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Barry Callebaut identifies El Nino as having an impact on fuel prices and cocoa bean price, on the business.
El Nino could cause cocoa prices to rise by several thousand pounds per metric tonne, according to the chief executive of Barry Callebaut, one of 'the world's leading cocoa processors. El Nino, an 'climatic pattern that can increase temperatures and increase risk of extreme weather conditions, could reduce the yields of crops, including cocoa. This would limit supply and push up prices. Hein Schumacher, CEO of Hein Schumacher, said in a press conference that the prices shouldn't jump as much as they did over the past couple of years. London cocoa futures are trading at PS2,944 per ton ($3,964), down from over PS9,000 in April 2020. Schumacher said that "usually by the end of June and July you can sort of predict what El Nino will lead to." Barry, who was "very carefully" watching the phenomenon, noted the much higher rainfall in Ecuador, and the?much warmer temperatures in West Africa. World Meteorological Organization said that there is a 80% chance of an El Nino developing between June and August and a 90% probability it will last at least until November. El Nino occurs naturally every 2 to 7 years when weakening winds in the east Pacific cause surface water warming. This can cause higher temperatures around the world and disruptions to rainfall patterns, resulting in droughts and heavy rains in different regions. IRAN WAR-RELATED FUELS COSTS Schumacher said that he expected fuel to be the most affected by the war in the Middle East. Barry is concerned about the overall cost of next year. He said, "(Fuel has) a direct and indirect impact on our operations and on demand. We need to see how we can and want to mitigate that."
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Stocks rise as AI optimism offsets Middle East anxieties
The global stock markets rallied Tuesday,?boosted by new AI optimism following Anthropic's move towards a U.S. market listing. Meanwhile, oil prices and bond yields dropped on renewed hope of a U.S. Iran deal. Brent crude futures fell?more?than?1% to $94 per barrel, paring sharp gains from the previous session, after U.S. president Donald Trump announced that talks with Iran are ongoing. His remarks came despite reports that Tehran had suspended indirect talks with Washington for the end of hostilities. This has kept investors on edge about the efforts to end the war, which lasted three months. It also highlights the fragility and inadequacy of the ongoing ceasefire. The STOXX 600 index in Europe was up 0.8% this morning, thanks to a positive forecast by STMicroelectronics. AI ENTHUSIASM Anthropic announced on Monday that it had filed a confidential application for an initial public offering in the United States, beating rival OpenAI?in a closely-watched race to reach public markets. Alphabet, the parent company of Google, is also looking to raise $80 Billion in equity to finance its AI infrastructure expansion. This is a clear indication of the enormous sums required to keep pace with the AI arms race. Russ Mould said that it represents a major shift from a period where there was a lot of free cash to relying on the markets for funding its expansion. The Institute for Supply Management reported on Monday that the U.S. Manufacturing PMI increased to 54.0 from 52.7 in May, exceeding expectations of a four-year-high. This was likely due to firms placing orders early amid rising prices and concerns about supply linked to the Iran War. Futures for the S&P 500 & Nasdaq 100 are down about 0.1%. This indicates a weaker opening after both indexes had posted a record-breaking eighth consecutive gain on Monday. "This is the first time in a year that the S&P has had eight consecutive days of gains. If you consider the weekly moves, the S&P would have its 10th consecutive week of gains, something that hasn't happened since 1985, according to Jim Reid, Deutsche Bank's strategist. Nvidia's CEO Jensen Huang said in Taipei that the company had enough supply to support a strong growth of central processing units and graphics processing unit (GPUs), though he acknowledged that supply constraints are still a concern. South Korean equities are volatile. The benchmark KOSPI has swung sharply 'lower? after reaching a record high, as bellwethers such as Samsung Electronics and SK Hynix sawsawed. The dollar's value was largely stable on the currency markets. The dollar was broadly stable. The euro zone core inflation rate rose by?2.5% in May. This was above the expectations of 2.4% and April's 2.1%. Money markets are pricing in a quarter point European Central Bank rate increase this month. At least one additional hike is expected by the end of the year. The yield on the 10-year Treasury Bond in the U.S. fell by 4.4 basis points, to 4.43%. In Germany, it dropped by nearly 6 basis points, to 2.956%. Gold increased 1%, to $4,527 per ounce. Gregor Stuart Hunter, Singapore, contributed to this report. Stephen Coates, Mark Potter and Stephen Coates edited the article.
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Gold prices rise as oil prices drop, easing inflation and rate hike fears
Gold prices rose by more than 1% on Tuesday as a result of lower U.S. Treasury yields. Meanwhile, oil prices fell, easing fears about higher interest rates and inflation. By 0900 GMT, spot gold had risen 1% to $4,525.72 per ounce. U.S. Gold Futures for August Delivery rose 1.1% to $4,556. Oil prices dropped after U.S. president Donald Trump announced that talks with Iran are ongoing. Lower fuel prices reduce inflation fears and bets on higher interest rates. Gold is traditionally viewed as a "hedge" against inflation. However, in an environment of high interest rates it becomes less attractive as a non yielding asset. Ole Hansen, analyst at Saxo Bank, said that gold continues to take its cues from crude oil's influence on inflation and interest rates. The metal is in a short term?downtrend. A break above $4.630 would signal a more positive outlook and attract new momentum buying. The yield on 10-year U.S. Treasury notes fell by 1.1%, which reduced the opportunity cost for holding non-yielding gold. Lebanon announced a partial truce between Hezbollah, Israel and Lebanon on Monday. This would be a de-escalation in a conflict which has claimed thousands of lives and stoked the U.S./Israeli war against Iran. Investors are now awaiting the U.S. Nonfarm Payrolls Report?for May which is due this Friday to assess the resilience of the labour market amid mounting concerns about inflation due to the Middle East Conflict. This week, a number of Federal Reserve Board members will also be speaking, including Cleveland Fed president Beth Hammack and San Francisco Fed president?Mary Daly. "We remain optimistic over the long term as economic growth risk, worsening geopolitical relationships, currency 'volatility, and downside risks in equity?markets, will continue to support?gold's role as a?portfolio diversifier," ANZ stated in a report. Silver spot rose 2%, to $76.32 an ounce. Platinum gained 2%, to $1961.90, and palladium rose by 1.2%, to $1378.25.
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China is reportedly increasing its oil imports despite a decade-low.
Analysts and industry officials say that China will continue to draw on its record crude oil inventories, as refiners reduce imports while maintaining production curbs in order to minimize losses due to weak fuel demand. The tepid demand from the world's largest crude importer is partly limiting global oil prices. They have fallen 19% since May, despite a strained truce between the U.S.A. and Iran. And the Strait of Hormuz remains largely closed a third time. Beijing has taken a number of measures to protect the country against the soaring Middle East crude oil prices. These include maximizing domestic drilling for oil, limiting fuel exports, and offering extra import quotas in order to encourage the purchase of discounted Russian or Iranian oil. According to Kpler, the number of seaborne crude oil imports in May could be at their lowest level in over a decade, dropping from 8.1 millions barrels per day in April. Vortexa, another ship-tracking company, estimated that May's imports would be between 7 and 7.5 million barrels per day. China's crude imports fell 20% in April to 9.3 millions bpd. DRAWING? ON COMMERCIAL STOREYPILES In order to compensate for lower imports, refiners in the last three weeks have drawn from commercial inventories, at a rate around 1 million barrels per day. This is a stockpile which, according Vortexa and Kpler, peaked around 1.25billion barrels early in May. Ye Lin, senior analyst at Rystad, said that China is allowing its inventories to be drawn down slowly, rather than bid aggressively in a tight market. This choice makes sense, given the deeply negative margins. Emma Li, Vortexa’s lead China analyst expects state refiners will accelerate stock withdrawals as imports continue to decline. Li says that commercial stockpiles have increased by 70 million barrels in the first four months of this calendar year. This is due to independent refiners' and traders' purchases of Russian oil and Iranian oil, as well as a reduction in output by larger refineries since March. Li said that even if the rate of drawdown accelerated to 2,000,000 barrels per day, the 200 million barrels accumulated since 2025 would be enough to last until mid-September. Oil is not far away from $100 per barrel. Chinese refiners are able to afford to stop stockpiling oil in the short term due to the large stocks built before the war. WORSE REFINING LOSSES AND SLOW DEMAND Analysts said that Chinese refiners will lose between 600 and 1,300 yuan (88.74 to $192.26), depending on the grade, for every metric ton crude they process. This is because Beijing has capped domestic pump rates to protect consumers from global price spikes. Trading and industry sources have confirmed that large state-owned refineries, including Sinopec – the world’s largest refinery by capacity – and Zhejiang Petroleum Chemical Corp – the biggest independent processor – will?maintain their throughput limits at least until June. According to analysts and teapot officials, smaller plants known as "teapots" are being pushed to reduce production in June and beyond despite government orders not to. A recent official visit to the refinery hub in Shandong informed him that several teapots were prepared to reduce processing or even suspend it after they had exhausted the crude stock built up between March and April. Oilchem, a Chinese consultancy, sampled and tracked commercial gasoline and diesel inventory levels, which reflect a lacklustre consumer demand. They were at their highest since early 2024 and respectively July 2024. Analysts said that the destruction of gasoline demand by electrification is deeper than originally thought, as higher petrol costs have caused people to change their behaviour more permanently by using more public transport. Michal Meidan is the research head of the?Oxford Institute for Energy Studies. He said that China could sustain a run-down of?5% compared to the five-year median, which would mean seaborne crude imports at 7.9 million bpd. This level corresponds with May's estimated imports. Meidan, in a recent report, wrote that while there may be some mismatches between chemicals and products, and the refining margins will suffer, the basic supply would be assured before any stakeholders need to draw massive stocks or return to market.
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UN warns about extreme heat from El Nino, urges preparation
On Tuesday, the United Nations weather agency predicted a moderate to strong 'El Nino which could increase global temperatures and increase extreme weather in the coming months. El Nino, or a periodic increase in sea surface temperature, is usually a nine to twelve month phenomenon, according the World Meteorological Organization. WMO predicted that temperatures would be above average in most regions of the globe from June to August. El Nino is expected to continue through November, according to the WMO. WMO Secretary General Celeste Saulo said: "We must prepare for a strong El Nino, which could exacerbate the drought and heavy rains and increase the risks of heatwaves on land and in the ocean." It is well known that the weather pattern can disrupt regional climates and bring warmer temperatures to many regions, including southern South America, southern United States, Horn of Africa, central Asia, and parts of southern Africa. The WMO also said that it can cause droughts in Australia, Central America, Indonesia and parts of southern Asia. It could also lead to hurricanes in the eastern and central Pacific Ocean. Saulo said that the most recent El Nino in 2023-24, contributed to 2024 being the hottest record year. The risks include heat-related illness and disease. "Extreme temperatures are already among the most dangerous climate hazards that we face. An El Nino could increase the danger," Saulo said. There are risks such as increased heat-related illnesses, an increase in vector-borne disease and increased pressures on water and food systems. She said that "communities who were already struggling would be pushed further beyond their limits". WMO reported that a shift was observed in the Equatorial Pacific, where sea surface temperatures rose rapidly between late April and mid-May. This suggests El Nino conditions are developing. WMO said that it had observed subsurface temperatures in the tropical Pacific exceeding 6 degrees Celsius, creating a reservoir which is driving surface heating. Some national 'weather agencies' have predicted a ten-year high El Nino. They warn of drier, hotter weather in Asia during the second half 2026. This is likely to cause damage to crops and food supplies, as farmers are already struggling with fuel shortages, fertiliser shortages, and the Iran War. WMO stated that there is still uncertainty regarding the strength of El Nino, as some models do not predict a strong El Nino. "The world needs to treat this as an urgent climate warning. El Nino conditions are a "fuel" to the fire that is global warming, said U.N. Secretary-General Antonio Guterres. He urged a switch from fossil fuels to renewable energy. According to the WMO, while there is no evidence to suggest that climate change can increase the frequency or intensity El Nino patterns it can worsen associated impacts like extreme heatwaves and excessive rainfall. Reporting by Olivia Le Poidevin, Editing by Nigel Williams and Barbara Lewis
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Sources say that China has told steelmakers to not talk to Fortescue about a new iron ore product.
Two sources with knowledge of the matter said that China Mineral Resources Group, a state iron ore buyer, has instructed some?domestic iron ore producers not to discuss a new product with?Australian Fortescue. The demand 'has stoked' speculation that CMRG might impose a purchase ban on certain Fortescue products, as it did in the long-running negotiations with BHP which concluded earlier this summer. Sources who asked to remain anonymous due to the sensitive nature of the matter said that CMRG and Fortescue are in negotiations over a new contract. CMRG didn't immediately respond to a comment request. A Fortescue spokesman said that the company is still in contact with CMRG, and will not comment on any confidential commercial discussions. Dino Otranto, CEO of Fortescue Metals, described the negotiations last week as "an arm wrestle". CMRG wants to improve the terms of its steelmakers who have thin profit margins. The world's largest iron ore miner has profit margins between 70 and 80%. Fortescue is planning to launch a lower-grade ore called Fortune Fines. Three separate trading sources have confirmed that the first shipments will be made in July. Analysts and traders said that even if the product was banned, it would have little effect on prices, as it had not yet been marketed. Traders said that they were unaware of the product before this week. The Dalian Commodity Exchange's most active?iron-ore contract finished Tuesday's daytime trading up 0.77%. In late trade, the benchmark July iron ore contract on the Singapore Exchange rose 0.72%. Bloomberg News was the first to report on the increased'scrutiny' by CMRG regarding potential 'purchases of Fortescue’s new iron ore products steelmakers. (Reporting and editing by Edwina G. Gibbs; Mel Burton, staff in Melbourne; Helen Clark, Perth; additional reporting by Helen Burton)
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After an overnight drone attack by Ukraine, Russia's Ilsky Oil Refinery is on fire
Local authorities reported on Tuesday that the Ilsky oil refinery, located in southern Krasnodar, caught fire overnight after an Ukrainian drone attack. This is part of Kyiv’s campaign to starve Russia’s economy of its oil revenues. Kyiv has targeted Russia's energy grid in a systematic effort to limit Moscow’s ability to fund its four-year-old war in Ukraine, at a time when global oil prices are high. The Ukrainian General Staff confirmed that it has'struck again' the Ilsky refinery, stating that?the facility produces fuel for the Russian Army fighting in Ukraine. There was no immediate word on whether the refinery, which is geared towards exports, had suffered any disruptions or if there had been?any injuries. There was no immediate information on whether or not the fire had been extinguished. The Ilsky refinery can produce?around 138,000 barrels of oil per day. Volodymyr Zelenskiy, Ukrainian president, said on Monday that his forces had attacked?15 Russian refineries multiple times between January and May. This caused fuel shortages in Crimea and other Russian-held areas. Reporting by Moscow Buro and Jekaterina Glubkova in Tokyo, Writing by Alessandra Prrentice, Editing by Andrew Osborn
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Gold prices rise on lower Treasury yields amid Middle East uncertainty
Gold prices rose on Tuesday due to a decrease in Treasury yields, as well as a partial ceasefire between Hezbollah, Israel and Hezbollah. Investors waited for more information on the U.S. Iran peace talks, despite conflicting reports. Gold spot rose by 1.1% at $4,532.74 an ounce as of 0731 GMT. U.S. Gold Futures for August Delivery gained 1.3%, reaching $4,562.90. Gold prices are rising due to the ceasefire agreement between Hezbollah and Israel, said GoldSilver Central's Managing Director Brian Lan. He added that lower Treasury yields also helped the metal. The yield on the benchmark U.S. Treasury 10-year note has decreased, reducing the cost of non-yielding gold. Lebanon announced a partial ceasefire on Monday between Hezbollah, Israel and other parties. This would be a 'limited de-escalation' of the conflict that has resulted in thousands of deaths and a war with Iran. Iranian state media had earlier reported that Tehran would stop indirect negotiations with the U.S., and could end the ceasefire. Meanwhile, U.S. president Donald Trump stated that talks with Iran are ongoing "at an accelerated pace." Investors await the U.S. Nonfarm Payrolls and Employment Reports, due in the coming week, in order to gauge the resilience of the labour market in light of the mounting concerns about inflation caused by the Middle East conflict. The?remarks of Federal Reserve policymakers such as Cleveland Fed President Beth Hammack, and Fed Governor Michael Barr are also a focus to gauge future monetary policy 'path. "On the plus side, the major barrier to overcome here seems to be around $4,900. If (gold), confidently reestablishes its foothold at the $5,000 mark, we will know that gold has?once more reengaged with its long-term dynamism," said Ilya spivak, head global macro at Tastylive. (Reporting by Pablo Sinha in Bengaluru; Editing by Rashmi Aich, Subhranshu Sahu and Ronojojo Mazumdar) (Reporting and editing by Rashmi aich, Subhranshu Sahu, Ronojoy Mazumdar in Bengaluru)
Copper reaches a two-week high amid US Tariff Uncertainty
The market was supported by tighter supply and tariff uncertainty outside the United States, as well as by a rise in copper. Aluminium also reached a four-year high.
Benchmark three-month copper on the London Metal Exchange was up 1% to $13,966 per metric tonne at 0915 GMT, after touching $13,994 earlier.
Investors will be waiting for a possible tariff recommendation by the U.S. Department of Commerce at the end of this month. Last year, the prospect of a similar duty helped to boost prices. However, it never materialised.
Tom Price, an analyst at Panmure Liberum, said that investors with whom he spoke in the U.S. during last week's conference were interested in buying U.S. Copper equities are expected to be a hot commodity in the coming weeks. He said, "If it worked last time, it might work again this year." Price said that the elevated price does not reflect copper fundamentals. The White House on Monday changed tariffs for some imports of copper, iron, and aluminium, but it did not address the larger question about refined Copper that has caused regional market dislocation.
The COMEX copper premium grew over the LME, resulting in increased shipments into U.S. storage facilities.
Aluminum, on the other hand, rose 1.2% to $3,759.50 per tonne, after reaching $3,787.50 - its highest since March 2022 - as LME inventories
The cash LME Aluminium contract traded at a premium of $116.50 a ton over the forward three-month contract
Price pointed to the slowing of Chinese exports and the loss of six million tons of supply per year from the war-torn Middle East.
He said, "But copper and Tin just look like speculation playthings right now."
Tin has risen by 2.4%, to $57.925. It is now within striking distance of its previous peak of $59 040, which was set in January of this year. Zinc rose 1.5% to $3.629.50. Nickel climbed 0.6% to $19360. Lead jumped 1% to $2,000.05. (Reporting and editing by Thomas Derpinghaus; Additional reporting by Dylan Duan, Lewis Jackson)
(source: Reuters)