2025-01-08 12:36
LUSAKA, Jan 8 (Reuters) - Zambia's kwacha has hit a series of record lows since the start of the year as a severe drought keeps the pressure firmly on the copper-producing Southern African country's economy. Analysts had hoped Zambia's emergence from default early last year would have helped sentiment, but the currency is now roughly 3% below where it was before its debt restructuring deal and has fallen nearly 15% over the last six months. At the close of Wednesday's trading session, the kwacha stood at a new record low of 28.13 per dollar, according to LSEG. "In a local market like this one, some big payments for imported electricity, or similar, could easily drive the ZMW," said Charlie Robertson, head of macro strategy at FIM Partners. The strained electricity supply was forcing mining companies to cut production of copper, which is a key hard currency earner, Access Bank Zambia said in a research note. The severe effects of El Niño caused the worst dry spell in southern Africa in a century last year, devastating crop production and forcing Zambia's authorities to cut electricity generation on the Kariba dam, the biggest source of electricity. "The amount of water available for hydropower generation remains insufficient for sustainable operations, especially given the unpredictable nature of regional rainfall patterns," state power firm Zesco said on Tuesday. The kwacha plunged when Zambia defaulted on $11 billion worth of external debt in November 2020, but saw a brief 20% jump last February when it became clear its restructuring efforts were going to be successful. One financial analyst in Lusaka said some companies had sold dollars during Wednesday's session in preparation for local tax payments next week, offering some support to the kwacha. Sign up here. https://www.reuters.com/markets/currencies/zambias-currency-stuck-record-low-drought-persists-2025-01-08/
2025-01-08 12:33
BEIJING, Jan 8 (Reuters) - China expects an increase in the number of people joining the coming Lunar New Year travel rush, with authorities estimating a record 9 billion domestic trips will be made during the 40-day period of festivities, despite the stuttering economy. State media reported the forecast for the travel season that starts on Jan. 14 when people traditionally travel to and from their home towns. Last year, authorities also expected 9 billion domestic trips, but actual numbers fell short with around 8.4 billion total trips logged. Self-driving road trips are expected to make up about 80% of trips this year, followed by train and air travel, Li Chunlin, an official with the National Development and Reform Commission (NDRC), said in a press briefing on Wednesday. This year's Spring Festival comes at a time when China's economy is in the doldrums, struggling to recover from three years of pandemic control and hamstrung by a prolonged property market crisis. Exports are a bright spot in growth but face possible new U.S. tariffs when Donald Trump takes office this month. The government has rolled out a flurry of stimulus measures in recent months, including interest rate cuts and an expansion in the scope of a consumer goods trade-in scheme, but has so far failed to stage a sustained recovery. Annual official tallies of trips made during the New Year travel rush have jumped since the Ministry of Transport revised the metric before the 2023 Lunar New Year to include self-driving road trips on major national expressways. The metric was changed again before the 2024 celebrations to include road trips made on more highways. A total of 2.98 billion trips were recorded in the 2019 Spring Festival travel rush, the year before the pandemic restrictions hampered travel. A record 510 million train trips are expected during the coming 40-day period, up 5.5% year-on-year, Zhu Wenzhong, an official from China's national railway operator, said at the same briefing. Some 90 million plane trips are expected during this year's celebrations, also a record high, the NDRC's Li said. Sign up here. https://www.reuters.com/world/china/china-expects-increase-new-year-travel-numbers-despite-economic-doldrums-2025-01-08/
2025-01-08 12:30
NAPERVILLE, Illinois, Jan 7 (Reuters) - It seems that Argentine farmers simply cannot catch a break. Despite much-needed rainfall during planting, bone-dry conditions are set to grip the country's farmland through at least mid-January, greatly increasing odds that soybean yields will disappoint for a sixth consecutive season. The dryness is not terribly surprising given the presence of La Nina, the cool phase of the equatorial Pacific Ocean. La Nina-induced dry spells have recently damaged multiple Argentine soybean harvests, most notably in 2023. November rainfall across Argentina's grain belt was 30% above normal, seemingly bucking the La Nina doom. But December totals fell right in line with the typical pattern at just 79% of normal. Risks have already been flagged. Both Argentine grains exchanges said last week that the recently hot and dry weather has started to damage crops. Unfortunately, current forecasts suggest the situation could get worse. At best, monthly rainfall across Argentina's grain belt after the third week in January may amount to only a third of normal levels. If that outlook is realized and no relief is seen by the end of the month, crop prospects could quickly turn grim. Argentina's very worst soybean yields also coincided with its driest Januarys. However, only one of Argentina's exceptionally dry Januarys occurred within the last decade (2018). If Argentine soybeans are better at resisting dry conditions now versus ten-plus years ago, this would weaken the relationship between dry Januarys and poor yields. In theory, strong February rains may be able to rescue the soy crop from a bad January, but that may come down to timing. For now, the newly planted soybeans are in decent shape. Exchange data last week showed 53% of the crop in good or excellent condition, a five-year high for the week. Only 4% is in poor condition, more than the year-ago 2% but well below the double-digit readings from the prior three years. However, satellite data shows that vegetation health was in worse shape at the end of December versus a year ago across much of the core grain belt. Soybean yields last year were disappointing despite the normally favorable El Nino pattern, though the crop was nearly twice as large as the prior year, the catastrophic 2022-23 season. SWEATING BEARS? Global soybean and soybean meal prices were already historically high and rising throughout late 2022, so the early 2023 Argentine crop disaster did not significantly shift already-very-bullish market sentiment. Soybean meal prices spiked more than 20% between early December 2022 and mid-February 2023 given Argentina's role as top exporter, and gains for soybeans topped out around 9%. However, speculators late last month forged a record net short position in Chicago soybean meal futures and options, and they have held bearish views in soybeans for a year now. CBOT soybean meal has recently flirted with some of the lowest prices of the last decade. While Argentina's current soybean crop is extremely unlikely to suffer a fate as bad as two years ago, the dry forecast is plenty reason to make soybean and especially soymeal bears a little uncomfortable for now. Karen Braun is a market analyst for Reuters. Views expressed above are her own. Sign up here. https://www.reuters.com/markets/commodities/argentinas-soy-belt-may-be-an-alarmingly-dry-january-2025-01-08/
2025-01-08 12:25
LONDON, Jan 8 (Reuters) - The structure of the benchmark Brent crude oil futures market on Wednesday reached its widest since August 2024, reflecting concern of tightening supply and expectations of a revival in Chinese demand. The premium of the first-month Brent contract to the six-month contract widened to $3.05 a barrel on Wednesday, the most since late August. The premium has risen by more than 50% so far this year. Oil output from the Organization of the Petroleum Exporting Countries fell in December, partly due to losses in Iran, a Reuters survey showed. Concern of tighter supply from Iran and Russia due to sanctions is also boosting prices, analysts said. "It looks as though sanctions might be working and the combination of declining Russian and Iranian exports supports the structure," said Tamas Varga of oil broker PVM. A widening of the premium, a structure called backwardation, generally indicates a perception of tighter prompt supply. The opposite structure, where prices for nearby delivery are cheaper, suggests ample supply and is called contango. "The tighter crude market is unmistakenly mirrored in the deepening Brent backwardation," Varga added. In a further indication of tightness, the premium of the first-month Brent contract to the second month has almost doubled this year, rising from 40 cents a barrel on Dec. 31 to as much as 75 cents on Wednesday. Sign up here. https://www.reuters.com/business/energy/brent-oil-market-structure-tightens-supply-concerns-2025-01-08/
2025-01-08 12:09
BERLIN, Jan 8 (Reuters) - German gas imports fell slightly in 2024 compared with the year before, with Norway the largest supplier, while exports more than halved, the country's network regulator said on Wednesday. According to preliminary figures from the Bundesnetzagentur regulator, German gas imports fell to 865 terawatt hours (TWh) in 2024 from 968 TWh in 2023. The largest gas suppliers were Norway, at 48%, followed by the Netherlands at 25% and Belgium at 18%, it said. Exports from Germany, on the other hand, dropped to 89 TWh in 2024 from 187 TWh the year before, with the Netherlands, the Czech Republic and Austria among its most important customers. In total, Germany consumed 844 TWh of gas last year, 3.5% more than in 2023, with 39% attributable to household and business consumption and 61% used by industrial customers. Germany scrambled to cut its dependence on Russian gas after the 2022 invasion of Ukraine, with the resulting high prices stoking inflation and raising the cost of living across Europe. Sign up here. https://www.reuters.com/business/energy/german-gas-imports-drop-slightly-2024-2025-01-08/
2025-01-08 11:53
Jan 8 (Reuters) - Sterling slid for a second day on Wednesday against a generally firmer U.S. dollar, despite British borrowing costs sitting at around their highest in 27 years. Solid U.S. data on Tuesday confirmed investors' view that U.S. interest rates will stay higher for longer, pushing up Treasury yields and boosting the dollar against most major currencies. "Political risks aside, there is little reason to be bearish on the US dollar - even if current levels look a little overdone," said Michael Pfister, FX analyst at Commerzbank. The pound was last down 1% at $1.2350, after sliding 0.34% on Tuesday. It was also weaker against the euro, which was last up 0.6% at 83.35 pence. That fall came even as yields on British government bonds, known as gilts, spiked higher, rising more than U.S. Treasury yields on Wednesday. Britain's long-term government borrowing costs are at their highest since 1998, with 30-year gilt yields last up 8 basis points (bps) on the day at 5.33%. The 10-year yield was also up 8 bps at 4.78%. "The way Gilts are trading would suggest that participants are becoming increasingly concerned over the perilous UK fiscal outlook," said Michael Brown, strategist at Pepperstone. Investors expect the Bank of England to cut interest rates by only about half a percentage point this year, with inflation likely to hover above the central bank's 2% target. Markets will be looking for signals of what is to come from Bank of England Deputy Governor Sarah Breeden when she speaks about the outlook for UK inflation and monetary policy in Edinburgh on Thursday. So far, higher yields have offered the pound little support against the dominant dollar, with sterling trading close to the April low of $1.2352 it hit last week. Compared to a resilient U.S. economy, where Tuesday's data showed that job openings unexpectedly rose in November and layoffs were low, Britain's economy lost momentum in the second half of 2024. The British Retail Consortium said on Tuesday that sales in the final quarter of 2024 proved disappointing. "Stagflation remains the 'mot du jour'," said Pepperstone's Brown. Sign up here. https://www.reuters.com/markets/currencies/sterling-tumbles-second-day-against-firmer-dollar-even-gilt-yields-rise-2025-01-08/
