Deutsche Bank on commodities this morning

A good PDF report on the state of play,which you can access by clicking this link. Meanwhile, get the gist by reading the front cover blurb:

Overview

We believe today's OPEC meeting and the IEA's Oil Market Report will provide an important update on the state of oil markets.  We believe the main risk to oil prices will be further downgrades to the oil demand outlook.  Given the deepening eurozone crisis, an ongoing US data disappointment cycle and slowing Chinese growth, it appears increasingly likely that the IEA will revise lower its global oil demand estimates.

In thermal coal markets, port inventories in China rose to 19.6mt (Figure 2), with Qinhuangdao accounting for 8.9mt, the highest level since at least 2008. US thermal coal exports were also up substantially year-on-year in March and April. If sustained, this rate of export would imply 48mt in 2012, up from 31mt in 2011. As market fundamentals remain extremely negative, front-month Newcastle prices at $85.9/t have now dipped into the Australian marginal cost range of $83-86/t.

In natural gas markets, new LNG contracts signed demonstrate continued desire to secure volumes as little new supply enters the market in the next 3 years. Statoil signed a three-year supply contract for LNG to Petronas to supply a total of 1bcm over 3 years to its newly constructed Melaka LNG terminal. Also, Qatargas signed a 1mtpa agreement with TEPCO beginning August 2012. This news came despite the announcement that a Japanese scientific panel appointed by Governor Nishikawa concluded that safety measures are adequate at two nuclear reactors, which opens the way for a potential restart approval by the Prime Minister and three other ministers on 16 June, according to Kyodo News. The Prime Minister urged public support for reactivation of nuclear power in a 9 June press conference.

The USDA released its June WASDE report yesterday which was bullish for soybeans and wheat but bearish for corn and cotton.  Soybeans ending stocks for 2011-12 were cut from last month and lower than pre-report estimate. They also cut wheat ending stocks for 2011-12 on higher food use and exports.  The USDA left its corn ending stock estimates unchanged for both 2011/12 and 2012/13 with downward revision of exports by 50 mn bu and increased ethanol by 50 mn bu for 2011/12. In cotton, the USDA has revised upwards ending stocks to a record 74.51mn bales for 2012/13 (August/July).  China's cotton imports estimate was also reduced to 13.5 mn bales, from 14 mn bales for 2012/13.