Last Week's European Commodity Winners
Robusta Coffee 10-T (RMH25), +9.74%
Brazil is experiencing its worst drought on record this year, affecting its crop output (Arabica type). Vietnam, global top producer of Robusta type, also experienced its worst drought in 10 years. The weak Brazilian real should encourage more exports from Brazil; however, that effect still is not compensating for the supply issues.
Prices are above the 10 (4,998), 20 (4,895), and 50 (4,7018) exponential moving averages (EMAs), confirming a strong uptrend. Robusta daily price action showed a firm support at the 50 EMA (4,701), sharply recovering from the most recent drop.
The new dynamic support lies at the 10 EMA (4,998), and long traders will enter or add positions if prices return here. This level serves to quickly identify changes in trend, too.
The Relative Strength Index (RSI) marks 59, and is in neutral territory with the last 4 candles setting higher highs and higher lows, indicating that bulls are in control.
Stoxx E600 Banks (FAZ24), +5.17%
This instrument represents the performance of major banks in Europe, and its market situation reflects the current trend in interest rates.
The index has shown strong performance in 2024, with a year-to-date gain of over 30% attributed to rising interest rates in Europe. They outperformed the equity market for a fourth year now.
Having said that, the European Central Bank (ECB) outlook for 2025 rates does not point to further rises, so this sector could underperform as net interest income and earnings will decline in such a scenario.
The trend remains up, but it could soon be over if EU interest rates start to decline.
Rapeseed (XRG25), +3.11%
The current supply-demand situation for rapeseed reflects a tightening market.
Global production for the 2024/25 season is forecast at approximately 87.2–88 million tons, slightly reduced compared to previous projections due to lower output in key producers like Australia and the European Union.
Demand is estimated at 88.7 million tons, leaving a supply shortfall of around 1.5 million tons. This imbalance is driven partly by increased demand for rapeseed oil in biodiesel and renewable diesel production.
The contract is trading above the 10, 20, and 50-day EMAs, confirming the uptrend. The 10-day EMA has been a very reliable entry point since September, and failed only once.
European Commodity Losers
UK Natural Gas (NFF25), -8.35%
The UK natural gas market is currently in a relatively stable position as the country enters the winter of 2024/25. Demand is expected to remain flat compared to last winter, according to National Gas and S&P Global.
Last year, gas accounted for over 50% of electricity in the UK. European LNG imports are at their highest since January and Asia demand remains weak.
However, British utility giant Centrica is giving a different picture, with a warning of declining stocks by the end of winter as a result of higher demand and not enough wind power as alternative.
Prices are in a sharp downtrend well below the 10, 20, and 50-day EMAs, and testing the 50 EMA. Short positions are in control, and if the 50 EMA is broken down, then expect more volatility. The RSI marks 43.89 and still has room to prolong the current trend, as it has not reached the "oversold" area at 30.
Long traders may see an opportunity here if the 50 EMA is respected and we see a sharp bounce.
Zinc Special Hg Cash (Q3Y00), -1.80%
Refined zinc production is expected to rise by 3.3% to 14.3 million tons, creating an estimated global surplus of 400,000 tons this year. Major contributors to increased production include China and Australia.
Disruptions at key mining sites, such as Glencore’s (GLNCY) McArthur River mine, may temporarily tighten the supply.
The forward curve shows stable prices around 3,100 during 2025 and further declines later.
LME zinc stocks are at 278,850 tn, which is the highest since June 2021. Funds net positions are bullish at 30,901, as of Nov. 22.
Prices remain very close to the 10, 20, and 50-day EMAs, and most likely a range is forming between 2,950 and 3,100.
