Close: London Session | Forex, Metals, Oil, Agriculture October 08, 2020



U.S. cotton exports to China hit a seven-and-a-half-year high in August, while corn shipments to the Asian country reached an all-time record. U.S. shipped record high soybean in September while Argentina exports fell dramatically. Cotton oil (Gujarat) was quoted at ₹860, while palm oil (Indore) ruled at ₹895- 900. Groundnut, palm and cotton oils were also quoted lower with availability outstripping demand. On the Corn front, the market continues to roll heading into today’s Export Sales and tomorrow’s USDA Crop Production Supply/Demand data.
More dry temperatures are expected in the Corn Belt; however, Hurricane Delta could slow the eastern portions with heavy rains. But the combined export value of cotton and corn, the No. Sugar prices at Vashi recovered on Thursday, erasing previous days lose on ease selling. 2 and 3 items in August, was less than half that of soybeans, emphasizing the importance of the oilseed in the trade relationship.


Since 1971, when the dollar went off the gold standard, the US dollar has declined 98% and is on the way to zero against gold. Pay attention to the US dollar, if the US dollar starts to fall, that is generally good for the stock market as well. That stability made the dollar much stronger and made the US dollar the global reserve currency. In 1971, when Nixon took the dollar off the gold standard, the US dollar became a paper or fiat currency. The US dollar is near a three-week low against the Canadian dollar (~CAD1.3235).
The present macro environment for gold prices is mixed because the positive effect from renewed dollar weakness is offset by the negative effect from rising US real interest rates. Gold and silver until 1971 were the guarantee that the US dollar would maintain its purchasing power and its intrinsic value. Stocks are on the rise and the safe-haven dollar is broadly lower as US lawmakers continue exchanging ideas – at least publically – for another stimulus package.
Now the good news is that gold, silver, and mining stocks tend to move opposite to the US dollar index. SGOL has enjoyed a mild rebound in recent days on the back of renewed dollar weakness.


Fortunately, preliminary production results from miners across the board have been quite strong, with Yamana Gold (AUY) being the first million-ounce gold producer to report its results. Given the bullish outlook for Gold, the outlook for Barrick Gold remains positive, as well – with some serious upside potential. Even though gold is down 22 or so, but gold derivatives are trading on the plus side today. We discuss gold prices through the lenses of the Aberdeen Standard Physical Gold Shares ETF (NYSEARCA:SGOL).
As noted earlier, the company had relatively high costs of $1,303/oz during this reporting period, with gold production in the period of 29,130 ounces. In Yamana’s case, this change is a much higher gold price, allowing the company to see improved gross margins, which are flowing directly to the bottom line. Precious metals bulls want to see Silver leading Gold higher to signal a “risk-on” environment for metals trading. On MCX, December gold futures fell 0.2% to Rs 49,950 per 10 gram while silver futures fell 0.3% to Rs 60,280 per kg.
Given the increased gold (GLD) price, which is an added tailwind for margins, and the significant cost reductions recently, we should see record mine operating earnings in FY2021. Silver means to Gold what small-caps and growth stocks mean to the broader stock market.


Groundnut oil (Indore) today was quoted at ₹1,250-1,270, groundnut oil (Bombay) ₹1,250, while groundnut oil (Gujarat) ruled at ₹1,220. With the total volume of oil production of about 30 million tons per year, super-viscous oil production in 2019 amounted to – more than . Photo illustration: Carlos Waters/WSJ Oil prices climbed Thursday, Brent crude oil, the global benchmark, rose by 1.2% to $42.48 a barrel. That, though, would sting oil prices and the economic growth of energy-exporting countries, said the oil cartel.
In mid-September, the Ministry of Finance announced its plan to abolish tax benefits for old oil fields and the production of super-viscous oil.
Crude future prices spiked in Thursday morning trade after OPEC said Thursday that the “worst is over” for the oil market. Another six oil and gas field could wholly or partly close by October 14, including the Ekofisk platform, the industry has said. Oil and gas workers have withdrawn from offshore U.S. Gulf production facilities as Hurricane Delta was forecast to intensify into a powerful, Category 3 storm. In 25 years’ time, non-OECD oil demand will have increased 43% from last year’s levels, partly driven by economic booms in China and India.
Some of that increase will come at the expense of oil, but demand for natural gas won’t yet have peaked by 2045.

United States

President Trump received the antibody cocktail last Friday and lauded the treatment in a video posted to Twitter yesterday, saying he would authorize its emergency use. less President Trump threw another U-turn at investors this week, after tweeting that he supports legislation to authorise sending a second batch of $1,200 stimulus checks to Americans. The Fed and ECB project their mandates are also unlikely to be reached any time soon but were reluctant to provide more support last month.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke briefly on Wednesday about a stand-alone stimulus bill for the airline industry, sending carriers’ stocks higher. President Trump yesterday said he was stopping any further stimulus bills until he is re-elected president, if he is. Overnight, President Trump praised an experimental antibody drug made by Regeneron, saying in a video message that it was key to his recovery from Covid-19.
Still talking Despite President Donald Trump announcing that talks over a stimulus package were over, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin remain in contact. The Nasdaq 100 is currently in its strongest year since 2009 and the S&P 500’s performance is also much higher than it is during normal years. US markets reversed this week’s losses on the back of Trump’s indication of a new stimulus bill. Regeneron rose after Trump said its antibody cocktail was the key to his quick recovery.


Proven cost-cutting measures, coupled with access to additional capital via the planned Xinjiang Daqo IPO, give DQ the fuel for visible sustainable EPS growth. With the recent crackdown by Beijing on Hong Kong, this advantage may be under some question as to the terms under which these businesses may operate in the future.


More easing looks likely in the December meeting, since the ECB remains far away from meeting its inflation target. It’s still possible that EU member states could use national emergency powers to distribute a vaccine, especially as deaths start to climb as the ‘second wave’ takes hold. The UK reiterated its threat to abandon talks with the EU at the end of next week yesterday, and sterling initially fell on the news. This isn’t all that much of a surprise given that the ECB is deliberately set up so as not able to directly support government fiscal policy through money creation.
The recent fall in market-implied inflation expectations will thus be of concern for the ECB. Michael Gove, the UK’s most senior minister in charge of implementing a Brexit policy, believes there is at least a 60% chance of a deal being agreed upon. According to President Christine Lagarde, the ECB would follow the Federal Reserve’s lead to allow for an inflation target overshoot.
Uncertainty was the key word in the ECB’s monetary policy account from the September meeting. This included tracking the underlying dynamics of the pandemic, developments in negotiations on the post-transition Brexit arrangements and decisions on fiscal plans.
The UK is prepared to make a major compromise to secure security ties with the EU without ripping up the human rights act.