Close: London Session | Forex, Metals, Oil, Agriculture October 16, 2020

Agriculture

The coronavirus pandemic is increasing demand for soybean oil as consumers rushing to online shopping are boosting traffic for trucks, which usually run on diesel and its renewable forms. Mid-Iowa Cooperative will build a new soybean processing plant with capacity to crush 38.5 million bushels a year. The Cotton Australia and the Australian Cotton Shippers Association, however, asserted that their relationship with China “is of importance to us”. As Rabobank’s Michael Every writes this morning, the “Australian press claim China is now no longer taking Australian cotton.
Bearish trend continued at the Vashi wholesale sugar market on Friday on eased demand. Coffee may revisit its September high while cocoa its July low. The Bombay Sugar Merchants Association spot rates (₹/quintal): S-grade 3,226 – 3,292 and M-grade 3,276 – 3,440.

Currencies

The dollar, however, failed to extend the rally further and faltered ahead of the key 94.00 barrier when gauged by the US Dollar Index (DXY). The dollar is mostly softer today, though the Australian dollar and Norwegian krone are exceptions. Echoing the others’ comments about dollar weakness, Ingram also notes that the greenback could be under pressure from decreased trade flows which has lowered demand for dollars internationally. Further, Gupta said “until the deal is released we won’t see optimism in market sentiments and USD/INR spot will follow the direct relationship with dollar index.
If this fuels demand for haven assets, such as the US Dollar, that could in-turn send gold prices to the downside. Breaching this technical support zone could encourage US Dollar bears to push the Greenback toward multi-year lows again near the 92.10-mark. The dollar is going to fall through the floor and inflation is going to ravish the United States.
less The US Dollar is trying to turn higher with USD price action bouncing off session lows. Nonetheless, USD price action still trades on its back foot today judging by the broader US Dollar Index. Dollar weakness benefits international ETF, but he says China’s rebounding economy encouraged him to bump up emerging markets holdings.

Metals

In other words, Barrick saw margin expansion at both ends (costs and realized gold price), which resulted in gold margins of $940 per ounce. Porgera is a 500,000+ ounce per year gold mine, with Barrick’s 47.5% stake amounting to 284,000 ounces of gold in 2019. Image: Lamaque Gold Mine Source (Mining.com) The Vancouver-based Eldorado Gold (EGO) released its preliminary production results for the third quarter of 2020 on October 13, 2020. less Gold prices trade without a clear direction at the end of the week, although they manage well to keep business above/around the key $1,900 mark per ounce.
Despite zero output from the company’s Porgera mine in Papua New Guinea last quarter (more on this later), total gold production still increased compared to Q2 2020. The Gold Edge is my premium, research-intensive service that provides that knowledge as I’m sharing all of my thoughts, ideas, and research on the gold sector. Shandong Gold, one of China’s biggest gold producers, in May offered C$230 million for struggling TMAC Resources.
As expected, gold margins expanded aggressively last quarter and hit that $900-1,000 per ounce range. It’s safe to say that with higher output and $940 per ounce gold margins, Q3 2020 OCF and FCF figures were exceptional. The company stated that the realized gold price in Q3 was $1,909, or an increase of $184 per ounce compared to Q2.

Oil

Moreover, thanks to great technological advances in oil production, oil producers are now able to extract more oil from a given number of wells. After 50+ years of production, the oil sands remain among the world’s most carbon-intensive large-scale crude oil operations. Demand for oil may not justify more E&P in the oil patch, which means such headwinds could persist until Q1 2021. China’s oil buying frenzy slows on high stocks, limited quotas China has hit the brakes on its oil buying spree as swelling inventories and limited import quotas stifle purchases.
I have worked in the areas of oil refining, natural gas production, synthetic fuels, ethanol production, butanol production, and various biomass to energy projects.
Oil services firms must maintain ample liquidity to survive volatile oil markets. In a recent interview, the CEO’s of Vitol, Trafigura, and Gunvor (oil trading houses) forecasted the price of oil for October 2021 between $50 and $55. Shut crude oil production is 24% or, 439,823 barrels per day (bpd). The Energy Information Administration reported that commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 3.8 million barrels from the previous week.
Polo Alagoas produced an average of 2,300 barrels per day of oil from January through September and 878,000 cubic meters of gas, the company said.

United States

With inflation rates down and the Fed’s pledge to keep interest rates low for the next few years, it seems that the banks could struggle. Five Things Follow Us Get the newsletter Mnuchin says Trump would lobby senators over stimulus, decision day for Johnson, and retail sales data due. In times of equity market distress, bond prices soared as yields sank, particularly when the Fed was able to cut policy rates by hundreds of basis points. The US 10-year note yield is around 0.72%, slightly softer on the day and around four basis points lower on the week.
But Sprogis said we could see “upward solar surprises” from that base-case scenario, including the US and China extending their solar installations plans. S. stock futures wobbled Friday, signaling a potentially muted end to a volatile week on Wall Street. Wall Street futures and European shares rose as Pfizer said it could apply for emergency use of its COVID-19 vaccine candidate as early as November.
As the week wraps up, US retail sales and University of Michigan consumer sentiment are due during the Wall Street trading session. A Wall Street sign is pictured outside the New York Stock Exchange in the Manhattan borough of New York City, New York, U.S., October 2, 2020. The Citi Economic Surprise Index tracking the US is near a 3-month low, showing that the level of rosy surprises in data has been fading since the Summer.

China

Also, the bilateral tensions triggered separate investigations by Beijing into Australia’s wine export and dumping allegations. While Australian Prime Minister Scott Morrison recently said: “It’s not uncommon for China to suspend coal imports,” Canberra is probing the latest moves by Beijing.

Europe

Since it’s clear that Brussels doesn’t want a more comprehensive “Canada-style” deal, BoJo said his office would instead seek an “Australia”-style deal, a far less “comprehensive” option. UK Prime Minister Boris Johnson said the country is now preparing to leave the European Union without a free trade deal in place. While an agreement remains elusive, the EU’s chief negotiator Michel Barnier said they remain determined to reach a “fair deal.” We think neither the October 15 deadline nor the EU’s October 30 deadline constitute a hard stop and we expect negotiations to continue in coming weeks.
In the UK, Boris Johnson will today set out his response to the EU’s request for concessions in the Brexit deal. Then the market seemed to react with surprise that there was no last-minute breakthrough in the UK-EU trade negotiations. However, Foreign Secretary Dominic Raab has said that “,” seems to hint that the UK is set to extend deliberations with the EU.
In Europe, the focus today is on the continuing Brexit negotiation saga with markets betting that PM Johnson will extend the self-imposed October 15 deadline.
On Thursday, EU leaders allowed for more negotiations – but refused to intensify them. That Clash song best described Prime Minister Boris Johnson’s dilemma about Brexit talks after a clash with the EU – .

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