Commodities: Grains higher on poor weather, IEA warns on supply risks

Commodities were higher at the end of the week, boosted by gains in the agricultural space on the back of reports of poor weather in Canada and Russia.

By the closing bell, corn futures for December delivery on the Chicago Board of Trade were ahead by 1.22% to $3.7375 a bushel, alongside an advance of 1.82% for similarly-dated wheat to $5.1725 a bushel.

Three-month cocoa futures on ICE were also wanted, tacking-on 3.0% to $2,160 a metric tonne.

In parallel, cotton#2 on ICE added 2.03% to $0.7837 a pound.

From a bird's eye view, the Bloomberg commodity index rose 0.36% to $86.24 a barrel, even as the US dollar spot index put on 0.21% to 95.2210.

In the energy space meanwhile, West Texas Intermediate crude oil futures for prompt month delivery added 0.52% to $71.34 a barrel on NYMEX.

That was despite the International Energy Agency's decision to mark-down its forecasts for global oil demand growth for 2018 and 2019 by 0.11m barrels per day, to 1.28m b/d and 1.36m, b/d, respectively, in its latest monthly oil market report.

Nevertheless, the main thrust of the report from the rich world's energy watchdog was that, with global oil demand and supply nearing 100m b/d, "expensive energy was now back" and posed a threat to economic growth, especially for emerging markets, which were also dealing with a stronger US dollar.

Since May, when Washington imposed sanctions on Iran and withdrew from the multilateral nuclear deal with Tehran, the so-called Vienna Agreement parties had jacked-up production by a combined 1.6m b/d, the IEA said.

And the US had added 390,000 b/d of fresh supplies even as global oil stocks had built by 0.5m b/d over the second and third quarters of 2018, supporting the view that the market was well supplied for now.

Even so, the world's oil capacity was now running at below 2% of world demand, the IEA said, and further declines were likely.

Together with the high probability that the fall in Iranian exports will exceed the 800,000 b/d thus far, and with supply disruptions in Libya and a collapse in Venezuelan output "ever-present threats", then "the market is clearly signalling its concerns that more supply might be needed".