OPEC and Crude Output, Metals rally, Agriculture

Energy • Crude oil output increases in October: In its latest report, the IEA showed that global oil supply rose by 800Mbbls/d MoM to 97.8MMbbls/d, with higher OPEC and non-OPEC supply. The agency expects non-OPEC supply to increase by 500Mbbls/d next year, compared to a 900Mbbls/d decline over 2016. Meanwhile, OPEC output into next year will depend on what decision the group comes to at their meeting in Vienna at the end of this month. • China to extend coal output limit: The Chinese government has said that they will extend output limits on coal by three months until end of March 2017. The government has attributed the rally in coal to speculation, and is keen to continue with capacity cuts. Earlier, the government allowed 800 mines in the country to extend the number of operating days due to the price strength..

Metals • Copper rallies: LME copper has seen quite the move this week, up 12% up until Thursday. Factors that have proved positive for the metal include stronger Chinese factory data, expectations that a Trump presidency will see significant investment in infrastructure, and Chinese speculative trading, with Shanghai Futures Exchange margins increasing in other metals. • Additional aluminium capacity: Chinese analyst SMM expects that China will add 6m tonnes of aluminium capacity over 2017 and 2018. Additional capacity should cap aluminium prices, however, government policy will remain a key factor to watch.

 Agriculture • Slow Vietnam coffee harvest: It has been a slow start to the 2016/17 Vietnamese coffee harvest due to rains. Through to the end of October, only 5% of the crop had been harvested, compared to 11% at the same time last year and a 5-year average of 12%. Continued disruptions could offer support to the coffee market. • Brazilian soybean crop: Brazil’s crop agency slightly lowered its estimate for 2016/17 Brazilian soybean output as a result of lower plantings in Parana state. Despite this. the agency is still expecting output to total a record 103.5m tonnes for the season, an 8.5% increase YoY. A record crop from Brazil would follow expectations for a record US crop as well.