Five Key Charts to Watch in Global Commodities This Week

(Bloomberg) -- Nickel on the London Metal Exchange finally resumed Asian-hours trading on Monday, marking a crucial step in efforts to repair the market after last year’s turmoil. Here are five notable charts to monitor in global commodities this week.

Nickel

The metal opened for business at 1 a.m. London time, more than a year after the LME suspended trading and canceled billions of dollars worth of deals following a runaway short squeeze. Trading activity so far Monday has been muted, with volumes lower than this year’s average. Since last March, with trading only happening during European hours, average daily volumes have plummeted to levels less than half of what they were before the crisis — and well below the five-year average — while the number of open contracts has dropped by more than a third. The decline in activity has left the market vulnerable to erratic swings and raised questions about the LME’s continued viability as the place where benchmark prices are set for one of the world’s most important metals. Officials hope the return of Asian trading will help boost liquidity.

Brazil-China Trade

Brazilian President Luiz Inacio Lula da Silva canceled his trip to China on Saturday as he receives treatment for influenza, potentially setting back his plan to strengthen relations with Brazil’s largest trading partner. The prospect of forging closer ties between Lula and President Xi Jinping was expected to help boost shipments of soybeans, beef and other commodities. Meanwhile, soybean crushers are still trying to finalize negotiations for exporting meal to the Asian nation, while Brazil is also hoping to solidify its position as a reliable and stable corn source. A growing partnership between China and Brazil threatens to displace US farmers in one of their key corn markets — and the South American nation is set to surpass the US as the top exporter this year.

Natural Gas

The end of winter in the Northern Hemisphere left natural gas traders with little to be bullish about in the short term. Prices for the heating and power-generation fuel have halved this year to trade around $2 per million British thermal units as abnormally mild temperatures caused inventories to swell relative to usual levels for this time of year. But the long-term picture is shaping up to be a whole different story. Gas for delivery in the summer of 2025 and 2026 have both seen their premiums to this year’s contracts climb, with prices hovering around $4 per mmbtu. That comes as new liquefied natural gas export projects, including Venture Global LNG Inc.’s Plaquemines terminal, are expected to begin operations and boost demand for the commodity from the end of 2024.

Electric Vehicles

Global passenger electric vehicle sales are set to hit a fresh record in 2023, according to BloombergNEF. While growth may be slower than in prior years, adoption in the US is poised for a breakout year thanks to improved manufacturing capacity and new federal tax credits under the Inflation Reduction Act. The Treasury Department is expected to release requirements later this week for consumers to qualify for up to $7,500 in credits, including standards for the batteries and critical minerals that are meant to encourage more North American production and cut out supplies from China.

Corn

Traders have been betting on corn ahead of the US Department of Agriculture’s prospective plantings report due on Friday. The closely tracked ratio between December corn and November soybean futures has been favoring corn plantings since earlier this month, meaning its comparatively stronger performance will push more farmers to plant the grain at the expense of the beans. That’s as top producer Brazil is harvesting a record soy crop while corn supplies in No. 1 grower the US were depleted by drought last year.

(Updates with resumption of nickel trading in Asian hours in first and second paragraphs.)

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