Commodities
Factbox-US government shutdown: agriculture data hit
© Reuters. FILE PHOTO: A general view of the U.S. Capitol, where Congress will return Tuesday to deal with a series of spending bills before funding runs out and triggers a partial U.S. government shutdown, in Washington, U.S. September 25, 2023. REUTERS/Jonathan E
CHICAGO (Reuters) – The release of commodity market-sensitive reports released by the U.S. Department of Agriculture (USDA) and other government agencies will be suspended if Congress fails to provide the government with funding for the fiscal year starting Sunday.
During shutdowns, nonessential government employees are typically furloughed, or placed on temporary unpaid leave. Workers deemed essential, including those dealing with public safety, food safety, and national security, keep working.
Private exchange operators such as the CME Group (NASDAQ:) are generally not affected. But routine government reports have in the past been delayed until the government reopens.
“Market reporters will pause USDA’s market news reports that help farmers, ranchers, commodity traders, and buyers determine the market value of goods, creating uncertainty in the marketplace with detrimental ripple effects for farmers who need to sell their products,” a USDA spokesperson said.
Below is a schedule of key reports planned for release in October and how they may be affected, depending on how long a shutdown lasts.
Monday, Oct. 2:
Weekly U.S. grain export inspections data, released by USDA’s Agricultural Marketing Service each Monday at 11 a.m. ET (1500 GMT), will not be published, according to the USDA spokesperson. Inspections reports were released during the 2019 shutdown as some personnel continued to work.
Monthly reports on U.S. grain crushings and fats and oils, including U.S. soy crushings, released by USDA’s National Agricultural Statistics Service (NASS) on the first business day of each month at 3 p.m. ET (1900 GMT), would also be suspended.
A weekly U.S. crop progress report, released by USDA’s NASS each Monday at 4 p.m. ET (2000 GMT), would be suspended, according to the USDA spokesperson. Farmers and traders rely on the report for harvest progress and crop condition data.
Wednesday, Oct. 4:
The U.S. Energy Information Administration said on Friday that a government shutdown would not have any immediate impact on the release schedule for its weekly oil inventory data, which includes figures on production and stocks of corn-based ethanol. The EIA releases its report each Wednesday at 10:30 a.m. ET/1430 GMT.
Thursday, Oct. 5:
Weekly U.S. export sales data, released by USDA’s Foreign Agricultural Service each Thursday at 8:30 a.m. ET (1230 GMT), would be suspended. Multiple weeks of export sales data delayed by two previous government shutdowns were later released in single, combined reports once the government reopened.
USDA Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor told reporters on Thursday the export sales report “is not produced while the government is shut down.” Taylor said the report “is a critical tool for market intelligence for our exporters and for our industry in the United States.”
Friday, Oct. 6:
The U.S. Commodity Futures Trading Commission’s weekly Commitments of Traders reports, which detail the size of positions in options and futures, will not be published if there is a shutdown, a CFTC spokesperson said. When the reports were disrupted during the last shutdown, CFTC backfilled the data over a period of weeks after the government reopened. Released each Friday at 3:30 p.m. ET (1930 GMT).
Thursday, Oct. 12:
The monthly World Agricultural Supply and Demand report, set for release by USDA’s World Agricultural Outlook Board at noon ET (1600 GMT), would be suspended, according to a spokesperson for USDA’s Office of the Chief Economist. Farmers and traders are counting on the monthly report for an update on the size of the U.S. soy and corn harvests and how much the crops have been affected by late-summer dry weather.
Monthly crop production data, released each month by USDA’s NASS at noon ET(1600 GMT), would be suspended.
Friday, Oct. 20:
Monthly cattle on feed report, released by USDA’s NASS at 3 p.m. ET (2000 GMT), would be suspended, according to a USDA spokesperson. The report gives livestock traders and ranchers an estimate of the number of cattle in feedlots at a time when the U.S. herd is shrinking.
Wednesday, Oct. 25:
Monthly cold storage report, released by USDA’s NASS at 3 p.m. ET (2000 GMT), would be suspended, according to a USDA spokesperson. The report details supplies of everything from frozen meats to orange juice in storage.
Investing.com — Oil prices settled lower Friday, ending the week with a loss as weaker U.S. nonfarm payrolls stoked concerns about an economic-led slowdown in crude demand.
At 2:30 p.m. ET (1430 GMT), the futures (WTI) traded fell 2.1% to settle at $67.67 a barrel, while contract fell 2.2% to $71.06 per barrel.
U.S. economic slowdown worries resurface after weak jobs report
The US economy added fewer jobs than anticipated in August, but rose from a sharply revised July figure, according to Labor Department data that could factor into the Federal Reserve’s next policy decisions.
Nonfarm payrolls came in at 142,000 last month, up from a downwardly-revised mark of 89,000 in July. Economists had called for a reading of 164,000, up from the initial July mark of 114,000.
Following the release, bets that the Fed will introduce a deeper 50 basis-point rate cut — rather than a shallower 25 basis-point reduction — increased.
Concerns about the demand come just a day after OPEC+ said it had agreed to postpone a planned increase in oil production for October and November.
U.S., Europe working on Iran sanctions
Geopolitical tensions ratcheted up on Friday after the U.S. and Europe they were working on sanctions to impose on Iran after the Tehran sent missiles to Russia.
The U.S. had previously warned Iran about transferring missiles to Russia, saying it would represent a major escalation in Iran’s support of Russia’s war against Ukraine.
(Reuters) – Goldman Sachs adjusted its expectations for OPEC+ oil production saying it now expects three months of production increases starting from December instead of October, the bank said in a note on Friday.
OPEC+ has agreed to delay a planned oil output increase for October and November, the producers group said on Thursday after crude prices hit their lowest in nine months, adding it could further pause or reverse the hikes if needed.
However Goldman Sachs maintained its range of $70-85 per barrel and a December 2025 Brent forecast at $74 per barrel.
The investment bank expects the effects of a modest reduction in OPEC+ supply in the upcoming months to be counterbalanced by easing effects from the current softness in China’s demand and faster-than-expected recovery of Libya’s supply.
“We still see the risks to our $70-85 range as skewed to the downside given high spare capacity, and downside risks to demand from weakness in China and potential trade tensions,” Goldman Sachs said.
Brent crude futures were down $1.63, or 2.24%, to $71.06 a barrel on Friday, their lowest level since December 2021. U.S. West Texas Intermediate crude futures fell $1.48 on Friday, or 2.14%, to $67.67, their lowest since June 2023. [O/R]
Investing.com — Strategists at Citi Research said oil prices could decline to around $60 per barrel by 2025, citing a significant market surplus as the primary driver.
While recent supply disruptions in Libya and a delayed production cut unwinding by OPEC+ have offered short-term support for Brent prices in the $70-72 range, Citi views this as temporary.
“At the time of writing, markets have not reacted to the OPEC+ decision, with Brent around flat to the 4 September close. Still, the Libyan situation could take months rather than a week to resolve, strategists wrote.
They highlight the likelihood of a strong market surplus emerging next year, pushing prices lower.
“We recommend selling on a bounce toward ~$80 Brent, as we look ahead to moves down to the $60 range in 2025 as a sizeable market surplus emerges,” the note states.
OPEC+ has delayed the start of its planned production cut unwind from October 2024 to December 2024, with the process now set to conclude by the end of 2025. This decision comes in response to recent market weakness and price declines, despite ongoing disruptions to Libyan oil supplies and broader economic concerns in the U.S. and China.
Separately, Bank of America’s Commodities Research team has revised down its price forecast to $75 per barrel for the second half of 2024, down from nearly $90, and for 2025, reduced from $80.
The team cites concerns about growing global oil inventories despite assuming OPEC+ will delay planned production increases. They note that weaker demand growth, combined with record OPEC+ spare capacity exceeding 5 million barrels per day, has dimmed the outlook for oil prices.
“In effect, we now see Brent oil prices moving from the top toward the middle of our unchanged $60-80/bbl medium-term range faster than previously warned,” BofA strategists said. This surplus in capacity, along with slower demand, also reduces the risk of price spikes from potential geopolitical disruptions.
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