Commodities Wrap 18 August: Metals Slide as Silver Drops 3.6 Percent While Coffee Jumps

By The Edge Research Team

The commodities board split sharply on Tuesday: every tracked energy contract rose while every tracked metal fell, per CNBC. Silver dropped 3.56 percent to lead the metals lower, natural gas gained 3.05 percent to lead energy, and coffee jumped 4.31 percent in the day’s largest single move, per CNBC. Seven of the 17 contracts tracked here were higher at the 18:35 GMT capture, our calculation.

Agriculture, energy and metals figures are late-session quotations captured between 18:19 and 18:34 GMT and compiled at 18:35 GMT, and should not be read as official settlement prices. Currencies, the volatility index and Bitcoin are intraday readings, while United States Treasury yields are Monday 17 August official closes, carried for reference.

In energy, the complex held Monday’s ground and added to it, with the gains rotating from crude to gas. Natural gas led, up 3.05 percent at 2.772 dollars per million British thermal units, reversing its position as Monday’s only energy decliner, with RBOB gasoline up 1.19 percent at 3.3091 dollars a gallon, per CNBC. WTI for September added 0.57 percent to 84.98 dollars a barrel, ULSD heating oil 0.39 percent to 4.4545 dollars, and ICE Brent for October held above 91 at 91.08 dollars, up 0.23 percent after Monday’s 2.78 percent surge, per CNBC. The supply backdrop hardened during the day: a vessel was struck by a projectile while transiting the Strait of Hormuz, damaging its engine room and causing a crew casualty, the UK Maritime Trade Operations agency said, per CNBC, and just three vessels transited the strait on Sunday, per Kpler ship-tracking data cited by CNBC.

In metals, the selling was uniform and heavy, the mirror image of energy. Silver fell 3.56 percent to 63.87 dollars an ounce, platinum 3.49 percent to 1,726.50 dollars and palladium 3.43 percent to 1,291.00 dollars, per CNBC. Copper dropped 2.14 percent to 6.4745 dollars a pound and COMEX gold for December fell 1.37 percent to 4,412.50 dollars an ounce, below Monday’s settlement of 4,473.70, per CNBC. The break came with the US dollar index little changed on the day and long-term government bond yields in many major markets holding near multi-decade highs, per CNBC, a backdrop that raises the carrying cost of non-yielding assets, our reading.

Agriculture split, with the tropical softs supplying the day’s biggest swings in both directions. Coffee jumped 4.31 percent to 331.60 cents a pound in the board’s largest move, extending Monday’s advance, and sugar rose 3.62 percent to 17.48 cents, per CNBC. Cocoa went the other way, giving back 2.39 percent to 5,924.00 dollars a tonne after Monday’s 5.28 percent jump, and wheat fell 1.78 percent to 677.00 cents a bushel, per CNBC. The rest barely moved: soybeans eased 0.06 percent to 1,215.25 cents, cotton 0.08 percent to 85.41 cents and corn 0.36 percent to 487.75 cents, per CNBC.

In rates and the wider market, the risk gauges stayed bid while the dollar sat still. The Cboe Volatility Index rose 3.16 percent to 15.67 against Monday’s close, per Cboe, while the US dollar index was little changed at 99.65, up 0.01 percent, per CNBC. Bitcoin added 0.74 percent to 64,748.00 dollars, per CNBC. The euro was little changed at 1.1576, sterling at 1.3532 and the yen at 159.58 per dollar, with the Kuwaiti dinar at 0.3071, per CNBC. United States Treasury yields carry Monday’s official closes for reference, with the 30-year at 5.31 percent after a 6 basis point rise; long-dated yields traded near multi-decade highs intraday on Tuesday before easing from the morning’s levels, per CNBC, and Tuesday’s official curve, derived from quotations at or near 7:30 PM GMT, publishes after the New York close.

Energy, late-session 18 August, ranked by change

Metals, late-session 18 August, ranked by change

Agriculture, late-session 18 August, ranked by change

Currencies, intraday 18 August

US Treasury yields, Monday 17 August official closes, for reference, ranked by change

Volatility and crypto, intraday 18 August, ranked by change

Why it matters: Tuesday’s board is a rotation, not a retreat, our reading. Energy held every dollar of Monday’s geopolitical repricing and added to it with gas in the lead, while the metals complex broke in unison, five of five lower with silver worst. That divergence with a near-flat dollar index argues against a broad currency effect and is more consistent with rates pressure and profit-taking, our reading: the precious metals have run far this year, and a long-end rates backdrop at multi-decade highs charges more every week for holding assets that yield nothing. The softs supplied the largest swings again in both directions, coffee’s 4.31 percent jump against cocoa’s 2.39 percent giveback a day after cocoa led the whole board, which is the signature of thin markets repricing on their own clocks. A 7 of 17 board with energy unanimously higher is narrower than Monday’s 14 of 17, and narrower breadth with higher vol reads as a market picking its exposures more carefully.

Outlook: The markers from here are whether Brent holds above 91 dollars into the weekly US inventory cycle, whether silver’s break extends or the metals stabilise once the long end of the rates market finds a level, and whether the strait’s transit count recovers after Tuesday’s reported strike, our reading. The United States Treasury publishes Tuesday’s official curve after the New York close, and this wrap’s energy and metals rows are checked against the exchanges’ published settlement pages in the next-morning confirmation pass.

Sources: CNBC; Cboe; United States Department of the Treasury; Central Bank of Egypt.

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