What to Watch in Commodities: Glencore, BHP, Oil, Food, Top Dogs

(Bloomberg) -- Welcome to the top table. The big guns are out in force this week as Glencore Plc, BHP Billiton Ltd. and Newmont Mining Corp. are among companies reporting. That’ll be an opportunity for Ivan Glasenberg and Andrew Mackenzie to peer into the future: should we expect more volatility, will global trade tensions rise further, and what are their priorities for 2018 and beyond?

In BHP’s case, there’s also the fascinating tussle with activist investor Paul Elliott Singer, while Newmont boss Gary Goldberg may finally reveal that his outfit has overtaken Barrick Gold Corp. as the world’s largest gold producer, having already surged ahead by value. Rounding out the agenda is the outlook for global energy with International Petroleum Week taking place in London, and the USDA’s annual forum just as agriculture prices start to tick higher. Now pass the wine and listen in, these guys can be a mine of information.

Both Ends Burning

With prices of many metals resurgent, analysts will be expecting bumper results when Glencore reports Wednesday. The Swiss trader has positioned itself as the key provider of the metals needed to deliver the clean-energy solutions of the future, and is already benefiting from rising prices for copper and cobalt. So it’s ironic that the firm’s coal business is likely to be the other strong performer. While competitors such as Rio Tinto Group are exiting coal citing environmental concerns, Glencore has strengthened its portfolio and is set to cash in on prices that jumped 30 percent in the second half.

What to Watch in Commodities: Glencore, BHP, Oil, Food, Top Dogs

The trader’s impenetrable marketing division is also going from strength to strength. It’ll report profits of about $2.8 billion, one of the strongest showings since Glencore listed, the company has said. (Peter Grauer, chairman of Bloomberg LP, is a senior independent non-executive director at Glencore.)

Unearthing Value

Investors in BHP Billiton Ltd. are seeking a response to the latest salvo from activist fund Elliott Management Corp. as the world’s No. 1 miner reports half-year profit on Tuesday. Elliott has won some support with a revived demand for BHP, which operates as two entities based in Melbourne and London, to study a reorganization as a single company in Australia, pointing to commissioned research that argues a change could add more than $22 billion in value. 

What to Watch in Commodities: Glencore, BHP, Oil, Food, Top Dogs

BHP has previously rejected a similar Elliott proposal, arguing a change could cost as much as about $3 billion for a benefit of as little as $32 million. Analysts expect the miner to set out a refreshed defense. “The ball is back in BHP’s court to respond,” Citigroup Inc. said in a Feb. 7 note.

Bucks Fizz

Bars and ballrooms in London’s Mayfair district will overflow this week as oil traders and executives schmooze at the annual International Petroleum Week conference. During the day they’ll hear about the outlook from industry leaders like BP Plc CEO Bob Dudley and U.A.E. Energy Minister Suhail Mazrouei. When the drinks flow in the evening, they’ll argue over the big question in the market right now: has OPEC finally won, or created a new crisis?

What to Watch in Commodities: Glencore, BHP, Oil, Food, Top Dogs

After a year of coordinated production cuts by OPEC and Russia, the glut that has battered crude prices since 2014 appears to have cleared. But prices have already started to slip on concern that OPEC’s intervention is provoking a fresh flood of supply of supply from American shale-oil drillers that will send the market tumbling once again.

The Big Reveal

With soybeans fresh from posting their biggest weekly gain in seven months, traders are looking for clues just how long the party can last. We might find out this week as U.S. Department of Agriculture Chief Economist Robert Johansson releases the agency’s first forecasts for U.S. 2018-2019 supply and demand. Will soybean acres top corn for the first time since 1983, as predicted in AgriSource Inc.’s survey of 2,200 Midwest growers? Tune in as the agency hosts its two-day annual forum in Washington beginning Thursday.

What to Watch in Commodities: Glencore, BHP, Oil, Food, Top Dogs

The forum will also feature a session on the long-term impact of the rapid expansion of Brazil’s production and export logistics. The South American nation’s share of global corn and soybean trade has more than tripled since 2000, while the U.S. share has shrunk by almost half. With its rising private investments in shipping and port capacity and its huge tracts of fallow land, Brazil is poised to assume the crown as the supermarket of the world.

Top Dog?

The title for the world’s biggest gold producer is up for grabs and the magic number Newmont needs to beat is 5.32 million ounces so it can unseat Barrick. Newmont’s output has to come in at the high end of its guidance to win the crown when it reports Thursday. The rivals, who once came within a hair’s breadth of merging, have been running neck and neck. Further out, the midpoint of Newmont’s outlook exceeds Barrick’s from 2018 through 2022.

What to Watch in Commodities: Glencore, BHP, Oil, Food, Top Dogs

Analysts will also be looking at costs after a slew of miners, including Barrick, cited inflationary pressures from fuel to labor. Kinross Gold Corp., Agnico Eagle Mines Ltd. and Barrick all hiked their guidance for all-in-sustaining costs for this year. When Newmont discussed costs in a presentation in January, the company was assuming crude at $55 a barrel. Costs may creep up with WTI now above $61, according to Bloomberg Intelligence analyst Andrew Cosgrove.

Bulls Versus Bears

With gold posting its biggest weekly gain since 2016, market players re optimistic the party will just keep going... at least for another week. About 80 percent of the traders and analysts surveyed by Bloomberg last week were bullish on prices, the most in 10 months.

What to Watch in Commodities: Glencore, BHP, Oil, Food, Top Dogs

Traders were most bullish on corn in seven months. Sentiment also turned positive for soybeans and copper. Terminal subscribers can see the surveys here.

For the Diary

MONDAY, FEB. 19

  • Brexit and Implications for Energy Markets, conference in London
  • BP Plc’s Energy Outlook 2018, inc. projections for global markets to 2040
  • JODI world oil exports, output data
  • Bloomberg proprietary forecast of Cushing crude inventory change plus weekly analyst survey of crude, gasoline, distillates inventories
  • OPEC Secretary-General Mohammad Barkindo among speakers at Nigeria Petroleum Summit in Abuja, through Friday.
  • China closed for Lunar New Year holiday, through Wednesday.
  • EARNINGS: Anglo American Platinum Ltd.

TUESDAY, FEB. 20

  • International Petroleum Week in London, through Thursday, with OPEC oil ministers, CEOs of BP Plc, Vitol SA and others, through Thursday.
  • Rescheduled Michiquillay copper auction in Peru
  • Russia 10-day Urals program for March
  • USDA data for grain-export inspections
  • EARNINGS: BHP Billiton Ltd., AngloGold Ashanti Ltd., Northern Star Resources Ltd., Ternium SA, Pan American Silver Corp., Mosaic. Co., Duke Energy Corp., Noble Energy Inc., IOI Corp.

WEDNESDAY, FEB. 21

  • Genscape weekly ARA crude stockpiles report
  • Sempra Energy’s $9.45b takeover of Oncor Electric Delivery, hearings by Public Utility Commission of Texas begin.
  • Caterpillar Inc. at Barclays Industrial Select Conference
  • Last day for Antofagasta Plc to present wage offer to Pelambres union
  • USDA monthly figures on milk production
  • API Crude Oil Inventory Report
  • EARNINGS: Glencore Plc, Fortescue Metals Group Ltd., Independence Group NL, Devon Energy Corp., Iberdrola SA, Cheniere Energy Inc., Iamgold Corp., Hudbay Minerals Inc., Dynergy Inc.

THURSDAY, FEB. 22

  • Russian refining maintenance schedule from ministry
  • Noble Group Ltd. 2018 bonds mature
  • Singapore onshore oil-product stockpile data
  • Caterpillar at Citi’s Global Industrials Conference
  • USDA’s annual outlook forum, through Friday.
  • Buenos Aires Grain Exchange weekly crop report
  • EIA Natural Gas Storage Change, Crude Oil Inventory Report
  • EARNINGS: Newmont Mining Corp., Wilmar International Ltd., Anglo American Plc, Rosneft PJSC, Hormel Foods Corp., Apache Corp., Centrica Plc, KAZ Minerals Plc, Alumina Ltd., Sibanye Gold Ltd., Chesapeake Energy Corp., OZ Minerals Ltd.

FRIDAY, FEB. 23

  • ICE weekly commitments of traders report for Brent, gasoil
  • Baker Hughes weekly rig count report
  • CFTC weekly commitments of traders report
  • Quarterly survey on oil investments by Statistics Norway
  • China’s January commodities & energy trade data, 2nd batch, including refined copper, soybeans and country breakdowns of crude.
  • EARNINGS: United Co Rusal Plc

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