Commodities Wrap 31 July: Cocoa Jumps 5.5 Percent as Oil Rebounds and Metals Slip

By The Edge Research Team

Commodities traded mixed on Friday, with crude oil rebounding and soft commodities surging while the precious-metals complex gave back part of the previous session’s rally. Brent crude for the front month traded at 90.09 dollars a barrel, up 1.19 percent, and West Texas Intermediate at 84.63 dollars, higher by 1.24 percent, per CNBC, as the market rebuilt part of the security premium tied to the Middle East conflict.

Energy firmed at the top of the barrel while refined products and gas eased. Brent and WTI both advanced, but heating oil fell 2.03 percent and RBOB gasoline also slipped 2.03 percent, per CNBC, a divergence between crude and the products. Natural gas edged down 0.47 percent to 2.745 dollars per million British thermal units. The rebound in crude recovered part of the previous day’s pullback and left the front-month Brent contract back above 90 dollars, our reading.

Precious metals retreated while base metals were mixed. Silver led the declines, falling 1.51 percent to 58.125 dollars an ounce, with palladium off 1.43 percent to 1,289.50 dollars and gold down 1.30 percent to 4,106.60 dollars, while platinum held a small gain of 0.34 percent to 1,665.80 dollars. Copper firmed 0.76 percent to 6.524 dollars a pound. The pullback in gold and silver unwound part of the prior session’s advance as Treasury yields rose, leaving the gold to silver ratio near 70.7, our calculation.

Agriculture was broadly higher, led by a sharp move in cocoa. Cocoa jumped 5.52 percent, coffee rose 1.90 percent, sugar added 1.52 percent and cotton 1.21 percent, per CNBC, while the grains lagged, with wheat down 3.84 percent, corn 1.01 percent and soybeans little changed. The surge in cocoa and the firmness across the softs contrasted with the weakness in the grain complex.

In the wider markets, Treasury yields rose and risk assets were mixed. The dollar index was little changed at 99.892, the euro held at 1.1532 and the yen firmed 0.40 percent to 158.87 per dollar, per CNBC. The US 10-year Treasury yield climbed about 8 basis points to 4.745 percent, the volatility index eased 3.92 percent to 16.42 and Bitcoin fell 2.59 percent to about 63,086 dollars.

Why it matters: The rebound in crude is the key read for the Gulf, our reading. Brent back above 90 dollars supports the export revenue of oil producers such as Saudi Arabia, Kuwait, the UAE and Oman, while Qatar’s gas-heavy exports are tied more to LNG pricing and broader hydrocarbon sentiment, and the rebuilding of the security premium keeps the focus on the freight and insurance costs around regional shipping. The retreat in gold trims the mark-to-market value of the region’s official reserves after this week’s gains, while higher US Treasury yields raise financing costs for the dollar-linked Gulf economies. Most Gulf markets and the Egyptian Exchange were closed for the weekend, though the UAE exchanges traded their normal Friday session, so the moves will be fully reflected when the rest of the region resumes.

Outlook: The immediate drivers are the course of the Middle East conflict and whether crude holds its rebound above 90 dollars on Brent, our reading. A renewed escalation could extend the oil bid, while the rise in Treasury yields and its pull on the dollar will shape the metals complex. In agriculture, whether cocoa’s surge holds and how the grain complex stabilises after wheat’s drop are the near-term markers to watch.

Table – Energy, 31 July, ranked by change:

Table – Metals, 31 July, ranked by change:

Table – Agriculture, 31 July, ranked by change:

Table – Rates, currencies, volatility and crypto, intraday 31 July:

Sources: CNBC.

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