Close: London Session | Forex, Metals, Oil, Agriculture August 19, 2020



The iPath Series B Bloomberg Coffee Subindex Total Return ETN product (JO) follows the price of coffee futures higher and lower. December coffee futures were trading above the $1.20 per pound level on August 18, with the first level of technical resistance at the recent high of $1.2890 per pound. The most direct route for a risk position in the coffee market is via the futures and futures options that trade on the Intercontinental Exchange. The price of coffee futures has been consolidating since reaching a long-term low at 86.35 cents per pound in April 2019.
Before 2018, coffee had not traded below the $1 per pound level on the active month futures contract since 2006. A bull market in commodities would likely boost the Brazilian real against the dollar, leading to higher prices for Arabica coffee beans. That includes coffee, and it should be abundantly clear that the sustained downward trend in the dollar index (below) has emphatically contributed to the rebound in coffee prices.
Open interest, the total number of open long and short positions in the coffee futures market has been steady between 260,000 and 280,000 contracts since early June. I believe it is just a matter of time before coffee tests the 2016 high at $1.76 per pound on the nearby ICE futures contract. Under ordinary circumstances, coffee futures experience a high level of price variance.


The dollar is softer against most of the majors, with the dollar bloc and the Norwegian krone leading. In dollar terms, the jump of $62 billion compared to Q2 last year was the largest ever in the data going back to 2001. Equities meanwhile remained mildly bid as the weak dollar is actually supportive for many US multinationals with large revenue exposure from abroad. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.04 per cent to 92.23.
Meanwhile, I will continue to make my monthly buys at market highs and market lows, dollar cost averaging into all my positions. This is because a weak dollar has made dollar-denominated assets cheap for foreign investors, making U.S. multinationals more competitive and leading to increased profits. It was sold to new lows for the year yesterday against the euro, sterling, the Swedish krona, and the Australian dollar. The US dollar index fell 0.58% to 92.32 after earlier touching 92.13, the lowest mark since May 2018.
Meanwhile, since Brazil is the world’s leading producer of the Arabica beans, they are highly sensitive to the foreign exchange relationship between the Brazilian real and the US dollar. The company generates over 90% of its earnings in US dollar currency, largely because of the heavy exposure of the various parts of its business to U.S. end markets.


“Today’s high real price of gold suggests that gold is an expensive inflation-hedge with a low prospective real return. To emphasize this point, they noted that the rise in the real price of gold has been highly correlated with the rise in demand from buyers of gold ETFs. Although Barrick Gold’s stock and the gold prices look quite high, I still believe they have a great potential due to the market’s overall uncertainty. True, a gold miner’s stock is not physical gold, but their prices correlate.
Will the gold price rise further?How about Barrick Gold’s fundamentals? Negative real rates are important because, as you can see in the following table, there has historically been a negative relationship between real interest rates and gold prices. However, in both 1980 and in 2011, high real gold prices coincided with widely held views that future inflation would be significant. At the same time, it bought a stake at Barrick Gold (GOLD). Barrick Gold is the world’s largest gold miner.
How important is the real price of gold in terms of future returns?


The Cushing Renaissance Fund (SZC) formerly focused on oil and natural gas energy companies, including midstream MLP’s. While uncertainty for both midstream and broader energy remains given concerns about COVID-19’s ongoing impact on oil demand, forward EBITDA estimate revisions and updated guidance can help provide clarity. Since OPEC+ decided to ease production cuts, Russia plans to increase its crude oil production by 400,000 b/d. **Whilst the oil and gas industry to which they service has high economic sensitivity, given the more stable nature of the midstream sub-industry, this was deemed to be average.
President Trump brokered an international deal to support oil prices and helped avoid the bankrupting of the U.S. energy Industry. Additionally, amid signs physical oil prices are weakening as the group this month started unwinding some of its record output cutbacks. Oil eased from a five-month high as API data indicated surging U.S. gasoline inventories and OPEC+ prepared to meet to assess supply.
The listed arm of state-owned China National Offshore Oil Corp said on Wednesday net profit totalled 10.38 billion yuan ($1.50 billion), missing analysts’ forecasts for 12.6 billion yuan. While oil prices have recovered past $40 a barrel, they are still a long way off pre-pandemic levels and Chevron (CVX) is down 27.3% YTD. So, the shocks to the oil industry occurred on both demand and supply sides.

United States

President Trump said he called off trade talks with China last weekend, raising questions about the future of the deal. Earlier in the session, Asia stocks were mixed: sentiment was dampened after President Donald Trump said he called off last weekend’s trade talks. Joshua Brustein If you read one thing SenseTime, a Chinese company blacklisted last year by the Trump administration, is doing just fine by focusing on its home country. The Trump administration’s unprecedented push for a vaccine is looking to take fruit, as many experts believe we will have one before the end of the year.
President Trump created incredible jobs and wage growth and stock appreciation before the coronavirus shocked stocks into a bear market. The US stock market wiped out the last of its coronavirus losses on Tuesday (Aug. 18), delivering a rapid rebound from a devastating drawdown. I think that Oracle would be certainly somebody that could handle it.” Earlier this month, Microsoft (NASDAQ:MSFT) said it was holding acquisition talks with ByteDance and the White House.
The Trump administration has yet to make hundreds of political appointments across the federal government and has left vacant slots on dozens of boards and commissions. New York, the original epicenter of the virus in the US, is now largely under control, but major states including Texas, California and Florida continue to get worse. Overall, the U.S approach is one of the reasons why cases shot up as high as 70,000 a day after the lockdowns, while those in Europe tumbled, he said.


On Sunday, Mr Raab also accused the Chinese state of committing “gross, egregious human rights abuses” against the Muslim minority group in the country’s north-western Xinjiang province. less Beijing is stepping up the drumbeat toward the eventual launch of CanSino’s adenovirus-vector COVID-19 vaccine by lowering China’s standards for vaccine efficacy. London’s concern is that Beijing will try to claw back Hong Kong pro-democracy activists seeking refuge in Britain, if the extradition treaty remains in place.


Arrivals from a number of non-EU countries including Georgia, Rwanda and South Korea will continue to be freely permitted when the new measures take effect on Monday. The government is currently identifying investment and reform projects that line up with EU support, he says. Belarus opposition leader Svetlana Tikhanovskaya appealed to European Union leaders meeting today on the post-election crisis in her country to reject the victory claimed by longtime ruler Alexander Lukashenko.
The former ECB president used his first major speech since stepping down to underline the plight of the region’s youngest generations. Angela Merkel’s government is doing its bit for the underperforming German wine industry by aggressively marketing dry whites and other top tipples. The uprising in Belarus is a test of the EU’s ability to take effective action, Bloomberg Opinion’s editors write. The UK will “continue to engage” with China, Boris Johnson says, hinting there will be no US-style sanctions imposed on the regime.