You are looking for that one useful piece of information, the thing you did not know or maybe vaguely suspected.
It might just be a feeling, a sense that a tide is turning.
When a few hundred people gathered at Almas Tower in Dubai on Sunday for a day-long conference on commodities, sponsored by the Dubai consultancy Richcomm, people came and went, drifted into the conference hall and out, listened sometimes and looked at their phones other times.
But many of them will have found their one takeaway insight somewhere during the day, which we summarise here.
The day was broken into four panels: first energy, then agriculture, and in the afternoon base metals and lastly precious metals.
Energy
The panel on energy prices broadly agreed that the multilateral deal reached in late November to cut oil output for six months was widely adhered to in January, but that was the easy part.
“Gulf producers are delivering [on the cuts],” said Giorgos Beleris, the lead oil analyst for Thomson Reuters. “So far, so good. There’s another five months.”
Some producers, he noted, were using the cuts as an opportunity to do maintenance work.
There was some question as to whether Russia will stick to its part of the deal. The main planks of the deal are for the Opec countries to cut output by 1.2 million barrels per day, and Russia by 300,000.
Joshun Chan, an oil trader at Sharjah’s Gulf Petrochem, said Russia is “making headway” and has already cut output by 100,000 barrels per day.
Beleris said Russia’s field are old and it is not easy to turn the tap on and off, adding: “You have to go with what the well is giving you.”
Let alone in the winter, said Tobias Young, the head of hydrocarbons at the DGCX.
Robin Mills, the chief executive of Qamar Energy and a weekly columnist for The National, noted the Russian output pattern as: "Always weakest in the first half of the year, always goes up in the second half of the year."
The big variable outside the countries that made the deal is the US shale sector, which has rebounded strongly as the oil price has rallied thanks to the output cuts plan. Mr Mills noted that US production was at a low as recently as September, and added: “It’s remarkable how quickly the US production has responded to higher prices.” He pointed out that financing has also been at the ready, and cited Exxon’s $6.6 billion purchase in January of assets in America’s Permian Basin.
The panellists saw the Donald Trump US presidency as a variable that could push prices either up or down: new sanctions on Iran, and the arrow points up; a trade war with China, and it points down
Asked to predict what the oil price will be at the end of this year, the panellists kept to what Mr Young, the session’s moderator, described as “a tight range”. Most bullish was Esa Ramasamay, the global director at Platts, who said the price could go up to US$60, and all that was missing for it to surge was a pickup in economic activity in China and Europe.Most bearish was Mr Chan with a low of $52. Mr Mills was at $57, while Mr Beleris and Mustafa Ansari, the energy research analyst at Arab Petroleum Investments Corp, were at $55. Brent stood at $56.70 a barrel as they spoke; on Thursday afternoon it was at $55.87.
Agriculture
James Wild, the regional head of Louis Dreyfus, and Jonathan Grange, a grains broker at Sunstone Brokers whose CV includes a stint farming in Ukraine, emphasised the growing importance of Black Sea Wheat, which includes product from Ukraine and Russia. Because those countries’ currencies have been so devalued, and because local economic conditions are difficult, the costs of production have fallen to the point where it has created a competitive advantage for the Black Sea farmers. “The potential output in Ukraine and Russia is very significant,” Mr Grange said – especially Russia which has lots of leeway to increase the amount of land used for farming.
Mr Wild noted that the typical Black Sea wheat farmer is raking it in big-time: “He’s making big money in local terms.”
Grange said “harvest pressure” – that is, the pressure to sell product quickly so it does not go to waste – is not as strong as it used to be. That is in part due to new technology.
Mr Wild said China will keep driving the soyabean trade. But at the same time, he noted that Chinese are shifting to buying their soyabeans in South America rather than North America, and he expected US soyabean exports to fall in the second half of this year as the competition from down south strengthens.
Protectionism from the White House could increase this trend. If Trump imposes a border tax on Mexican goods, Mr Wild said, “there is likely to be some retaliation from Mexico itself, which is a major, major market for the US farmer.”
Mr Grange noted that last big protectionist drive was the US embargo on selling grain to the Soviets in 1980-81 because of their invasion of Afghanistan. But he said the upshot was that the Russians, pushed by desperation, found new source markets – and then stuck with them after Ronald Reagan lifted the embargo upon becoming president in 1981.
The bottom line in this sector is that China has options – perhaps moreso than America, which if it pursues protectionism will invite retaliation that could harm the export-dependent US farmer most of all.
It was a lively conversation so it was something of a surprise when Mr Grange, who was the moderator, said in summary: “The outlook for agriculture is pretty average to dull in the next six months. We’re kind of dependent on the weather. The only way we’re going to get any fun in these markets is a weather disturbance in the northern hemisphere.”
Base metals
“The bear is behind us,” said Salam Al Sharif, the president of the Bureau of Middle East Recycling, an industry group.
Yes there are challenges and uncertainties – again, Mr Trump and China – but the base-metals experts were generally upbeat.
China’s economy could keep slowing down – or it could rally, or at least stay steady, and keep up its 20-year trend as the bulwark of the base metals market.
Mr Trump could spark a trade war – or he could follow through with his plan to spend $1 trillion on infrastructure, a lot of that money going to base metals such as copper and aluminium.
One of the major issues up ahead for UAE business is the planned implementation of value-added tax, which is to begin in 2018. This is no less a concern in the base metals field.
“Definitely that will have a worse effect,” said Pradeep Kumar, the head of risk and treasury management for metal industries at Al Ghurair Group. He said the region’s tax-free economies are an important part of their allure for companies.
Near the end of the session Mr Sharif changed tack, away from big-picture externalities and toward the daily task of running a business. He said he learned from his father in the 1980s to focus inside, not on outside. “Know your business. Know demand. Leave a little room for opportunities.”
Precious metals
What is the key driver of the gold price these days?
“Trump. Trump. And probably Trump,” said Jeffrey Rhodes, the founder of Rhodes Precious Metals Consultancy DMCC.
He said the election of Mr Trump – and likewise the Brexit vote result – meant that 2016 had two “black swan” events in one year.
“Those events of the past year have yet to play out,” Mr Rhodes added. “Brexit has got a lot more impact [ahead] ... It’s going to get nasty.”
Gerhard Schubert, the founder of Dubai’s Schubert Commodities Consultancy, agreed: “The impact of Brexit wasn’t last year. It will be this year.”
Given that gold is a haven for investors in troubled times, those who trade in gold benefit when the world goes awry, as investors rush to harbour.
Jan Carnogursky, the chief executive of Gulf Gold Refinery and formerly a special-forces soldier in the Slovak army, took issue with Mr Rhodes’ definition of black swans. They are not merely surprises, Mr Carnogursky said, but things that no one saw coming; whereas Mr Trump and Brexit, although surprising, played out in full public view.
Looking ahead, Mr Carnogursky said, “A true black swan event will come – this is what I expect ... Don’t be surprised if you see gold at more than $1,300.”
Gold stood at $1,227.12 as he spoke and was at $1,238.09 on Thursday.
The panellists were even keener on the other precious metals – silver, palladium and platinum – though these are more volatile than gold.
“Silver is gold on steroids,” Mr Schubert said. “Silver is an amplifier – on good days as well as on bad days. If gold loses 2 per cent, silver will lose 5 per cent on the same day. ... If somebody is positive for gold, then silver is your metal.”
Mr Rhodes said, “The white precious metals have a lot more going for them than gold. “ He noted that palladium and platinum are valuable for their many industrial uses.
Mr Schubert said he sees palladium reaching US$1,000 an ounce – it was at $780.92 as he spoke – but noted taht in the past, he has been “bitterly disappointed” when he has made this call.
rmckenzie@thenational.ae
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