Surprisingly, last week's action in Europe shows little upside action in commodities, with the Stoxx index topping the ranking. I seldom touch on equities, but this time ECB rates warrant it.
Last Week's European Commodity Winners
Rapeseed (XRG25), +0.9%
Rapeseed futures are showing moderate wins after Canada announced plans to reduce electric vehicle (EV) tariffs for China. Before that, European rapeseed markets had been under pressure after the start of China´s anti-dumping probe on Canadian rapeseed.
However, according to Germany´s vegetable oil trade group (UFOP), global rapeseed production is forecast to be below demand for the 2024-2025 season.
The contract has been locked in a range since June 2023, making a top at 510 and a bottom at 410. The latest weekly 14-unit Relative Strength Index (RSI) at 62 is in neutral territory.
Stoxx E600 Banks Futures (DVX24), +0.56%
The big news here is that German producer prices fell 1.4% year over year, with another decline of 0.8% in the previous month. Added to that, last week the ECB cut rates to 3.25%, and Fitch ratings just raised Italy´s Outlook to Positive.
The index is firmly on an uptrend above the 10, 20, and 50-unit exponential moving averages (EMAs).
The current interest rate context supports long positions.
Last Week's European Commodity Losers
Robusta Coffee 10-T (RMF25), -7.19%
Robusta is trading at 2-month lows as a result of good news from Brazilian weather and speculators reducing positions. Vietnam is to announce the harvest result next month.
Weekly prices have broken down the 10 and 20 EMAs in the last 3 weeks, with the last 4 candles in red and even showing a bearish gap from 4 weeks ago.
The RSI at 51 is in neutral territory, and the mood is now clearly bearish. If the weekly current candle remains below the 20 EMA this week, this will encourage further short selling.
Tin Refined 3M (Q2Y00), -5.72%
China is showing weak demand, and despite the current fiscal stimulus, the market is not reacting for lack of details. Factory output and weak domestic demand in China are the negativeforces in this market.
On the other hand, there are serious supply concerns in tin mines in Myanmar's Wa State, given political instability there.
The price action of tin is not doing much since April 2024. It is locked in a price range with the bottom at 29,000 and top at 35,000. Prices and the EMAs show no direction here; the only reliable entry point for longs is the 50 EMA, currently at 30,321.
Nickel 3M (P8Y00), -5.41%
Papua New Guinea announced the discovery of more nickel reserves at the Wedei prospect. The depressed real estate market activity in China and lack of clarity on its latest fiscal stimulus has increased the bearish sentiment.
In contrast, the nickel forward curve is sharply pointing upwards, showing optimism for the coming months and throughout 2025.
The weekly chart keeps trading in a wide range that started in September 2023, with a bottom at 15,900 and a top at 21,500.
Long traders have a chance in the next sessions as prices are nearing the bottom to trade the range.
