The Point for Europe

Research evidence excerpt

The Point for Europe

collapse of the Iran/US MoU, and military confrontation over the past 1-2 weeks.

Meanwhile, the IEA/OECD release of 400-m bbls of oil and products is almost

done, having increased supply and reduced fear in the market, but finishing over

the next 1-2 months. By September, should SoH flows or energy infrastructure be

or continue to be materially compromised, we would expect another material

release. We would expect Europe to contribute through a substantial product

release (diesel-led), versus last time where the releases were mainly by the US and

Japan. However, this is by no means guaranteed given Europe may choose to

preserve its buffer, subsidize prices at the European pump, and through higher

energy prices encourage the US to return to negotiations with Iran.

Maximilian J Layton | Eric G Lee | Francesco Martoccia | Anthony Yuen | Arkady Gevorkyan

Global Commodities - Seasonal volatility for grains/oilseeds is more

pronounced than for softs as calendars vary

Volatility premia, measured as the difference between implied and subsequent

realized vol, are generally negative for corn, wheat, and oilseeds during the July to

October period, which coincides with critical stages in the new-crop cycle. During

this time, wheat is harvested, while corn and soybeans undergo key pollination,

pod-setting, and maturation phases ahead of fall harvest. Volatility premia in the

softs complex are less deterministic, as each crop follows a different production

calendar and output is more geographically dispersed across the globe (see Figures

1 and 2). Overall, we remain bullish on most agricultural commodities, with the

exception of coffee, as weather dynamics associated with El Niño, energy prices,

fertilizer costs, and trade policies drive market sentiment.