During the week, with the Fed Chair's speech at Jackson Hole, most commodity prices remained in the green. However, wheat and corn faced downward pressure.

Macro Developments

United States: Revised labor data from the U.S. Department of Labor indicated a reduction of 818,000 jobs between April 2023 and March 2024 compared to initial estimates. This revision has raised concerns about the actual health of the U.S. economy and the possibility that the Federal Reserve may need to intervene with monetary policy easing soon. Earlier, the Consumer Price Index (CPI) for July 2024 increased by 0.2% month-over-month and 2.9% year-over-year, marking the lowest level since March 2021.

China: China's economy continues to face significant challenges, with new home prices falling at the fastest rate in nine years and weakening industrial production, raising concerns about economic recession and reducing growth prospects for this year. On August 20, the People's Bank of China (PBOC) kept the 1-year loan prime rate (LPR) unchanged at 3.35%. The 5-year LPR also remained steady at 3.85%.

U.S. Stock Market (August 19-23, 2024)

Dow Jones Industrial Average (DJIA):The Dow Jones saw a significant increase, rising by 462.30 points (equivalent to 1.14%) and closing at 41,175.08 points. This growth has pushed the Dow Jones up nearly 1.3% for the week, continuing a strong upward trend due to optimism that the Fed will ease monetary policy in the near future, reflecting investor confidence following Fed Chair Jerome Powell's speech.

S&P 500:The S&P 500 experienced strong growth on August 23, increasing by 1.15% and closing at 5,634.61 points, nearing an all-time high recorded last month. The S&P 500 saw a weekly gain of 1.45%.

Nasdaq 100:The Nasdaq Composite rose by 1.47% on August 23, reaching 17,877.79 points. The Nasdaq also recorded a 1.4% increase for the week, benefiting from the recovery of technology stocks after Powell's speech.

U.S. Dollar Movement

The U.S. dollar continued to weaken last week, reaching its lowest level in nine months, driven by expectations that the Fed will cut interest rates in September. This has boosted the prices of U.S. commodities in the international market, particularly in the agricultural sector, such as soybeans and corn, and supported U.S. exporters as a weaker dollar makes goods more competitive.

Fed Chair's Speech

At the annual economic conference in Jackson Hole, Fed Chair Jerome Powell emphasized that "the time has come to adjust policy," and the Fed may soon cut interest rates. Powell noted that inflation has significantly decreased, and the Fed is confident that inflation is on track to return to the 2% target without causing excessive economic harm. However, the adjustment of interest rates will depend on future data as well as economic outlook and risk assessments.

Commodity Market Developments

WTI oil prices ended the session on August 23, 2024, up more than 2% to $81.58 per barrel, while Brent oil prices increased by 2.1% to $85.70 per barrel. Over the week of August 19-23, 2024, WTI oil fell by 2.4% due to concerns about weak demand from China—the world's second-largest economy—and prospects of peace negotiations in the Middle East. Brent oil followed a similar trend, losing 0.83%, falling below $85 per barrel by the end of the week for the same reasons as WTI oil, although crude oil supplies from Middle Eastern countries remained largely uninterrupted.

U.S. crude oil inventories saw a sharp drop in the week ending August 16, decreasing by 4.6 million barrels to 426 million barrels. This decline was larger than analysts' forecasts in a Reuters survey, which predicted a decrease of 2.7 million barrels, mainly due to increased gasoline demand at the end of summer, while supply from producers remained stable.

U.S. crude oil production remained stable this week, despite concerns about global demand. The average daily production stayed near 12.6 million barrels per day, similar to the levels of previous weeks. U.S. oil producers maintained production to meet domestic demand and exports.

Global crude oil demand continues to be heavily affected by weak economic conditions in China, with refinery output declining due to low fuel demand. According to reports, crude oil output from refineries in China fell sharply in July, affecting crude oil import demand. These economic issues have reduced global oil demand, putting pressure on Brent and WTI prices.

Global crude oil demand: OPEC has warned that global crude oil demand growth must increase in the coming months, or the market will struggle to absorb the expected increase in oil supply from October. Recent data from major consuming countries like the U.S. and China show a decline in demand, which could negatively impact oil prices in the near future.

Gold prices rose by 1.15% on August 23, 2024, to $2,511.91 per ounce, due to the dollar and bond yields falling after Fed Chair Jerome Powell's comments on the possibility of interest rate cuts. This increase has made gold more attractive, especially amid rising geopolitical tensions and increased demand for safe-haven assets. Major central banks worldwide have also increased gold purchases for reserves, further pushing prices higher.

Silver prices increased significantly during the week, with December 2024 futures contracts rising nearly 3.4% compared to the previous week, closing at $30.256 per troy ounce. Weaker-than-expected industrial demand from sectors like automotive and electronics, particularly in China, pressured prices in many sessions. The 2024 forecast suggests that the silver market will continue to see a deficit of more than 250 million troy ounces.

Platinum prices have repeatedly faced downward pressure due to the automotive industry—which uses platinum in catalytic converters—being impacted by the global economic downturn, causing pressure on prices. By the end of the week, October 2024 platinum futures prices rose slightly by 0.4% to $966.1 per troy ounce.

Copper prices rose nearly 2%, reaching $4.211 per pound. The latest inventory data from the Shanghai Exchange showed that copper inventories decreased by 11,162 tons last week, marking the seventh consecutive week of total copper inventory decline and the tenth in the last eleven weeks. Copper inventories on the Shanghai Exchange currently stand at 251,044 tons. Although this figure is higher than the total inventory at the end of 2023 by 220,000 tons, it is the lowest inventory level since early March.

Agricultural Markets

Corn prices on the CBOT weakened this week, with pressure from large supplies and reduced export demand weighing on prices. December 2024 corn futures prices fell nearly 2% over the past week, ending the week at 370.5 cents per bushel.

November 2024 soybean futures prices increased by nearly 2% to 973 cents per bushel, driven by rising demand from China and dry weather in major growing regions in the U.S.

December 2024 wheat futures prices faced significant downward pressure, dropping more than 4.4% to 528 cents per bushel, mainly due to the pressure from large harvests and favorable weather forecasts in major growing regions.

Weekly Export Sales Report from USDA for Three Agricultural Commodities

U.S. corn export sales reached 1.291 million tons last week, up from the previous week but still below expectations. Soybean export sales reached 1.677 million tons, exceeding expectations, with strong growth from the Chinese and Mexican markets. Wheat export sales reached 492.7 thousand tons, up 45% from the previous week, with increased exports to Southeast Asian and South American countries.

Regarding China’s corn and soybean purchases from the U.S. market: Chinese demand for U.S. corn decreased slightly due to high domestic inventories and the government’s import restriction policies. However, Chinese demand for soybeans remained high, with many orders placed by edible oil processing plants, boosting U.S. exports.

Source: Compiled