For those looking to participate in the market without venturing into the futures arena, the iPath Bloomberg Cocoa Subindex Total Return ETN product (NIB) provides an alternative. Cocoa futures in the US, like many other commodities, use the US dollar as its pricing mechanism. In August 2019, nearby ICE cocoa futures fell to a low of $2089 per ton. A weak dollar tends to support the price of commodities, and cocoa is no exception. The price pattern is a constructive sign for the cocoa market. However, while others recovered, the selling pressure remained in the cocoa futures arena. Farmers could turn to other more profitable crops, creating a long-term shortage of cocoa beans if they do not receive a living wage. September cocoa futures rose from $2092 on July 8 to a high of $2307 on July 28 or 10.28%. At first, cocoa fell with many other commodities and other asset markets.
NIB did an excellent job tracking the price of cocoa. The West African countries of the Ivory Coast and Ghana supply over 60% if the world’s annual supply of cocoa beans. Coronavirus has weighed on the demand for cocoa beans over the past months.
[the_ad id =”38490″]Emerging market currencies are mostly higher on the back of the dollar’s pullback, but the Turkish lira continues to struggle. FOREX: The U.S. dollar fell to a two-year low as pressure built on the Federal Reserve to strike a dovish policy stance amid a surge in coronavirus cases. The WSJ Dollar Index, which tracks the U.S. currency against those of major trading partners, fell 0.3%, extending its decline this month to 3.1%. Meanwhile, the U.S. dollar just recently touched two-year lows, as investors see interest rates remaining low and the road to recovery perhaps taking longer than initially projected. Moreover, if people were losing confidence in the dollar, then why would they see the euro as a safe haven? The dollar is weaker against all the major currencies, and the greenback fell further below JPY105 that was violated in the North American session yesterday. This disparity was almost entirely due to the two million dollar additional loan loss provision added in the current quarter.
One could argue that gold price is reflecting a sudden drop of confidence in US dollar. The Australian dollar firmed to new highs for the year as it approached without yet trading at $0.7200. Any hint about additional action could further weaken the dollar, while reluctance to act could push it higher. Goldman was out with a note yesterday about growing warnings on the end of the dollar’s global reserve status. Similar to the current state of the Treasury market and interest rates, deciphering the U.S. dollar movement and its meaning are ambiguous.
Gold prices hit another record Monday, with the precious metal now up 27% this year, while Silver prices have also surged. The one silver lining was that the company’s average realized gold price jumped 9% sequentially, offsetting the minor headwind from lower production. Gold has already climbed to a new record high, and silver, copper, and crude oil have all made impressive price recoveries. It’s not just the price of gold and silver that warns of inflation, but the ratio of the two prices. (Source: Company Presentation) Medusa Mining released its fiscal Q4 and FY2020 results last week and reported quarterly gold production of 21,900 ounces at all-in sustaining costs of $1,116/oz. National Bank of Canada raises target price to C$3 from C$2.5, citing strong gold price and improved economic returns. Miners see their profit margins increase at a faster pace than the gold price, which often results in leveraged gains.
[the_ad id =”38490″]However, from around the same time, the Gold price took almost three years to double, thereby only catching up very late in the game. I have been bullish on gold since 2014, as I have always thought that money printing would reduce the purchasing power of money, pushing precious metals prices higher. For clues about where the price of gold might head next, the ETF flows are the best way to interpret the market’s positioning. However, I think that we should not confuse fundamentals catalysts with FOMO, and I tend to be skeptical about any asset going parabolic, including gold and silver. Of course, there are all types of variables that could impact the price trajectory for gold, but this gives us a rough idea of the potential ahead.
Should the Government of Alberta ease its regulated curtailment, oil sands output could rise nearly 500,000 b/d from 2020 to 2022 (over 300,000 b/d higher than 2019). Oil prices rose after a surprise drop in U.S. crude inventories. For example, pre-dividend free cash flow for the four largest oil sands producers increased three-fold from 2014, an average of more than $USD2.5 billion each in 2019. Oil products are also of interest as second wave fears of the coronavirus could impact demand. Rail was Canada’s oil lifeline in recent years when cheaper pipelines ran full and crude had no other exit from landlocked Alberta. The Permian Basin in west Texas has staggering potential to drive the United States even further into providing the oil and gas needed by an energy-hungry world. Instead, 2020 will mark the single largest production drop in the history of the Canadian oil sands-an industry that has almost always seen year-on-year additions.
Natural gas and oil define the quality of our modern day-to-day lives – and the energy required is essential. Benchmark U.S. oil prices, which were moderately higher before the data were released, added slightly to those gains afterward. This is much too high of a valuation as a 3.0x unhedged EBITDAX multiple at mid-$40s oil would value Chaparral at around $360 million. In 2019, IHS Markit projected Canadian oil sands output to reach 3.9 mmb/d in 2030 and now we expect it could reach about 3.8 mmb/d. Since 2014 the decline in upstream oil sands spending has led to a steady reduction of the number of projects in development. Before COVID-19, 2020 had the potential to mark a turning point in the Canadian oil sands.
[the_ad id =”38490″]To the downside, I suppose the government could display fiscal restraint and the Fed could raise interest rates and reduce their balance sheet. While stocks ended lower on Tuesday amid concerns over stimulus negotiations, U.S. futures inched into the green overnight as traders awaited the Fed’s latest policy decision. Recent Fed-speak threatens even more aggressive policy actions, including yield curve control and higher inflation targets. The stock began to sell off in late February along with the rest of the market once the COVID-19 panic hit the US. As addressed in the article “Fed Stimulus Has Created The Cobra Effect,” the failure of the market to “break out” of the June highs raises our risk. During Tuesday’s New York session, US investors dumped equities on weaker than expected corporate results and the US’s escalating coronavirus case count. If the Fed has our back and if Pelosi is right about “the stock market floor”, then why not taking risks?
Ahead of the trial, markets were mixed overnight, with Asian stocks seeing a varied session as investors fretted about tonight’s US Fed announcement. Virus latest: President Trump said the medical community’s warnings against using hydroxychloroquine for Covid-19 were politically motivated. Those claims were denied on Sunday when Mr Trump said neither he nor vice president Mike Pence were told about the bounties placed on American soldiers in Afghanistan. Source: Wall Street Journal Lions Gate could also sell its business at a premium to one of its larger competitors with an established foothold in OTT and movie industries. Donald Trump and senior members of his administration say talks about a fifth coronavirus recovery bill have yielded little progress. It is meant in particular to help those who borrowed in the $550 billion market for mortgages that are packaged into bonds and sold to Wall Street.
He immediately alerted the authorities in Beijing.
[the_ad id =”38490″]Global Headlines Merkel s succession | The Wirecard scandal is emerging as a significant factor in the battle to control Germany after Chancellor Angela Merkel steps down. Meanwhile, the EU is determined to expand its arsenal of defensive tools to counter China s trade and investment expansion. Since then, however, the 27-nation EU has been frustrated by what it says is China s reluctance to match rhetoric about pursuing fairer policies with action. The EU and the U.K. reached a deal with Gilead for supplies of the company’s antiviral drug Veklury, the brand name for remdesivir. Comments by ECB officials today have not broken new ground. Also, the ECB has not exhausted its policy tools and is prepared to do more if necessary. The plan gained appeal thanks to a coincidence in the EU calendar. That gave Chancellor Angela Merkel reason to schedule an EU-China summit in Germany for September.