Five Key Charts to Watch in Global Commodity Markets This Week
BHP Group seeks Anglo American tie-up, valued at $39 billion, but complexities abound. US natural gas prices rebound after mild winter. Wheat supply concerns linger as USDA report awaited. Energy outlook split as oil consumption forecasts vary. UK offshore wind power surges, outpacing fossil fuels on the grid.
BHP Group Ltd. is pulling out the stops to gain support for a proposed tie-up with rival Anglo American Plc, but calculating the true value of the megadeal can be a bit tricky. US natural gas prices have snapped a losing streak. And wheat traders will be watching for the latest US Department of Agriculture estimates on crops, with the grain being of particular interest as North America’s growing season begins.
Here are five notable charts to consider in global commodity markets as the week gets underway.
Mining
BHP’s pitch to Anglo American has been touted as a $39 billion deal, but it’s a lot more complicated than that. The actual offer is significantly lower because BHP is asking Anglo to first demerge its two main South African businesses to shareholders, striping out a fair chunk of that topline number. Once that work is done, Anglo holders would end up owning those two businesses and then getting a big chunk of BHP stock for the rest of Anglo, currently worth about $25 billion.
Natural Gas
US natural gas prices, which had slumped earlier as an unusually mild North American winter damped demand, are now making a comeback. April saw the first monthly gain since October, snapping the longest losing streak in more than four years. The market is expecting hotter weather to arrive soon, bringing demand for gas with it as households and businesses crank up air conditioning that taxes gas-fired power plants.
Wheat
The world’s wheat supply will be top of mind for grains traders this week as they await the latest estimates from the US government. There are still plenty of questions about this year’s crop size as the growing season starts in the Northern Hemisphere, and the USDA’s World Agriculture Supply and Demand Estimates report due Friday will shed some light on production and stocks of the key grain. Global wheat stocks have contracted over the last few years, under pressure from Russia’s war in the Ukraine and other geopolitical issues as well as weather woes in important producing regions. If those issues persist, wheat could face a tightening between supply and demand.
Oil
The disconnect among energy experts on just how much oil will be consumed in 2024 will be in the spotlight this week, with the US releasing its latest supply and demand forecasts. The Energy Information Administration’s Short-Term Energy Outlook, which looks at supply and demand in the US and around the world, was more pessimistic in April than the International Energy Agency and the Organization of Petroleum Exporting Countries. Oil traders will see whether that bearish mood prevails when the latest monthly report is released Tuesday.
Renewables
The UK’s decade-long bet on offshore wind is paying off, as rising green power generation starts to push fossil fuels to the margins of the British electric grid. Wind farms in the UK produced twice as much power as gas and coal-fired plants in April, which followed two straight quarters when the UK got more electricity from wind than from fossil fuels, according to National Grid data. The trend will only accelerate as Britain works toward a goal to more than triple its offshore wind power fleet by the end of the decade.
Source Link: https://www.bloomberg.com/news/articles/2024-05-05/five-key-charts-to-watch-in-global-commodity-markets-this-week
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