Oil markets are keeping an eye on any announcement from OPEC that could indicate its oil output plans. The group is scheduled to meet in Vienna on December 6 and 7. Experts say a production cut agreement could further strengthen Dubai crude prices.
Meanwhile, the US and China have agreed over the weekend to resume trade negotiations and halt further tariff rate hikes for 90 days. This could help restore trade flows for some commodities like agriculture and petroleum.
In thermal coal, shippers in Asia are seeking confirmation from customers that China's import quotas may be exhausted before the end of December. Market sources estimate that only 2 million mt of China's annual import allocation is left for the remainder of the year.
In agriculture, Australian wheat prices are expected to inch higher due to stronger demand in the domestic market.
This week: Markets assess the US and China's decision to resume trade negotiations, freight rates are to weaken, and healthy demand seen supporting wheat prices.
But first, all eyes are on the upcoming OPEC meeting, with international crude prices having come off some 30% since early October. A production cut agreement could further strengthen Dubai crude prices, after the benchmark has jumped recently, further narrowing its discount to Brent, backed by strong fuel oil crack and a relatively weak gasoline/naphtha market.
Still in oil, China will release its preliminary trade data for November on December 8. Market participants will focus on the product export volume, which will give an indication of the expected outflow this month, when the Asian gasoline and gasoil market is oversupplied.
And China remains in focus following the Trump-Xi talks over the weekend. China and the US have agreed to resume negotiations and temporarily halt further tariff hikes for 90 days. This could help restore trade flows for some commodities like agriculture and petroleum. This provisional truce could benefit US exports of soybeans, crude oil and LNG to China, which had tapered off after Beijing implemented retaliatory tariffs and threatened new ones. China has agreed to start purchasing agricultural products from US farmers immediately.
So for our social media question this week: Do you expect the two countries to agree on a longer-term trade truce? Share your thoughts on twitter with hashtag PlattsMM.
In the dry bulk market, sources expect the recent sentiment driven increase in Panamax freight rates to retrace down quickly given the lack of significant changes to market fundamentals.
Supramax markets seem to have hit the floor last week. But with demand remaining thin, the rates are not expected to be too different but for changes to bunker fuel prices.
In thermal coal, shippers in Asia are seeking confirmation from customers that China's import quotas may be exhausted before the end of December. Market sources estimate that only 2 million mt of China's annual import allocation is left for the remainder of the year, and that is before vessels arrive with cargoes at Chinese ports under long-term contracts. You can learn more about the port restrictions from our latest Commodities Policy podcast on our website.
Finally in agriculture, Australian wheat prices are expected to inch higher due to stronger demand in the domestic market. Traders say demand from Australia's East Coast for APW will continue to support prices, resulting in higher offer prices for the export business. The harvest for the 2018/2019 marketing year might see increased production for lower protein wheat, which could explain the wider spread for APW and ASW.
That's it for this week. Thanks for kicking off your Monday with us. Have a great week ahead!