine issues from blockchain to biofuels, with input from a range of commentators, including supermarket operator Carrefour SA and food giant Nestle SA.
Before that in Chicago, U.S. Agriculture Secretary Sonny Perdue and industry experts including farmers and analysts will convene at DTN’s 2018 Ag Summit. Perdue is expected to discuss prospects for global trade and the economic outlook as it relates to agriculture. With soybeans caught in the crosshairs of the U.S.-China trade war, market watchers will be eager to hear early updates from the G-20 and signs of a deal between the two countries.
Bulls Versus Bears
The outlook is turning positive in the soybean market, with bulls outnumbering bears by the most since July, according to a Bloomberg News survey. Sentiment is shifting on optimism the leaders of the world’s two biggest economies could call a trade truce during their meeting this weekend.
In the gold market, traders are bullish for a third week as dovish comments from the Federal Reserve on the outlook for interest rates bolster the appeal of the non-interest bearing metal. Respondents were also bullish on sugar, while sentiment was mixed for crude oil and natural gas. Terminal subscribers can see the other commodity surveys here.
For the Diary
SATURDAY, DEC. 1
Group of 20 wraps up meetings in Buenos Aires. Presidents Donald Trump and Xi Jinping plan to meet over dinner.
MONDAY, DEC. 3
Glencore Plc investor update call U.S. Agriculture Secretary Sonny Perdue speaks at Ag Summit in Chicago Singapore Exchange Ltd. starts trade of high-grade iron ore futures The 24th Conference of the Parties to the UN Framework Convention on Climate Change (COP24), Katowice, Poland, through Dec. 14. Discussions will focus on implementing the 2015 Paris Agreement PNG Mining and Petroleum Investment Conference, Sydney, through Wednesday. Speakers include PNG Prime Minister Peter O’Neill, Oil Search Ltd. MD Peter Botten Benchmark Minerals press briefing on battery metals, London USDA soybean crush and corn for ethanol
TUESDAY, DEC. 4
Vale SA holds Vale Day, New York Abares Australian crop report China National Grain and Oils Information Center (CNGOIC) estimates on country’s grains supply and demand, including corn, soybeans Australia weather bureau El Nino outlook 24th Annual Asia International Coffee Conference, Ho Chi Minh City, through Thursday API Oil Inventory report Federal Energy Policy Summit, through Thursday
WEDNESDAY, DEC. 5
Federal Reserve Chairman Jerome Powell testifies on the economic outlook before Congress’s Joint Economic Committee LBMA seminar, biennial dinner, in London. Speakers include LBMA CEO Ruth Crowell, HSBC Plc’s James Steel, Suki Cooper from Standard Chartered Plc Event to mark one year since start of Tesla Inc./Hornsdale battery in South Australia China Nuclear Engineering holds EGM 24th Annual Asia International Sugar Conference in Ho Chi Minh City, through Thursday EIA crude inventory report BofAML 2019 Year Ahead Event S&P Global Platts Global Energy Outlook Briefing Newmont Mining Corp. guidance
THURSDAY, DEC. 6
OPEC ministerial meeting, Vienna, with delegates including Saudi Energy Minister Khalid Al-Falih. Click here for Top Live blog Bloomberg hosts ‘‘The Year Ahead’’ in Tokyo. Global CEOs talk about trends and challenges in the year ahead Russian refining maintenance schedule from ministry EU Agricultural Outlook conference, Brussels, through Friday. Speakers include European Commissioner for Agriculture and Rural Development Phil Hogan Vedanta Zinc Ltd. site visit at Gamsberg project, South Africa UN FAO Food Price Index Vale SA executives hold Vale Day, London S&P Global Platts Analytics Outlook Themes 2019 EIA natural gas storage report Federal Energy Policy Summit U.S. Census Bureau Oil Exports U.S. soy, wheat, corn export sales
FRIDAY, DEC. 7
OPEC, non-OPEC meet, press conference Funding set to end for some U.S. federal agencies, leading to a partial government shutdown unless Congress approves budgets The U.S. jobs report. Economists expect payroll growth stayed strong in November with 205,000 gain Baker Hughes rig count ICE weekly commitments of traders report for Brent, gasoil CFTC weekly commitments of traders report on U.S. futures and options Origin Energy Ltd. investor day webcast, Sydney Agroinvestor magazine agriculture conference, Moscow. First Deputy Agriculture Minister Dzhambulat Khatuov, Ros Agro Plc CEO expected to attend
SATURDAY, DEC. 8
China’s customs office commodity & energy trade data for November, including crude oil, gas, coal, steel, iron ore, soybeans China’s National Bureau of Statistics may publish country’s grains output in 2018, including corn, wheat.
(Reporting by Jake Lloyd-Smith and Mario Parker.)
