(Bloomberg) -- Caterpillar Inc., the heavy machinery maker that’s seen as a bellwether for the health of global industry, reports second-quarter earnings this week. China is ramping up wheat purchases, and copper investors are parsing signals from money managers for their outlook on the key industrial metal.
Here are five notable charts to consider in global commodity markets as the week gets underway.
Caterpillar
Caterpillar is set to report earnings Tuesday, with analysts forecasting a drop in revenues from construction and resource sectors compared with the same period last year. The US company is widely viewed as an economic bellwether, given how demand for its iconic yellow machines that dot mines and construction sites around the world can shed light on the health of those industries. Caterpillar’s stock has outperformed the S&P 500 Index’s materials sector this year.
LNG
US liquefied natural gas exports fell in July to a three-month low, as the country’s second-largest fuel exporter stopped loadings for more than two weeks due to disruptions from Hurricane Beryl. Reduced shipments to Europe also narrowed the gap between Russia and US as the top key fuel suppliers to Europe. The drop in July LNG exports from the US underscores supply risk of relying on a majority of American LNG infrastructure along the Gulf Coast during the Atlantic hurricane season, which lasts through October.
Wheat
China is stepping up state purchases of wheat to support local prices, after heavy rains forced some farmers to unload their crop into a market already heaving with grain. Downpours last month in northern China, a major production hub for wheat, have worsened the glut as farmers and traders rush to sell rather than risk moisture damage to their crops in storage. At the same time, a weak economy is hampering consumption of flour for items like noodles and bread. Wheat futures slumped in Chicago on Monday amid a broader global financial selloff.
Copper
Money managers have closed out about $20 billion in bullish copper bets since mid-May, with mounting worries about Chinese demand helping drive an exodus from one of the most important industrial commodities. Copper spiked to a record above $11,100 a ton in May as investors embarked on an unprecedented buying spree, but prices have since slumped by more than 15% and funds are in retreat. Copper tumbled almost 4% on Monday amid the global financial meltdown, raising questions of whether the rush for the exit is over. Bullish positions on Comex and the London Metal Exchange are back near levels seen in March, though they remain elevated by historical standards.
Climate
There’s a 70% chance of La Niña emerging sometime between August and October, following the strongest El Niño in almost a decade that ended earlier this summer. During La Niña, the tropical Pacific Ocean is cooler than average, putting in motion a series of potential impacts, from stronger rains in Asia to dryer conditions in parts of South America. If La Niña forms, it’s likely to help reverse many of the past year’s trends that wreaked havoc on some of the world’s key commodities markets, from terrible flooding in South America to devastating African droughts. In cocoa, especially, the emergence of a new pattern may bring some welcome relief.
--With assistance from Doug Alexander, Anne Riley Moffat, Geoffrey Morgan, Dayanne Sousa and Ilena Peng.
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