Commodities Weekly - September 28, 2020

> Oil. We expect Brent to remain near the $42/bbl mark throughout this week, with a likely bullish EIA inventory report acting as a key price supportive factor. The reintroduction of some lockdown measures in Europe and the possibility of increased Iraqi supply at a time when Libya is also beginning to resume oil exports as its civil war abates are the major bearish fundamental factors at play. > Precious metals. We forecast that gold will bounce to $1,886/oz this week amid upbeat economic data, which should reduce fears sparked by the diminishing likelihood of US stimulus measures and boost inflation expectations. In this scenario, we expect the gold-to-silver ratio to slide from 81 to 78, rendering silver a better performer than gold.> Base metals. This week, investors will continue to focus on the Covid situation in Europe and further measures to slow the spread. Elsewhere, China will report September PMI data. The Reuters consensus expects the Caixin manufacturing PMI to remain flat m-o-m, which would be the first month of no growth since April.> Iron ore. Iron ore prices continued to correct last week, with October futures for 62% Fe content at the SGX dropping 6% over the week to $114/tonne. Chinese iron ore inventories rose 1.7% w-o-w to 120 mln tonnes, while domestic HRC prices eased 2%, further pressuring steelmaking margins. This week, the iron ore market will likely be subdued ahead of the start of a week of holiday in China on October 1.> Agriculture. From a technical perspective, we think Chicago wheat could retest $5.53/bushel this week, with a break above likely taking it to the $5.56-5.60/bushel range. Support stands at $5.45/bushel, with a break below likely causing a fall to $5.42/bushel. Meanwhile, we see the Chicago soybean November contract bouncing to $10.09/bushel, as it has found support at $9.96/bushel. We expect Chicago corn to bounce to $3.67/bushel.