Commodities: Futures slip as Chinese investors return from their break

Commodities started the week on a downbeat note, with investors treading cautiously ahead of the second round of US-China trade talks that had kicked-off earlier on Monday, in Beijing.

In recent days, the US administration had appeared to leave all options open, including a resumption of an escalation in tariffs - starting from 2 March - or a postponement of any further trade levies on Chinese goods if enough progress was being made.

And China had already signaled its willingness to ramp-up purchases of US soybeans, but market participants appeared to be opting for caution nevertheless.

Against that backdrop, as of 2137 GMT, the Bloomberg commodity index was down by 0.51% to 79.66 as the US dollar spot index climbed 0.43% to trade at 97.0560, hitting its highest level in two months during the session.

Brent crude oil futures were down by 0.97% to $61.50 a barrel on the ICE, alongside a 1.18% drop for RBOB gasoline to $1.4202 a gallon.

Declines in Brent materialised despite bullish comments out of analysts at TD Securities and Rabobank.

In a research note sent to clients on 8 February, analysts at the latter of those two brokers said: "the market is still in a holding pattern of sorts but it is our view that a breakout is lurking in the not too distant future. We remain strongly biased to the upside although downside risks from economic growth cannot be fully ruled out."

Base metals were lower, with three-month LME copper futures ending the session at $6,150 per metric tonne after starting the day from $6,193 per tonne.

Commenting on the price action, analyst at Sucden Financial said: "Chinese investors returned to the market and drove financial markets lower. Unease regarding trade negotiations caused stocks and commodities to weaken, however, the longer discussions go on for suggests willingness to salvage a deal.

"[...] The return of some Chinese investors and little optimism surrounding the trade war has dominated markets. We anticipate a similar rhetoric tomorrow as more Chinese investors return to their desks."

April dated gold on COMEX meanwhile was off by 0.52% to $1,311.70/oz..

Over in the soft commodities space, March-dated corn on CBoT was dipping 0.40% to $3.7275 a bushel, while cotton#2 on the ICE was erasing 2.76% to $0.7055 a pound.