The Eurozone in Trouble? Again…?
“That sinking feeling (again)” was the stark headliner from the Economist on the state of the Eurozone economy (click here). After a period of optimism spurred by Mario Draghi’s pledge to do “whatever it takes” to save the Euro, the Eurozone seems once again to be heading towards zero-growth and deflation (click here). As economies like the United States and the United Kingdom continue to recover, it becomes harder to ignore the possibility that the Eurozone may indeed be in need for structural reforms or some sort of stimulus (click here and here). However, “Super Mario” does at least for now show determination to follow through with his pledge, and pulled out his “bazooka” to provide some of the quantitative easing that many analysts and economists have called for (click here).
As for the commodity markets, we have previously referenced news about bumper harvests across a wide range of agricultural commodities, and the media continues to bring reports about how near-perfect weather conditions are supporting crops around the world (click here). While the most optimistic reports have come from corn and soybeans, other agricultural commodities also signal potential price declines. Cotton farmers in the United States also had a good harvest (click here), while Thailand is contemplating a big sell-off of the country’s rubber inventory (click here). Even sunflower oil and palm oil prices seem to be heading downwards (click here).
Speculation in commodity markets is and will always be a hot topic. We have already written extensively about this topic in previous articles (click here), and Kairos Commodities continues to monitor the activities of speculators on major commodity exchanges in the United States. While the US exchanges usually have provided a good picture on what the “smart money” is doing, there has always been a piece missing in terms of the metals traded on the London Metal Exchange (LME). The good news is that the LME now produces its own “Commitment of Traders” report to show the overall position of various groups of traders (click here). The most recent reports indicate that aluminium and zinc in particular have captured the interest of bullish speculators (click here).
Speaking of metals, the market for iron ore continues to raise eyebrows. While other metals have rallied, the key ingredient in steel continues to surprise as it recently reached a new multi-year low (click here). As usual, theories for the depressed iron ore market are plenty. However, this time the media has managed to trace the problem back to either demand or supply (click here) – quite an accomplishment. Jokes aside. Steel is arguable the World’s most important metal and we have previously emphasized iron ore as an important price driver (click here). As always, we recommend our readers to stay up to date on the latest developments on the Kairos portal to see whether steel prices will stay depressed or join the wider metal rally.