Etikett: Agriculture ETPs

Price gains in industrial metals prompt strong outflows

ETF Securities Price gains in industrial metals prompt strong outflowsPrice gains in industrial metals prompt strong outflows

ETF Securities Weekly Flows Analysis – Price gains in industrial metals prompt strong outflows

  • Precious metals, following a period of high profit taking outflows, saw inflows of US$29m last week.
  • Industrial metals saw continued outflows of US$118m last week and has now seen outflows of US$272m over the last month.
  • Agriculture ETPs attracted US$25m of inflows last week and inflows now total US$248m year-to-date.

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Precious metals, following a period of high profit taking outflows, saw inflows of US$29m last week. Silver ETPs were the primary beneficiary with inflows of US$ 25m. The current gold/silver ratio of 75 implies that silver remains more attractively valued relative to gold. Furthermore the previously overbought positions in silver implied by the CFTC data has now corrected back to the long-term average. Recent macro data has been mixed, with delivered results broadly missing expectations, expectations for a rate hike this week remain close to zero although expectations for a December rate hike have risen to 50% as they see recent misses as temporary. We continue to believe the US FED will maintain a “dovish tightening” approach, with only one more rate hikes this year, favouring negative real interest rates to support growth.

The expected supply constriction from Hurricane Irma has prompted outflows from crude ETPs of US$15m and inflows of US$19m in to Energy ETPs which have broader exposure to gasoline. Hurricane Katrina prompted a constriction on gasoline supply and a short-lived bounce of gasoline prices due to refiners production outages. Recent improved sentiment for oil prices has likely been due to the IEA forecasts released last week showing an upward revision to it oil demand expectations for 2017 based on the weaker US dollar. Alleged improved compliance to the OPEC production freeze has also increased price.

Industrial metals saw continued outflows of US$118m last week and has now seen outflows of US$272m over the last month. Industrial metals from the beginning of September were up 35% for the year and 22% year-to-date. Since then they have begun to sell off due to what we believe is profit-taking. Given the long lead times in exploration and development of mines, even though capital expenditure may soon start to increase, we expect supplies to remain tight and the market is unlikely to achieve balance in the short term. However, there are threats to the current rally as strong momentum could give way to a pull-back in prices. Historically periods in which trading volumes in China have risen sharply have been followed by a correction. These pull-backs are usually an opportunity to shake out momentum trades and allow the market to focus on fundamentals rather than a sustained downturn.

Agriculture ETPs attracted US$25m of inflows last week and inflows now total US$248m year-to-date, representing the best inflows of all commodity subsectors. Despite news from North Dakota and Russia that wheat harvest yields have been high investors have been buying wheat and other agricultural commodity ETPs on what we believe is a combination of price weakness and news that the probabilities of a La Niña is rising according to NOAA forecasts.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

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This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

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This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

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Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

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Agriculture ETPs standout during the summer doldrums

Agriculture ETPs standout during the summer doldrums

ETF Securities Weekly Flows Analysis – Agriculture ETPs standout during the summer doldrums

  • Coffee recorded the largest weekly inflows since May 2015.
  • Crude oil ETPs recorded outflows for the sixth consecutive week as prices near US$50/bbl.
  • Nickel recorded outflows of US$11m for the week and US$25 for the month on likely profit taking.
  • Minor moves in fund flows in comparison to previous weeks due to the summer doldrums.

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The summer doldrums have been taking a toll on the volume of flows last week. In precious metals, which are particularly sensitive to comments from central bankers, prices have remained steady as investors waited for any hints from them at the Jackson Hole meeting on Friday. Consequently inflows have been have been minimal, with US$8.8m in gold ETPs. Despite the threat of interest rate hikes there have been net flows of US$338m year-to-date in gold ETPs with outflows in short positioning, suggesting investors aren’t worried about any significant downside risks for gold in the immediate future. In addition, the price of gold gained nearly US$20/oz. this morning as a missile from North Korea overflew Japan early Tuesday.

Crude outflows totalled US$11.3m for the week and since mid-July we have seen outflows of US$225.5m. We continue to observe a fairly established trend of investors selling out positions when the price of crude is above US$50/bbl. Inflows then tend to resume when the oil price falls below US$45/bbl. We believe this is likely to continue as oil is likely to remain range-bound, trading between the lower marginal cost of production for the US tight oil producers and US$55/bbl, the 90th percentile of the broader oil producers cost curve.

Nickel saw outflows of US$12.1m for the week and US$25.9 for the month on likely profit taking. The metal is valued as one of the cheapest when comparing current prices to marginal cost. Prices have also been a laggard relative to its industrial metal peers for the full year. The metal is however playing a catch up over the past month, triggering profit taking from bargain hunters. Industrial metals have been the best performer over the last month in the commodities sphere, having risen 8% versus broader commodities remaining flat. Import data from China is the likely reason for the outperformance. We continue to expect China data to beat expectations and many forward looking data points, such as electricity consumption and port volumes have been rising in recent months.

Coffee saw inflows of US$8.7m, the largest weekly inflows since May 2015. Coffee remains one of the weakest performers year to date in agriculture. Although recent news of an outbreak of the borer beetle, due to the ban of certain pesticides, suggests there could be a burgeoning supply constriction.

Inflows into long wheat ETPs outpaced the peak observed following the extreme drought in the US in 2013. Since the peak in 2014, inflows into long wheat ETPs have reached new records whilst the market remains ample supplied with prices continuously depressed below its 10-years average.

 

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.