Close: London Session | Forex, Metals, Oil, Agriculture October 26, 2020

Agriculture

Earlier this month, the USDA’s monthly World Agricultural Supply and Demand Estimates (WASDE) report forecast a large, and somewhat unexpected, reduction in global soybean stocks. Exhibit 1 illustrates global soybean ending stocks in the 2020-2021 crop year dropping in October 2020 to the lowest level in four years. On the demand side of the ledger, China imports roughly 60% of total global soybean exports. The 2018-2019 crop year coincided with the start of the China-U.S. trade war, which was the catalyst for U.S. soybean exports to plummet.
Brazil and the U.S. make up approximately 85% of total soybean exports, and there have been supply issues in both countries. Chinese monthly imports of soybeans reached a new five-year high this Northern Hemisphere summer (see Exhibit 2). Soybean meal is used as a source of feedstock in animal production. The top-line beat versus what we were looking for is certainly welcomed news but it is still tough to sugar coat a 20% decline.
Over two decades ago Jay got his start at the Kansas City Board of Trade in the Wheat Futures pit. In September 2019, the company announced it would build robotic coffee kiosks for Texas-based startup Briggo.

Currencies

Amid the pandemic downturn, loan investors could find themselves losing 40 to 45 cents on the dollar, compared with historical averages of 30 to 35 cents, according to Barclays. Buoyed by a weak US Dollar Index, which is close to a 2-1/2 low, foreign markets generally led trading action for the week through Friday, Oct. 23. Buoyed by a weak US Dollar Index, which is close to a 2-1/2 low, foreign markets generally led trading action for the week through Friday, October 23.
The decline in emerging market currencies is led by the 1% decline in the Turkish lira, against which the US dollar is at a new record high around TRY8.05. We’ve seen economic turmoil, political strife, social unrest, a $3 trillion federal deficit, and a dollar weakened by fiscal and monetary stimulus – all happening at once. When J.C. Penney Co. went bankrupt, an auction held for holders of default protection found the retailer’s lowest-priced debt was worth just 0.125 cents on the dollar.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.25 per cent to 93.00. The dollar gained against a basket of currencies, while gold prices were little changed. The U.S. dollar gained against a basket of currencies, while gold prices were little changed. less The rupee depreciated 23 paise and settled at 73.84 (provisional) against the US dollar on Monday as muted domestic equities and strong American currency weighed on investor sentiment.

Metals

The Gold Analyst offers quality technical and fundamental analysis of the price of gold to help educate readers in their investment decisions. Because gold serves as the backstop of the international financial system, the global distribution of gold influences the balance of power. The company released its fiscal Q1 2021 (Q3 calendar year) results last week and reported quarterly gold production of 20,300 ounces, down 29% year-over-year. Unfortunately, this lower production has resulted in a sharp rise in costs due to the lower gold sales, with trailing-twelve-month costs sitting at $1,985/oz [US$1,409/oz].
Unfortunately, the lower grades also led to a 210 basis point headwind in gold recovery rates (91.3% vs. 93.4%), which also hurt overall production. less Metals broke out earlier in the year because there has likely never been so many fundamental reasons to buy gold and silver. >> Fabrice Drouin Ristori on Twitter is an independent investment analyst and studies the gold and silver market and their future role in the international monetary system.
On Monday, the prices of gold plunged to its lowest level since October 15 but the yellow metal managed to recover the losses in early European trading.
This is because the study envisions 146,000 ounces of gold production over KOTH’s mine life at all-in sustaining costs of $1,415/oz. Stocks are great, but these days I believe hard assets like gold, silver, bitcoin and real estate are just as important.

Oil

Starting from January 2006 up to December 2019 (data for 2020 is incomplete), long crude oil from January to March, and short crude oil from April to December. Everyone would have to agree with me that for more than a decade, the prices of crude oil have been deplorable, causing much disappointment to oil investors. The Libyan National Oil Company announced that all major oil ports had been reopened and that production is likely to increase to 1.0 MMbbl/d over the next four weeks.
In September, crude oil throughput rose 13.4% from the previous month to 4.33 million barrels per day (17.71 million tonnes). Crude oil throughput in September rose 13.4% from the previous month to 4.33 million barrels per day (17.71 million tonnes). This was the highest since the onset of the country’s coronavirus restrictions in March when refiners processed 5.01 million bpd of crude oil. A little more than six months after Covid-19 sent oil prices into a tailspin, a second wave is threatening to take another bite out of energy demand.
Both supply and demand concerns are seen as negative for oil prices, and the December WTI contract, which tumbled 3% last week, is off another 3% today (~$38.70). The crude oil market is also fearing the danger of COVID 19 and showing disappointment that Speaker of the House Nancy Pelosi continues to play politics with people’s lives. Saudi Arabia’s energy minister said at a conference on Monday that the oil market isn’t yet out of the woods, despite a strong recovery in recent months.

United States

less U.S. equity benchmarks traded lower in the earlier session, as Wall Street is heading into the last full trading week before Election Day. Deep Value, namely Energy and Financials, would likely be key beneficiaries of an ‘orderly’ Trump victory and could see a large short squeeze. If they can see 2021 being a better year, then demand for the physical metal could wane, as it did after Trump’s first victory four years ago. The Trump administration earlier this month announced it was opening a trade investigation into Vietnam’s currency policy to determine whether an undervalued dong hurts U.S. businesses.
While many banks have indicated that net charge-offs could linger around for the next 12-18 months, I don’t believe UBSI is likely to see that scenario. Investors are steeling themselves for the last stretch of campaigning, with Democratic candidate Joe Biden still favored to beat President Donald Trump, according to the latest data from PredictIt.
Given the relationship between US President Trump and UK PM Johnson, it would seem at first glance that a Trump victory would be best for Brexit. On top of that, since most PPP related deposits were put into bond investments, UBSI saw 117% growth in its short term investment portfolio. Both funds track an index of the 100 biggest Nasdaq stocks, a corner of the stock market that has massively outperformed in recent years. The trade deficit with China also has risen amid the pandemic, and is back to where it was at the start of the Trump administration.

China

Each of the cases were asymptomatic, according to Xinjiang’s health authorities.Free testing is being rolled out for nearly 4.75 million people in Kashgar, in the far west of China. The guided revenue reacceleration to ~25% YoY in 2Q21 (from ~8% YoY in 1Q21) is particularly impressive given the shortened summer and delayed reopening of learning centers in Beijing. China’s Xinjiang province reported 26 new asymptomatic coronavirus infections between 1600 Sunday and 1600 Monday in Kashgar prefecture, China Central Television reported.
According to Reuters, Beijing has decided to impose sanctions on Boeing’s defense unit, Raytheon and (again) Lockheed.
According to Reuters, Beijing has decided to impose sanctions on Boeing’s (BA) defense unit, Raytheon (RTX) and (again) Lockheed. The Centrale China plan President Xi Jinping spoke at a meeting in Beijing devoted to mapping out the country’s 14th five-year plan. U.S. shipments in September soared to 3.9 million tonnes, spurred by cheap prices and a trade deal between Beijing and Washington, data from China’s General Administration of Customs showed.
Going forward, I feel comfortable underwriting further pick-up in enrollment growth in Beijing towards the 2021 winter holiday, which should entail continued YoY acceleration in 2H21. Beijing considers Taiwan a wayward province it has vowed to bring under control, by force if necessary. In Asia, news broke on Sunday that China had discovered its largest outbreak in months in the far-flung province of Xinjiang.

Europe

Elsewhere in the EU, the Czech government has imposed a partial lockdown of the economy to regain control over the raging coronavirus. It’s my feeling that even though Johnson may have given the EU ‘two fingers up’ the EU and those behind it aren’t done with the Brits yet. While Covid-related restrictions have been ramping up across the eurozone, ECB President Christine Lagarde has warned that the recovery could lose momentum. A major difference is that the post-Brexit era has seen three changes of government and two general elections in the UK.
All eyes will be on the economic data and monetary policy outlook coming from the European Central Bank (ECB) on Thursday, 29 October. At the same time Macron has emphasized a freedom of speech message over the teacher Samuel Paty’s slaying, vowing that. The EU played hardball giving zero ground for four years while undermining the UK from within its own political and bureaucratic structures. The UK and the EU went from a breakup in talks to resuming them and now even making progress.
One need look no further than the insipid way Merkel has handled the obvious intelligence job surrounding Russian opposition figure Alexei Navalny. In the UK (still technically part of the EU) the pace of growth slowed to the weakest since the post-lockdown recovery started.

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