Happy Friday from Europe!

Saudi cuts, a lack of grain deal and a rice export ban. Negative supply stories are queuing up in commodity space currently and the supply side is back in the driver’s seat of market action. 

On the demand side there are now at least signs that the manufacturing outlook has stabilized at low levels but without much progress yet. The Philly Fed survey made for luke-warm reading in the US yesterday, but some of the details proved to be very convincing. The KRW takes a major beating this morning on the back of extremely weak export and import numbers for the first 20 days of July – this data does not fit the cyclical rebound narrative and will have to be investigated.

The spread between prices received and prices paid is at all time highs in the surveys hinting of solid margins and such widening of prices received to prices paid are typically seen after a bottom in equities – i.e. during a bull market.

Chart 1: The spread between prices received and prices paid at all time highs !