Commodities: Oil retreats alongside losses for iron ore, agricultural futures well bid

Oil futures led the way lower on Monday after Iran said over the weekend it would not support an agreement by several of the world’s top producers to freeze their oil output until his country’s production had first recovered to 4m barrels a day.

“As long as Iran’s oil production does not reach 4m barrels a day, it is better that we are not disturbed. We will accompany them afterwards,” Iranian Petroleum Minister Bijan Zangeneh told the Iranian Students News Agency on 13 March.

Zangeneh claimed on Monday Tehran’s exports of crude oil and gas condensates would rise to 2m b/d in March, from 1.75m b/d in the month before, according to state-owned newswire Shana.

Iranian oil production stood at about 3m b/d in February, according to Bloomberg data.

On Monday, Zangeneh’s aspirations apparently received the backing of Russian Energy Minister Alexander Novak, Shana reported.

Front month Brent crude oil futures were moving lower by 1.76% to $39.69 per barrel on the ICE by the end of trading in London, alongside a 3.2% drop in West Texas Intermediate to $37.30 per barrel.

Natural gas futures on NYMEX ended the day 0.22% lower at $1.82/MMBtu.

Copper slips, iron ore comes off the boil

Three-month copper futures slipped by 0.2% to $4,947.0 per metric tonne on the LME.

May-dated iron ore futures on China’s Dalian Commodity Exchange finished the session down by 2.3% at 422.5 yuan ($65.06) a tonne, after hitting a session high at 454 yuan, their highest since 16 January, amid speculation that Chinese steel output is recovering and will swamp a modest rise in demand.

Industrial production grew by 5.4% year-on-year in January and February combined, in comparison to a 5.9% gain in December while retail sales were up at a 10.2% year-on-year clip over that same period, China’s National Bureau of Statistics said on 12 March. Both sets of data were weaker than economists had anticipated, although some attributed the short-fall to seasonal and statistical effects.

One of those was Julian Evans-Pritchard at Capital Economics who nevertheless added: “to be clear, the long-run outlook for China remains challenging. The recent acceleration in credit will boost activity in the short-run but adds to long-run debt risks. Meanwhile, progress on key reforms looks likely to remain slow."

The drop in iron ore futures took place despite strong figures on the value of Chinese property sales , which figures revealed rocketed 43.6% in the first two months of the year.

In parallel, COMEX-traded gold futures for delivery in April retreated by $22.10 or 1.75% to $1,237.30 per ounce, undermined by a moderate advance in the greenback ahead of Wednesday’s interest rate decision from the US Federal Reserve.

Agricultural futures find a bid

Out in the agricultural space, May 2016 corn futures were up by 1.03% to $368.75 per bushel on the Chicago Board of Trade, and those for wheat by 0.58% to $478.50.

Cocoa futures gained 0.62% to $3,081 per tonne and those for cotton 1.99% to $58.29 per pound.

Live cattle futures for June delivery edged higher by 0.21% to $128.83 per pound in CBoT trading.