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Weekly Commodities ETF Report: Fresh US-China Trade Tensions Weigh on Copper, Agriculture Commodities; Crude Struggles With Supply Issues

(MT Newswires) – Trade tensions between the US and China flared up once again following the Trump administration’s announcement this week that it plans to double tariffs on a range of Chinese imports worth about $200 billion; Beijing retaliated with its own tariffs of about $60 billion to be imposed on US goods being imported into China. The tit-for-tat trade moves between the two countries have exacerbated fears for a trade war, with industrial metals such as copper and agricultural commodities like soybeans and wheat among the most heavily affected.

Crude edged lower for the week, ending Friday’s session in the red amid renewed concerns about excess supply in the market, after data showed oil output in Russia to have increased sharply in July. Russian oil output rose by 150,000 barrels per day in July from a month earlier, surpassing the amount Moscow had said it would add following a key Vienna meeting in June. Meanwhile, Saudi Arabia has cut the September official selling prices for all its grades to meet customer demand. And, back home, Baker Hughes (BHGE) reported that the active US rig count dropped by two to 859 rigs in the week. Last week, Baker Hughes said, three rigs were added in the US, taking the total rig count in the country to 861.

Over the last five days, light, sweet crude oil for September delivery edged 0.64% lower and closed at $68.49 per barrel. In other energy futures, gasoline fell during the week, down 2.40% and settled at $2.07 per gallon at the close of Friday’s session. Meanwhile, natural gas rose 2.19% this week and was up in Friday’s session at $2.85 per 1 million British thermal unit.

The SummerHaven Dynamic Commodity Index Total Return Index (SDCITR) fell 1.18% this week, from an increase of 1.25% in the previous week.

Gold ended the Friday session higher, settling at $1,223.20 as this week’s tepid jobs data has helped the yellow metal log some modest gains. July nonfarm payrolls increased 157,000, missing the 190,000 consensus, but the prior months’ gains were revised to 248,000 from 213,000. The unemployment rate ticked down to 3.9% from 4.0%, as expected. For the week, however, gold fell 0.87% — the fourth weekly decline — on the back of the continued strength of the US dollar and as the US Federal Reserve’s reiterated its decision to implement interest rate hikes in September and December this year. Earlier in the week, gold had sunk to its lowest level in nearly 17 months. On the other hand, copper ended Friday’s session higher at $2.76 but closed the week down 1.59%, as traders continued to fret over the impact of the US-China trade war on industrial metals. Also, workers at BHP Billiton’s (BHP) Escondida mine in Chile voted to go on strike after union workers rejected the company’s final wage offer. The union had earlier given BHP until Aug. 6 to improve its contract offer. Escondida is the world’s largest copper mine, and Chile is the top copper producer. Last year, workers at the mine staged a 44-day walk out over contract disputes, which also affected global copper markets. BHP is now reportedly looking at contingency plans ahead of the strike.

Agriculture commodities ended the week mixed, mostly weighed by trade war worries. Sugar had a weekly decline of 0.37% and settled at a price of $0.11 on Friday; coffee was at $1.08 per pound at Friday’s close, with a weekly decrease of 2.54%; and cocoa sank 8.28% lower for the week and closed Friday’s session at $2,046.  Among grains, corn was up 2.26% in the week and settled at $3.84 per bushel in Friday’s session; and soybeans rose 2.12% for the week, closing at $9.02 per bushel on Friday. Meanwhile wheat rose 5.96% for the week and settled at $5.80 per bushel at the end of Friday’s session following reports late Thursday that Ukraine might impose export limits for wheat; however, the post on social media platform Facebook by the Ukrainian deputy agriculture minister was misinterpreted as a total export ban when in fact, the announcement was for the country’s annual non-binding quota on wheat exports. Ukraine sets an annual export quota and gives guideline figures on volumes that are allowed to be exported each marketing year.

The SummerHaven Dynamic Agriculture Index Total Return Index (SDAITR) rose 0.15% for the week, compared with an increase of 0.25% in the prior week.

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