Last Week's European Commodity Winners
Cocoa #7 (CAH25), +8.65%
The forward curve points downward for 2024 and the rest of 2025. The market is discounting more supply on the market in the middle term. In contrast, Ghana is hoarding beans, which is keeping up current prices. Ivory Coast port volume at 365,000 mt represents 26% more than from last season.
Cocoa is reaching the key level of 5,500, tested last week and on the week of Oct. 14. Weekly prices are moving above the 10, 20, and 50-unit EMAs; however, since the last week of June, we see a range with a bottom at 4,485 and a top at 5,405.
The last candle looks promising, but it has to go past 5,500 for a full week to declare a breakout. The RSI marks 66.93 and is approaching the 70 oversold area. This indicator has been very reliable in the past for this contract, so watch out this week for a possible pullback.
Crude Oil Brent (CBF25), +5.29%
The Brent forward curve is pointing downward for the rest of 2024 and all of 2025, which shows a market not so much concerned about the current conflict in the Middle East. OPEC+ just announced it is delaying plans to increase production. This, again, is showing concerns about the demand outlook for 2025.
Still, the Persian Gulf produces about a third of oil global supplies, and traders should follow the current Israel-Iran conflict very closely.
The Brent contract is above the 10 and 20, and is trying to break the 50 (70.43) EMA. It is at a key level now and if it remains this week above the 50 EMA it could be a great opportunity for long positions.
European Commodity Losers This Week
UK Natural Gas (NFZ24), -5.56%
Reported reduced wind speeds are driving up gas demand for power generation. As mentioned, the UK has limited storage capacity and is currently very dependent on European supply. This has the potential to increase volatility. The situation seems to favor long positions for now.
UK Natural Gas is now trading below the 50 EMA (102.29) after a sharp drop from the peak of 111.5 on October 25th. The daily RSI marks 49.34 and is in a neutral area.
Aluminium Hg 3M Cash (P4Y00), -2.89%
Last LME stocks at 741,900 t are still well below the historical average. It was 1.9 million in March 2021. LME reported Net Fund Position for Oct. 25 was 102,490, which shows a healthy volume in long positions.
Goldman Sachs revised its 2025 aluminium price forecast upwards to $2,700 per ton from $2,540, expecting stronger demand in China following the economic stimulus. Technically, prices are struggling to hold the uptrend initiated on Sept. 11.
Prices are now below the daily 10 EMA (2,624), 20 EMA (2,613) and are looking to test the 50 EMA (2,560.). This last average presents a great opportunity for long traders to enter positions. Should prices break down the 50 EMA, it will present opportunities for short traders.
Robusta Coffee 10-T (RMF25), -4.89%
In Vietnam (top producer), there were some heavy rains last week which reduced the outlook for the next harvest. Tropical storm Trami and its heavy rains might have an impact on robusta coffee,although it is not yet clear by how much. Flooding in the region remains the main risk.
The forward curve remains down for the rest of 2024 and most of 2025, which reflects expectations of increased supply.
Robusta contracts are well under the 10 (4,414), 20 (4,519), and 50 (4,567) daily EMAs. The trend remains down since the change in trend on Oct. 2.
The current daily RSI marks 38.53 and still in neutral territory. Short traders can continue to ride this trend as long as daily candles remain below the 10 EMA.
On the date of publication, Cesar Marconetti did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
