Commodity prices were little changed going into the weekend as investors sifted carefully through the latest news around the US-China trade war, amid speculation that if the US administration was facing the next presidential elections, then Beijing was under pressure from higher food prices, especially for pork.
On Friday morning, Chinese state news agency Xinhua reported that Beijing will exempt some US agricultural goods, including pork and soybeans, from additional tariffs, stoking buying pressure in the commodities, but by the afternoon those gains had largely evaporated.
As of 1802 BST, the Bloomberg commodity index was up by 0.06% to 78.61, having earlier reached 78.98, while the US dollar index was drifting lower by 0.07% to 98.2390, albeit well off its intra-day lows at around 97.9980.
Overnight, Reuters had reported that China had purchased over 600,000 tonnes of US soybeans, in an apparent good-will gesture.
And the US President confirmed that a ‘mini-deal’ with China was possible – but not necessarily likely.
“A lot of people are talking about, and I see a lot of analysts are saying: an interim deal, meaning we’ll do pieces of it, the easy ones first,” Trump said late on Thursday.
“But there’s no easy or hard. There’s a deal or there’s not a deal. But it’s something we would consider.”
Copper futures did manage to put in solid gains nevertheless, with three-month LME futures rising from $5,848 per metric tonne at the open to $5,974.5 by the end of trading.
And hog prices were soaring, with December lean hog futures on the CME surging by 7.01% to $0.6870 a pound, although they remained far beneath their 52-week highs at 99.83 and soybean futures were only marginally higher.
On the flip side, December-dated gold futures on COMEX gave back 0.50% to $1,499.90/oz., alongside a 3.08% drop in similarly-dated silver futures.
Energy futures meanwhile were a bit soft after analysts at Barclays Research cut their 2019 and 2020 oil demand growth forecasts by 200,000 barrels a day to 800,000 b/d and 1.3m b/d, respectively.
“However, the market is likely overestimating US shale growth at current price levels despite IOC’s ramping up activity in the Permian region, as the smaller operators, which contribute roughly 40% to the total US output are finding it difficult to grow in the current price environment.”