Commodity Monthly Monitor

Transcription

1 Commodity Monthly Monitor Commodities see-saw amidst geopolitics and rising yields Apr/May 218 Summary If there has been one theme driving global markets over the past month it has been geopolitical risk. At times, the focus has been on the potential for a trade war, primarily between the U.S. and China, but also potentially touching on adjustments to North American Free Trade Agreement (NAFTA). Subsequently, the focus has shifted away from trade policy and back towards the powder keg in the Middle East. While Syria is the headline issue, tensions between the U.S. and Russia are the true foundation. Commodities have responded over the month. As of 2th April, the Bloomberg Commodity Index had delivered a Year-To-Date (YTD) total return of approximately 2.4%. Over the month of April, this Index was up 2.8%, thereby taking its return from negative YTD territory to positive YTD territory. When the Middle East is in focus, energy and oil historically tend to come to the forefront. On 2th April 217 (1-Year ago), the price of one barrel of Brent Oil was $ Now, it is nearly $74, rising from approximately $7 during April 218 alone. Tension in the Middle East has historically been supportive to oil, but we caution investors to overplay that thesis as the production from the U.S. shale producers has been a factor growing in its importance and may create further supply in this market. Christopher Gannatti Head of Research Nitesh Shah Director Nick Leung Associate Director Florian Ginez Senior Quantitative Associate Aneeka Gupta Associate Director One year ago, the price of gold was at about $128 per Troy ounce, while as of 2th April it was about $134 driven upward and supported by geopolitical risk more than any other factor. We would also point out that, since commodities are priced in U.S. dollars, movement of the dollar is playing an important role. Over the prior year (2-April-217 to 2-April-218), the dollar weakened against all of the G1 currencies. The euro was the biggest gainer appreciating 15.2%, while the yen was the smallest, gaining 1.7%. Over the month of April 218, the dollar s performance was more mixed the Swedish krona, Japanese yen and Swiss franc actually weakened while the Canadian dollar and Norwegian krone strengthened. The euro and the British pound appreciated slightly over this short period. Cocoa and sugar follow different paths however, we expect sugar prices to recover. Unfavourable wet weather conditions coupled with healthy grinding figures in Europe and Asia contributed to cocoa s strong price appreciation last month. While sugar a prices lagged behind owing to the ample supply situation. We expect the substitution of sugar production for ethanol by Brazil to pave the way for a price recovery. Industrial metal prices rebounded from last month s slump, reflecting easing fears of an escalation in the global trade war. This was accompanied by speculative rallies in aluminium and nickel, both of which saw double digit price increases as a result of US trade sanctions being imposed on Russian metals producers. a Oil prices rose by close to 1%, to the highest level since 214. Geopolitical risk has put a premium into oil prices. If sanctions are placed on Iran and Russia, oil supplies could be disrupted, tightening the market further. Outages from Venezuela have already reduced production from OPEC more than the group had intended when they decided to curb a production at the end of 216. Contents Commodities market overview 1 Summary tables 4 CFTC net positioning 5 Inventories 9 Moving average and volumes 13 Futures curves 17 Recent publications 21 Precious metals benefit from ongoing trade tensions and geopolitical risks. Gold appears to have fulfilled its purpose as a safe haven asset. Geopolitical risk continued to weigh on market sentiment, supporting the price of the yellow metal. Silver was the best performer in the sector rising on the back of strong fundamental data releases. Commodity Monthly Matrix 1 Performance 2-1 Mth - 6 Mth - 12 Mth Current Returns Price vs 2 Inventories 3 Positioning 4 2 Apr 16 Mar All Commodities 3.7% 7.5% 9.6% Price 2 Roll Yield 5 (-1 Mth) days MA (- 3 Mths) (- 1 Mth) Score Score Energy 6.5% 15.% 14.9% WTI Oil % 2.5% 3.9% 4%.% Industrial Metals 8.4% 8.2% 27.9% Brent Oil % 2.% -3.9% 29% 1.% 4 Precious Metals 2.7% 3.1%.9% Natural Gas % -5.2% -43.4% 1% -1.% 1 (1) Agriculture.3% 1.1% -4.9% Gasoline % 18.5% -3.3% -3% -.2% (2) MSCI World -.7% 4.2% 16.8% Heating Oil % 13.3% 1.% 79%.4% 2 (2) US Aggregate Bond -.1% -1.8% -.5% Carbon % 57.3% % 2 Bloomberg TR Indexes for basket returns, data to Friday 2 April 218. Source: ETF Wheat % 4.8% 1.2% 13% -2.9% Securities, Bloomberg Corn 3.8.5% 5.2% -4.3% -18% -2.3% 2 Soybeans 1.% 4.3% -7.9% 7% -1.1% 2 2 Sugar.1-7.3% -16.% - 6% -1.9% (1) (2) Cotton.9 2.9% 14.1%.6% -3%.9% Coffee % -7.6% - -3% -1.7% (4) (4) Soybean Oil.3-1.4% -5.7% -.3% -76% -.8% (2) 1 Cocoa 2, % 3.3% - 23%.7% 4 1 CFTC Net Speculative Positioning Aluminium 2, % 17.7% 27.4% 12%.1% 2 (2) (in ' contracts) Copper (COMEX) % 2.% 16.2% -5% -.6% (2) (3) Precious Metals Livestock Industrial Metals Copper (LME) 6, % 2.9% 67.% 81% -.2% (1) Energy Agriculture Zinc 3,233.8%.5% 2.% 43% -.2% 2,5 Nickel 14, % 22.2% -13.4% 82% -.1% 2 1 Lead 2,366.5% -3.5% -13.5% 7%.% 3 (1) 2, Tin 21, % 6.5% -8.5% -15%.3% 2 3 1,5 Gold 1, % 2.7% - 13% - 4 (2) Silver % 2.2% - 83% - 4 (4) 1, Platinum % -2.9% - -41% - (4) (4) 5 Palladium 1,3 5.2% 5.2% - -11% - (2) Live Cattle % 2.2% - -59% 15.1% Lean Hogs.7 1.6% 4.7% - -66% -9.8% (1) (4) -5 Feeder Cattle % -6.7% - -94% -1.5% (4) (4) The score matrix is designed to highlight significant changes in key variables but should not be viewed as predictor of performance. Source: ETF Securities, Bloomberg Source: ETF Securities, CFTC, Bloomberg " - " Information not available. Green = returns positive, inventories falling, positioning rising, roll yield positive. Red = the opposite. Black = neutral. 1 Detailed explanation of the matrix calculations can be found at the end of this report. 2 All prices are futures prices to April 2, 218. Broad sector returns based on Bloomberg Commodity Index family. 3 % change in inventory over the past 3 months except for sugar and coffee which are based on past 6 months as data is updated bi-annually by USDA. 4 CFTC futures and LME COTR net positioning as at, 218, and Apr 2, 218 respectively, % change from previous month. 5 Calculated as % difference between front month and second month futures prices on report date. 1

2 Platinum Gold Palladium Silver Natural Gas Gasoline WTI Oil Heating Oil Brent Oil Carbon Lead Zinc Copper (LME) Copper (COMEX) Tin Nickel Aluminum Sugar Coffee Soybean Oil Feeder Cattle Live Cattle Soybeans Corn Wheat Cotton Lean Hogs Cocoa Sector Overview Agriculture Cocoa was the best performer amongst agricultural commodities, rising by 7.1% over the prior month. Unfavourable wet weather conditions in the Ivory Coast, the leading growing country, a are feared to disrupt the harvesting season which is currently underway. The change in a weather conditions are having a pronounced impact on prices as sentiment shifts. The European Cocoa Association (ECA) reported, record high cocoa grinding in Europe up 5.5% in the first quarter over the prior year owing to the high grinding margin. Grinding data in Asia posted the highest figure since records began in 211. This is also lending buoyancy to cocoa s price appreciation. Agriculture - April Returns* 12% 1% 8% 6% 4% 2% % -2% -4% -6% -8% -1% Sugar s weak price performance can largely be attributed to the ample supply situation on the international sugar market, largely from EU and India. Sugar has staged the weakest performance amongst all major commodities since the start of the year. In response to its price gap with ethanol (that attained a five year high in March), producers in Brazil have more incentive to switch production from sugar to ethanol in the 218/19 crush. According to JOB Economia e Planejamento, a consultant firm specialised in sugar and ethanol, Brazilian sugar exports in the 218/19 season currently underway is expected to decline by 6.5 million tons over the prior year owing to lower processing. The resulting lower supply from the world s largest sugar exporter should support a price recovery for sugar. a Source: Bloomberg Industrial Metals Industrial metals rebounded from last month s slump, outperforming all other commodity sectors as cooling Trump trade rhetoric soothed investors' nerves about an escalating global trade war. Copper was one of the key beneficiaries of improving investor sentiment, posting gains of 3.5% over the prior month. Though prices remain vulnerable to trade tension tantrums, global growth conditions remain favourable, and any signs of a potential US-China trade agreement could present a catalyst for copper prices to retest recent highs. Industrial Metals - April Returns* 25% 2% 15% 1% 5% Leading the industrial metals sector was aluminium, with prices rallying by over 2% in response to US sanctions imposed on Rusal, the world s second largest aluminium producer. This could leave almost 6% of global aluminium supply cut off from commodity markets. The threat of a potential widening of sanctions to other Russian metals producers also provided an initial boost to nickel, reinforcing investors already strong appetite for the base metal. % Source: Bloomberg Energy With Organization of Economic Co-operation and Development (OECD) inventories of crude oil now falling close to a five-year average, Organization of Petroleum Exporting Countries (OPEC) seems very close to have accomplished its stated mission. However, a large part of the group s production decline has come unintentionally from Venezuela s production outages. Global supplies could get even tighter if sanctions are placed on Iran and Russia. We believe it is unlikely that sanctions would be placed on Russian oil exports given the importance of these supplies in Europe. However, the political will-power from the US to put pressure on Iran appears very strong and so we are reluctant to dismiss the risk of tighter sanctions against Iran. For now, we have what appears to be a geopolitical premium in oil price. If geopolitical risks dissipate, we could see prices fall. a a Positioning in both Brent and WTI futures is looking stretched. A decline in the geopolitical premium, could trigger a sharp downward movement in prices given the extent of positioning. Carbon prices continued to rise, posting a 13% gain last month (72% over the past 6 months). With European Union emissions having risen for the first time in seven years in 217 on the back of higher industrial activity, we could find companies short on emission allowances if the trend continues. Brexit had cast doubt on the EU Emissions Trading System, and weighed on carbon prices in 217, but last month, the British Energy Minister said that the UK will continue participate in the system until the end of the current phase (22). That lent further support to the recent carbon rally. Energy - April Returns* 14% 12% 1% 8% 6% 4% 2% % Source: Bloomberg Precious Metals Gold appears to have fulfilled is purpose as a safe haven asset. Geopolitical risk continued to weigh on market sentiment, supporting the price of the yellow metal. Ongoing trade war rhetoric between the US and China, deteriorating relationship between Washington and the Kremlin, as well as tensions in the Middle East should remain important drivers for short term price movements over the coming months. However, the yellow metal gave up some of its gains at the end of the month on the back of a strong appreciation of the US dollar. a Silver has been the best performer in the sector over the last month. Good fundamental data releases helped an initial rise in price. According to the Silver Institute, industrial demand rose a in 217, for the first time since 213. On the production side, mine supply decreased for a second year. The price rebound has probably been magnified by a investors covering elevated a short positions. Net speculative shorts in silver futures, reached a record high on the 17 April, right before a sharp spike in the metal price. Platinum prices appear to have been range-trading for almost 18 months. Once again in April, it got close the $9 support level, before rebounding slightly to post a -2.1% performance for the month. Platinum is an essential material for the production of autocatalysts, thus short term performance is directly impacted by the potential for trade war, as car parts would likely fall into tariffs implementation. Precious Metals - April Returns* 7.% 6.% 5.% 4.% 3.% 2.% 1.%.% -1.% -2.% -3.% Source: Bloomberg *Note: all returns are based on front month futures prices in the month to Friday 2 April

3 Technical Overview Positioning Top 5/Bottom 5 Change in CFTC Net Positions 1 Investors appeared to have turned extremely bearish on soybean oil, as net Silver long positioning declined by 76% over the past 3 months. Short positions Nickel have widened by 29% since September 217. Copper (LME) a a Net long speculative positioning surged for nickel and copper (LME), rising 82% and 81% respectively. The extent of investor bullishness reflects stronger expected global appetite for both metals. Positioning in Brent oil futures rose 29.5% to all-time high of 53,23 contracts net long (as on 17 April 218), which is more than 2 standard deviations above the average for the last five years. With positioning so stretched, we could see sharp downside price movements if anything were to trigger a sudden change in sentiment such as a reassessment of geopolitical risk. Silver spent most of the first three weeks at the lowest net positioning in history. Despite bullish fundamentals, speculative market participants remained overly bearish in aggregate. This lead to a spike in silver prices on the 18th of April, as short positions were covered following an initial upward move. Source: Bloomberg Inventories Top 5/Bottom 5 Change in Inventories 2 In the latest report by the US department of Agriculture (USDA), soybean stocks expected at the end of 2 season have been reduced more sharply than expected by the market owing to the large 7 million ton downward adjustment of the Argentinian crop. LME copper inventories reached their highest levels since 214, rising 67% over the past three months. This surge hints at potential weakness in global demand since the turn of the year, even as Chinese Q1 GDP growth surprised to the upside at 6.8%. Given recent strength in copper prices however, demand is clearly expected to pick up again over the coming months ahead. Natural gas inventories continue to remain lean for this time of year. Inventories have declined 43.4% in the past three months, as cold weather has drawn on supplies for heating needs. Heating Oil Zinc Platinum Live Cattle Lean Hogs Soybean Oil Feeder Cattle Copper - LME Aluminium Source: Bloomberg Zinc Copper - Comex WTI Oil Soybeans Tin Nickel Lead Natural Gas -1% -5% % 5% 1% -5% -3% -1% 1% 3% 5% 7% Curve Dynamics Top 5/Bottom 5 Roll Yields 3 Live cattle futures have the steepest backwardation, providing a roll yield of 15.1% driven by softening demand and ample cattle supplies. Meanwhile lean hog futures have the steepest contango, providing a negative roll yield of 9.8% driven by an anticipation of seasonal tight supplies as warm weather usher in increased outdoor grilling. Most agricultural commodities, with the exception of cocoa, soybean and cotton, are in contango. Negative roll yields run as high as 2.3% and 2.9% for corn and wheat respectively. The front end of the cocoa futures curve has moved from contango into over the past month yielding a positive roll yield of.7%. a Both Brent and WTI futures curves are in backwardation. Brent offers the most pronounced positive roll yield: 1% between the front and the next month future. Curve backwardation has been seen as an important tenet of OPEC s strategy to drain excess oil inventories as it discourages traders from storing oil in the hope of higher prices in the future. Live Cattle Brent Oil Cotton Palladium Cocoa Coffee Sugar Corn Wheat Lean Hogs Source: Bloomberg -13% -8% -3% 2% 7% 12% 17% Contango Backwardation Technicals Top 5/Bottom 5 Price Diff to 2 day moving av. (dma) 4 q a Cocoa prices are trading 29% above their 2-dma on the back of unexpected wet weather conditions and robust first quarter grinding data in Europe and Asia. Meanwhile sugar prices have trailed behind and are trading 13% below their 2-dma, a price recovery is likely to follow if Brazil produces lower sugar. Nickel s ongoing rally has left it trading significantly above its 2-dma by 22%. We expect the positive momentum to continue owing to long-term growth trends such as vehicle electrification, and ongoing supply deficits. Brent and WTI crude oil benchmarks are trading over 2% above their 2- day moving average, highlighting the very bullish momentum behind oil at the moment. Platinum is trading below its 2-day and 5-day moving averages. Should prices maintain their current level or go further down, the 5-day moving would quickly dip below the 2-day indicator, highlighting the ongoing downward trend. Carbon Cocoa Nickel WTI Oil Brent Oil Natural Gas Soybean Oil Feeder Cattle Coffee Sugar Source: Bloomberg -35% -15% 5% 25% 45% 65% % < 2 dma % > 2 dma 1 CFTC futures net positioning as at report date, percent change from previous month. 2 Percent change in inventory based on 3 month change (in %). 3 Roll yields calculated as percent change between front month futures price and next month futures price on Apr 2, Percent difference between the front month futures price and its 2 day moving average on Apr 2,

4 Summary Tables PRICES 1 Current 1 Month 3 Month 6 Month 1 Year ROLL YIELDS 2 Unit Exchange 2-Apr 1 Week 1 Month 3 Month Energy Energy WTI Oil % 7.9% 32.9% 36.% WTI Oil USD/bbl. NYMEX.%.1% -.2% -.1% Brent Oil % 7.9% 28.2% 39.8% 2 Brent Oil USD/bbl. ICE 1.%.9%.4%.6% Natural Gas % -14.% -6.% -13.3% Natural Gas USD/MMBtu NYMEX -1.% -1.% -1.1% 1.% Gasoline % 12.5% 24.9% 25.5% Gasoline USd/gal. NYMEX -.2% -.2% -.5%.% Heating Oil % 3.1% 17.6% 34.5% 6 Heating Oil USd/gal. NYMEX.4%.5% -.2%.1% Carbon % 49.% 72.% 174.1% Carbon EUR/MT ICE -.1% -.1% -.1%.% Agriculture Agriculture Wheat % 9.6% 8.7% 14.% Wheat USd/bu. CBOT -2.9% -3.4% -3.4% -2.9% Corn 3.8.5% 6.8% 9.3% 5.2% Corn USd/bu. CBOT -2.3% -2.1% -2.1% -2.4% Soybeans 1.3.% 5.3% 5.1% 8.7% Soybeans USd/bu. CBOT -1.1% -1.% -1.% -1.2% Sugar.1-7.3% -12.2% -16.9% -28.7% Sugar USd/lb. NYBOT -1.9% -1.% -1.5% -1.1% Cotton.9 2.9% 2.5% 27.8% 6.7% 3 Cotton USd/lb. NYBOT.9%.1% -.1% -.4% Coffee % -4.5% -7.6% -12.1% Coffee USd/lb. NYBOT -1.7% -1.8% -1.7% -2.% Soybean Oil.3-1.4% -3.% -8.4% -1.9% Soybean Oil USd/lb. CBOT -.8% -.9% -.7% -.6% Cocoa 2, % 42.4% 28.6% 51.7% 5 Cocoa USD/MT NYBOT.7% -.5% -1.% -1.2% Industrial Metals Industrial Metals Aluminum 2, % 11.8% 16.9% 28.4% Aluminum USD/MT LME.1%.% -.3%.2% Copper % -1.6% -1.% 23.3% Copper USd/lb. COMEX -.6% -.7% -.4% -.5% Copper (LME) 6, % -.7%.6% 24.3% Copper (LME) USD/MT LME -.2% -.2% -.1% -.2% Zinc 3,233.8% -5.9% 3.4% 23.2% Zinc USD/MT LME -.2% -.3%.%.4% Nickel 14, % 16.6% 26.6% 56.7% Nickel USD/MT LME -.1% -.1% -.1% -.1% Lead 2,366.5% -8.7% -3.9% 9.8% 9 Lead USD/MT LME.%.1%.%.3% Tin 21, % 6.% 11.3% 1.% 7 Tin USD/MT LME.3%.1%.1%.1% Precious Metals Precious Metals Gold 1, %.3% 4.6% 4.3% Gold USD/t oz. COMEX -.1% -.2% -.4% -.4% Silver %.7%.5% -4.7% Silver USD/t oz. COMEX -.3% -.4% -.4% -.5% Platinum % -8.9%.2% -5.4% Platinum USD/t oz. NYMEX -.7% -.6% -.6% -.3% Palladium 1,3 5.2% -6.2% 6.2% 28.3% 4 Palladium USD/t oz. NYMEX.8%.5%.4%.7% Livestock Livestock Live Cattle % -2.1% 6.9% -7.9% 1 Live Cattle USd/lb. CME 15.1% 12.4% 9.7% -.3% Lean Hogs.7 1.6% -2.9% 7.9% 9.6% Lean Hogs USd/lb. CME -9.8% -22.8% -9.9% -4.4% Feeder Cattle % -7.2% -1.6% -.4% Feeder Cattle USd/lb. CME -1.5% -.7%.2% 1.4% CFTC NET 5 Yr Current POSITIONING 3 Average 1 Month 6 Month 1 Year INVENTORY LEVELS 4 Current 1 Month 3 Month 6 Month Energy Energy WTI Oil 769, ,962 74, , ,267 Oil - US 427,567-3% % 4% -7% Brent Oil** 53,23 148, , ,47 297,585 Oil - OECD Europe** 334 6% - -4% -3% Natural Gas -9, ,912-11,248-57,953 3,64 Natural Gas - DOE 1,299-25% -1% -43% -65% Gasoline 77,55 61,921 79,826 68,16 56,491 Gasoline - DOE 235,967 4% -3% -3% 9% Heating Oil 24,261 6,11 13,54 5,813 33,64 Heating Oil - DOE 1,7-6% -1% 1% -6% Agriculture Industrial Metals Wheat -21,147-49,358-24,365-51, ,2 Aluminum 2,388,757-35% 7% 27% 31% Corn 267,35 71, ,223-96,318-73,159 Aluminum - LME 1,395,55-58% 8% 28% 16% Soybeans 21,365 73, ,87 81,215-31,54 Aluminium - SHFE 993,27 194% 6% 27% 61% Sugar -16,614 84,89-112,911-66,576 87,484 Copper 863,75 57% 1% 44% 43% Cotton 94,418 56,737 97,415 62,129 98,16 Copper - LME 353,375 18% 1% 67% 23% Coffee -61,659 4,647-47,38-33,63 19,931 Copper - SHFE 261,743 51% -12% 49% 132% Soybean Oil 5,781 33,375 24,6 57,173-41,116 Copper - COMEX 247, % 6% 16% 21% Cocoa 53,613 35,723 43,56-8,719-23,26 Nickel - LME 312,894-12% -3% -13% -19% Industrial Metals 5 Zinc 311,126-58% -16% 2% -8% Copper (COMEX) 3,251-1,33 32,3 5,488 16,314 Zinc - LME 185, -67% -12% 3% -31% Copper (LME) 55,784 37,89 3,773 Zinc - SHFE 126,126-29% -2% 59% 86% Aluminum 147, ,18 13,972 Lead 158,82-34% -4% -14% -9% Nickel 33,621 22,556 18,46 Lead - LME 131, -3% 1% -6% -13% Zinc 5,377 41,864 35,223 Lead - SHFE 27,82-49% -2% -38% 18% Lead 58,882 49,998 54,948 Tin 6,389-39% -6% -8% -46% Tin 7,854 7,77 9,196 Tin - LME 2,13-7% 21% 8% 1% Precious Metals Tin - SHFE 4,259 28% -16% -15% -56% Gold 173, , ,316 29,646 2,343 Agriculture Silver -2,353 36,592-14,21 62,928 15,462 Wheat - USDA 271,22 39.%.9% 1.2% 1.2% Platinum 16,776 3,166 28,59 24,189 29,39 Corn - USDA 197,78 42% -.7% -4.3% -1.6% Palladium 1,917 17,155 12,317 22,78 18,73 Soybeans - USDA 9,8 5% -3.8% -7.9% -5% Livestock Sugar - USDA 4,821 14% - - 7% Live Cattle 36,428 86,66 87, , ,432 Cotton - USDA 88,29 2% -.6%.6% -4.4% Lean Hogs 4,157 55,418 12,193 59,874 23,84 Coffee - USDA 29,268-18% % Feeder Cattle 266 8,667 4,684 2,37 22,811 Soybean Oil - USDA 3,12-22% -.6% % -11% 1Performance of front month futures from 2 (1 Year), 2 (6 Month), 2 (3 Month) and 2 (1 Month) to 2. 2Roll return non-annualised from front month futures into second " month on 22 (3 Month), 2 (1 Month), 13 (1 Week), 2. 3 Net positions in number of contracts. 4 Current inventories relative to 1, 3, 6 months ago. Under the column "5 yr average" is the current inventory level relative to 5 year average inventory. For energy, 5 yr average is the average of the same month as report month over the past 5 years. SHFE started reporting inventory data from April All Industrial metals positioning data (excluding copper) is sourced from LME COTR data in Bloomberg from 3 January 218 (first available date) under post-mifid rules. **Brent 5 Yr average of net positions from January 211 as positions were not reported by CFTC before then and inventory data (OECD) reported with 3 month lag with current = Jan

5 CFTC Speculative Net Long Futures Positions Agriculture Cocoa ,6 3,4 3,2 3, 2,8 2,6 2,4 2,2 2, 1,8 1,6 Coffee Price (RHS, USD/MT) Price (RHS, USd/lb.) Corn Cotton Price (RHS, USd/bu.) Price (RHS, USd/lb.) Soybean Oil Soybeans Price (RHS, USd/lb.) Price (RHS, USd/bu.) Sugar Wheat x Price (RHS, USd/lb.) Price (RHS, USd/bu.) Note: positioning in ' contracts. Standard deviation based on 5 year average 5 All commodity futures price data is denominated in USD unless otherwise indicated.

6 Energy Brent Oil WTI Oil ICE managed money net positioning Price (RHS, USD/bbl.) Price (RHS, USD/bbl.) Natural Gas Gasoline Price (RHS, USD/MMBtu) Price (RHS, USd/gal.) Heating Oil Price (RHS, USd/gal.) Note: positioning in ' contracts. Standard deviation based on 5 year average. All commodity futures price data is denominated in USD unless otherwise indicated. *Brent average of net positions from January 211 as positions were not reported by CFTC before then. 6

7 Industrial Metals Copper (COMEX) Copper (LME) ,2 7, 6,8 6,6 6,4 6,2 6, Price (RHS, USd/lb.) LME non-commercial net positioning Price (RHS, USD/MT) Aluminum ,8 2,7 2,6 2,5 2,4 2,3 2,2 2,1 2, 1,9 1,8 Zinc ,6 3,5 3,4 3,3 3,2 3,1 3, 2,9 LME non-commercial net positioning Price (RHS, USD/MT) LME non-commercial net positioning Price (RHS, USD/MT) Nickel Lead , 14,5 14, 13,5 13, 12, ,7 2,65 2,6 2,55 2,5 2,45 2,4 2,35 2,3 2,25 2,2 LME non-commercial net positioning Price (RHS, USD/MT) LME non-commercial net positioning Price (RHS, USD/MT) Tin ,5 22, 21,5 21, 2,5 2, LME non-commercial net positioning Price (RHS, USD/MT) Note: positioning in ' contracts. Standard deviation based on 5 year average. LME non-commercial net positions from 3 January 218 post MIFID II data and respective graphs represent daily data. All commodity futures price data is denominated in USD unless otherwise indicated. 7

8 Precious Metals Gold ,7 1,6 1,5 1,4 1,3 1,2 1,1 1, 9 Silver Price (RHS, USD/t oz.) Price (RHS, USD/t oz.) Platinum ,95 1,75 1,55 1,35 1, Palladium ,15 1, Livestock Lean Hogs Price (RHS, USD/t oz.) Price (RHS, USD/t oz.) Live Cattle Price (RHS, USd/lb.) Price (RHS, USd/lb.) Feeder Cattle Price (RHS, USd/lb.) Note: positioning in ' contracts. Standard deviation based on 5 year average. respective graphs represent daily data. All commodity futures price data is denominated in USD unless otherwise indicated. 8

9 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 Inventories Agriculture Corn - Stock to Use Annual data in %, from 198 to % chg in projections vs. previous = -4.5% Corn - Ending Stocks Annual data in mln tons, from 198 to chg in projections vs. previous = -8.8 Coffee - Stock to Use Annual data in %, from 198 to % chg in projections vs. previous =.% Coffee - Ending Stocks Annual data in mln bags (6 kg), from 198 to chg in projections vs. 5 previous = Cotton - Stock to Use Annual data in %, from 198 to % chg in projections vs. previous =.6% Cotton - Ending Stocks Annual data in mln 48 lb Bales, from 198 to chg in projections vs. 1 previous = Soybeans - Stock to Use Annual data in %, from 198 to % chg in projections vs. previous = -7.2% Soybeans - Ending Stocks Annual data in, from 198 to chg in projections vs. previous = Note: Ending stocks, inventories and stock to use data from the USDA are annual with monthly update of 217/218 estimates. 9

10 /9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 96/97 98/99 99/ /1 1/2 2/3 3/4 4/5 5/6 6/7 7/8 8/9 9/1 1/11 12/13 14/15 16/17 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 Soybean Oil - Stock to Use Annual data in %, from 198 to % chg in projections vs. previous =.3% Soybean Oil - Ending Stocks Annual data in mln Metric Tons, from 198 to chg in projections vs. previous = Sugar - Stock to Use Annual data in %, from 1998 to % chg in projections vs. previous = % Sugar - Ending Stocks Annual data in mln Metric Tons, from 198 to chg in projections vs. previous = Wheat - Stock to Use Annual data in %, from 198 to % chg in projections vs. previous = 1.% Wheat - Ending Stocks Annual data in mln tons, from 198 to chg in projections vs. previous = Cocoa - Inventory Annual data in ' metric tons, from 1981 to 217 2, 1,8 1,6 1,4 1,2 1, Source: International Cocoa Organisation, Bloomberg, ETF Securities Note: Ending stocks, inventories and stock to use data from the USDA are annual with monthly update of 217/218 estimates. 1

11 89/9 99/ 1/2 3/4 5/6 7/8 9/1 89/9 99/ 1/2 3/4 5/6 7/8 9/1 May-17 Jun-17 Aug-17 Sep-17 Nov-17 Dec-17 May-17 Jun-17 Aug-17 Sep-17 Nov-17 Dec-17 Industrial Metals Aluminum Inventory Daily data, from 2 to 2 2,6 2,4 2,2 2, 1,8 1,6 1,4 1,2 1, Copper Inventory Daily data, from 2 to 2 1, SHFE Inventory (in ' tonnes) LME Inventory (in ' tonnes) SHFE Inventory (in ' tonnes) LME Inventory (in ' tonnes) COMEX Inventory (in ' tonnes) Nickel Inventory Daily data in ' MT, from 2 to Zinc Inventory Daily data, from 2 to Source: LME, Bloomberg, ETF Securities SHFE Inventory (in ' tonnes) LME Inventory (in ' tonnes) Lead Inventory Daily data, from 2 to Tin Inventory Daily data in ' MT, from 2 to SHFE Inventory (in ' tonnes) LME Inventory (in ' tonnes) LME Inventory (in ' tonnes) SHFE Inventory (in ' tonnes) Source: LME, Bloomberg, ETF Securities Livestock Lean Hogs Inventory Annual data in mln Heads, from 198 to Live Cattle Inventory Annual data in mln Heads, from 198 to 217 1,15 1,1 1,5 1, 95 9 Note: Ending stocks, inventories and stock to use data from the USDA are annual with monthly update of 217/218 estimates. 11

12 Energy US Oil Inventory Weekly data in mln barrels, from Apr 13 to Yr Average +/-1 stdev Source: DOE, Bloomberg, ETF Securities OECD Europe Oil Industry Inventory Monthly data in mln barrels, from Apr 13 to Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 5Yr Average +/-1 stdev Source: DOE, Bloomberg, ETF Securities Heating Oil Inventory Weekly data in mln barrels, from Apr 13 to Yr Average +/-1 stdev Source: DOE, Bloomberg, ETF Securities Natural Gas Inventory Weekly data in billion cubic feet, from Apr 13 to 4,5 4, 3,5 3, 2,5 2, 1,5 1, Yr Average +/-1 stdev Source: DOE, Bloomberg, ETF Securities Gasoline Inventory Weekly data in mln barrels, from Apr 13 to Yr Average +/-1 stdev Source: DOE, Bloomberg, ETF Securities Note: "Oil - OECD Inventory" represents OECD industry stocks and is reported with a 2 month lag. 12

13 Commodities Front Month Futures and Trading Volumes Agriculture Cocoa Front Month Futures Price Daily data in USD/MT, from 2 to 2 2,5 2, 1,5 1, 5 $3, $2,8 $2,6 $2,4 $2,2 $2, $1,8 $1,6 Coffee Front Month Futures Price Daily data in USd/lb., from 2 to 2 6, 5, 4, 3, 2, 1, $1.5 $1.5 $1.4 $1.4 $1.3 $1.3 $1.2 $1.2 $1.1 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Corn Front Month Futures Price Daily data in USd/bu., from 2 to 2 25, 2, 15, 1, 5, $4. $3.9 $3.8 $3.7 $3.6 $3.5 $3.4 $3.3 $3.2 Cotton Front Month Futures Price Daily data in USd/lb., from 2 to 2 4,85 4,35 3,85 3,35 2,85 2,35 1,85 1, $.9 $.85 $.8 $.75 $.7 $.65 $.6 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Soybean Oil Front Month Futures Price Daily data in USd/lb., from 2 to 2 5,5 4,5 3,5 2,5 1,5 5-5 $.38 $.37 $.36 $.35 $.34 $.33 $.32 $.31 $.3 Soybeans Front Month Futures Price Daily data in USd/bu., from 2 to 2 4, 35, 3, 25, 2, 15, 1, 5, $1.8 $1.6 $1.4 $1.2 $1. $9.8 $9.6 $9.4 $9.2 $9. Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Sugar Front Month Futures Price Daily data in USd/lb., from 2 to 2 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, 5 $.22 $.2 $.18 $.16 $.14 $.12 $.1 Wheat Front Month Futures Price Daily data in USd/bu., from 2 to 2 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, $5.5 $5.3 $5.1 $4.9 $4.7 $4.5 $4.3 $4.1 $3.9 $3.7 $3.5 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Note: all commodity futures trading volume and price data is denominated in USD unless otherwise indicated. Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) 13

14 Energy Brent Oil Front Month Futures Price Daily data in USD/bbl., from 2 to 2 $12, $1, $8, $6, $4, $2, $ $75 $7 $65 $6 $55 $5 $45 $4 WTI Oil Front Month Futures Price Daily data in USD/bbl., from 2 to 2 $16, $14, $12, $1, $8, $6, $4, $2, $ $7 $65 $6 $55 $5 $45 $4 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Natural Gas Front Month Futures Price Daily data in USD/MMBtu, from 2 to 2 $35, $3, $25, $2, $15, $1, $5, $ $4. $3.8 $3.6 $3.4 $3.2 $3. $2.8 $2.6 $2.4 $2.2 Gasoline Front Month Futures Price Daily data in USd/gal., from 2 to 2 $45, $4, $35, $3, $25, $2, $15, $1, $5, $ $2.2 $2.1 $2. $1.9 $1.8 $1.7 $1.6 $1.5 $1.4 $1.3 $1.2 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Heating Oil Front Month Futures Price Daily data in USd/gal., from 2 to 2 $25, $2, $15, $1, $5, $2.5 $2.3 $2.1 $1.9 $1.7 $1.5 $ $1.3 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Carbon Carbon Front Month Futures Price Daily data in EUR/MT, from 2 to Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Note: all commodity futures trading volume and price data is denominated in USD unless otherwise indicated. 14

15 Industrial Metals Aluminum Front Month Futures Price Daily data in USD/MT, from 2 to 2 $26, $21, $16, $11, $6, $1, -$4, $2,7 $2,5 $2,3 $2,1 $1,9 $1,7 $1,5 Lead Front Month Futures Price Daily data in USD/MT, from 2 to 2 $8, $7, $6, $5, $4, $3, $2, $1, $ $2,9 $2,7 $2,5 $2,3 $2,1 $1,9 $1,7 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Copper (COMEX) Front Month Futures Price Daily data in USd/lb., from 2 to 2 $25, $2, $15, $1, $5, $ $3.4 $3.2 $3. $2.8 $2.6 $2.4 $2.2 $2. $1.8 Copper (LME) Front Month Futures Price Daily data in USD/MT, from 2 to 2 $35, $3, $25, $2, $15, $1, $5, $ $7,7 $7,2 $6,7 $6,2 $5,7 $5,2 $4,7 $4,2 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) 2 dma (RHS) 5 dma (RHS) Prices (RHS) Nickel Front Month Futures Price Daily data in USD/MT, from 2 to 2 $16, $14, $12, $1, $8, $6, $4, $2, $ $16, $15, $14, $13, $12, $11, $1, $9, $8, Tin Front Month Futures Price Daily data in USD/MT, from 2 to 2 $8 $7 $6 $5 $4 $3 $2 $1 $ $23, $22, $21, $2, $19, $18, $17, Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Zinc Front Month Futures Price Daily data in USD/MT, from 2 to 2 $25, $2, $15, $1, $5, $ $3,7 $3,5 $3,3 $3,1 $2,9 $2,7 $2,5 $2,3 $2,1 $1,9 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Note: all commodity futures trading volume and price data is denominated in USD unless otherwise indicated. 15

16 Precious Metals Gold Front Month Futures Price Daily data in USD/t oz., from 2 to 2 $1, $9, $8, $7, $6, $5, $4, $3, $2, $1, $ $1,4 $1,35 $1,3 $1,25 $1,2 $1,15 $1,1 Silver Front Month Futures Price Daily data in USD/t oz., from 2 to 2 $18, $16, $14, $12, $1, $8, $6, $4, $2, $ $21 $2 $19 $18 $17 $16 $15 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Platinum Front Month Futures Price Daily data in USD/t oz., from 2 to 2 $2,5 $2, $1,5 $1, $5 $ $1,5 $1,3 $1,1 $99 $97 $95 $93 $91 $89 $87 $85 Palladium Front Month Futures Price Daily data in USD/t oz., from 2 to 2 $1,6 $1,4 $1,2 $1, $8 $6 $4 $2 $ $1,2 $1,1 $1, $9 $8 $7 $6 $5 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Livestock Lean Hogs Front Month Futures Price Daily data in USd/lb., from 2 to 2 $2,8 $1.2 $2,3 $.92 $1,8 $.82 $1,3 $.72 $.62 $8 $.52 $3 $.42 -$2 $.32 Live Cattle Front Month Futures Price Daily data in USd/lb., from 2 to 2 $12, $1, $8, $6, $4, $2, Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) $ $1.4 $1.35 $1.3 $1.25 $1.2 $1.15 $1.1 $1.5 $1. $.95 $.9 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Feeder Cattle Front Month Futures Price Daily data in USd/lb., from 2 to 2 $3, $2,5 $2, $1,5 $1.7 $1.6 $1.5 $1.4 $1, $1.3 $5 $1.2 $ $1.1 Volume ($mn) Prices (RHS) 5 dma (RHS) 2 dma (RHS) Note: all commodity futures trading volume and price data is denominated in USD unless otherwise indicated. 16

17 Futures Curves Agriculture Cocoa Futures USD/MT $3, $2,8 $2,6 $2,4 $2,2 $2, $1, Coffee Futures USd/lb. $1.6 $1.5 $1.4 $1.3 $1.2 $ Corn Futures USd/bu. $4.5 $4.3 $4.1 $3.9 $3.7 $3.5 $3.3 Cotton Futures USd/lb. $.9 $.85 $.8 $.75 $.7 $ Soybean Oil Futures USd/lb. $.345 $.34 $.335 $.33 $.325 $.32 $.315 $.31 $.35 $.3 Soybeans Futures USd/bu. $1.8 $1.6 $1.4 $1.2 $1. $9.8 $9.6 $9.4 $ Sugar Futures USd/lb. $.16 $.155 $.15 $.145 $.14 $.135 $.13 $.125 $.12 $.115 $.11 Wheat Futures USd/bu. $5.8 $5.3 $4.8 $4.3 $ Note: all commodity futures price data is denominated in USD unless otherwise indicated. 17

18 Energy Brent Oil Futures USD/bbl. $79 $74 $69 $64 $59 WTI Oil Futures USD/bbl. $69 $64 $59 $54 $54 $ Gasoline Futures USd/gal. $2.2 $2.1 $2. $1.9 $1.8 $1.7 $1.6 $1.5 $1.4 Natural Gas Futures USD/MMBtu $3.3 $3.2 $3.1 $3. $2.9 $2.8 $2.7 $2.6 $2.5 $ Heating Oil Futures USd/gal. $2.15 $2.1 $2.5 $2. $1.95 $1.9 $1.85 $1.8 $1.75 $ Carbon Carbon Futures EUR/MT Note: all commodity futures price data is denominated in USD unless otherwise indicated. 18

19 Industrial Metals Aluminum Futures USD/MT $2,55 $2,45 $2,35 $2,25 $2,15 $2,5 Lead Futures USD/MT $2,65 $2,6 $2,55 $2,5 $2,45 $2,4 $2,35 $2,3 $2, Copper (COMEX) Futures USd/lb. $3.35 $3.3 $3.25 $3.2 $3.15 $3.1 $3.5 $3. Copper (LME) Futures USD/MT $7,4 $7,3 $7,2 $7,1 $7, $6,9 $6,8 $6,7 $6, Nickel Futures USD/MT $15,2 $14,8 $14,4 $14, $13,6 $13,2 $12,8 $12,4 $12, $11,6 $11,2 $1,8 $1,4 Tin Futures USD/MT $22,5 $22, $21,5 $21, $2,5 $2, $19,5 $19, $18, Zinc Futures USD/MT $3,6 $3,5 $3,4 $3,3 $3,2 $3,1 $3, $2,9 $2,8 $2,7 $2, Note: all commodity futures price data is denominated in USD unless otherwise indicated. 19

20 Precious Metals Gold Futures USD/t oz. $1,55 $1,5 $1,45 $1,4 $1,35 $1,3 $1,25 $1,2 Silver Futures USD/t oz. $2. $19.5 $19. $18.5 $18. $17.5 $17. $16.5 $16. $ Platinum Futures USD/t oz. $1,2 $1, $98 $96 $94 $92 $ Livestock Lean Hogs Futures USd/lb. $.9 $.85 $.8 $.75 $.7 $.65 $.6 $ Palladium Futures USD/t oz. $1,15 $1,1 $1,5 $1, $95 $ Live Cattle Futures USd/lb. $1.29 $1.24 $1.19 $1.14 $1.9 $1.4 $ Feeder Cattle Futures USd/lb. $1.5 $1.48 $1.46 $1.44 $1.42 $1.4 $1.38 $1.36 $1.34 $1.32 $ Note: all commodity futures price data is denominated in USD unless otherwise indicated. 2

21 C Commodity Monthly Matrix Explained Score based on unweighted sum of four fundamental/technical measures detailed below with each measure awarded a possible score of -1,, or 1 depending on whether variable is viewed as fundamentally negative, neutral or positive. Score ranging from -4 to +4. For commodities where data is not available or not relevant, scores are calculated on remaining variables and adjusted to the -4 to +4 scale. The score matrix is designed to highlight significant changes in key variables but should not be viewed as predictor of performance. The four fundamental/technical measures are as follow: - price vs. 2 days moving average: 1 when price is above 2dma and return is positive, -1 when price is below 2dma and return is negative, otherwise - % change in net positioning over the past month: 1 when % change is positive, -1 when % change is negative, when no change - % change in inventory level over the past 3 months: 1 when % is negative, -1 when % is positive, when no change - roll yield between the front and second month futures contracts: 1 when in backwardation, -1 when in contango, when no change CALENDAR ETF Securities - Recent Research Notes 19-Sep-17 Nitesh Shah A short-term pull-back in industrial metals likely to open new entry points 26-Sep-17 Morgane Delledone Open-ended debate over US debt ceiling 3- Edith Southammakosane Underweight bonds on rising interest rates and inflation expectations 1- Nitesh Shah Coffee offers upside potential in a depressed soft commodity market 5-Dec-17 Research team Disruptors going mainstream in Nov-17 Aneeka Gupta The rebalancing of the Australian economy is the cornerstone of its resilience 12-Dec-17 Edith Southammakosane A closer look at emerging market equities 16- Nitesh Shah Silver may benefit from upturn in industrial cycle 23- Martin Arnold Can the Euro sustain the 217 rally? 3- Aneeka Gupta Macro outlook supports the mining sector but further upside remains muted 6- Edith Southammakosane The potential benefits of real assets in a portfolio 2- Nitesh Shah Nickel : electrification may boost demand 8- Aneeka Gupta Europe is near to closing the gap with the US ETF Securities - Past Issues of Commodity Monthly Monitor Aug-Sep 217 Research Team Global economic upswing is fertile ground for metals Sep-Oct 217 Research Team Investors cautious as commodities continue to rally Oct-Nov 217 Research Team Rising US dollar likely to be a weight for commodities Jan-Feb 218 Research Team US dollar gives transitory boost to commodities Feb - Mar 218 Research Team Commodities buck cyclical shakedown The research notes are for qualified investors only. Key Reports Current Next release 8-8- USDA World Agricultural Supply and Demand Estimates 6-6- EIA Short-Term Energy Outlook OPEC OPEC Oil Market Report IEA IEA Oil Market Report DISCLAIMER Important Information The analyses in the above tables are purely for information purposes. They do not reflect the performance of any ETF Securities' products. The futures and roll returns are not necessarily investable. Telephone calls may be recorded for training and monitoring purposes. 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 (the FCA ). This communication is only targeted at qualified or professional investors. The information contained in this communication is for your general information only and 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. 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