Close: London Session | Forex, Metals, Oil, Agriculture September 17, 2020



The Teucrium Sugar ETF product (CANE) follows the price of a portfolio of three sugar futures contracts that trade on the Intercontinental Exchange. Trading sugar requires market participants to follow the US dollar versus the Brazilian real currency relationship and the price of crude oil. Since sugar is the primary ingredient in ethanol in Brazil, the price of the agricultural commodity is also sensitive to the prices of gasoline and crude oil. Since then crude oil has made higher highs and higher lows, reaching a peak in August around the time sugar’s high was at 13.28 cents.
Despite seasonal falling of Brazilian soybean exports to China, exports remain strong, and in August, they were almost five million tonnes as per Commodities at Sea. Despite higher corn exports to China, it is worth noting that Black Sea exports are mainly satisfying demand for corn in China. Year on year, for the first eight months of this year, total major grain exports to China including soybeans is lower by about 14%.
The free-market price of sugar is sensitive to the price of oil and gasoline because of its role in ethanol. Price momentum fell to oversold territory as the price of sugar moved below the 12 cents level. The most price volatility tends to occur in the nearby contract, so CANE typically underperforms the price of sugar on the upside and outperforms during downside corrections.


On a valuation basis, Dollar Tree looks cheaper than Dollar General, but if we factor in the great job Dollar General has done controlling costs it may be warranted. Dollar Tree has a total of 15,479 stores under the two brands of Dollar Tree and Family Dollar. Similarly, the Dollar weakness at the time, coupled with talk about currency wars, did nothing to diminish the dollar’s dominance. The amount of Family dollar stores has decreased by 1% over the past five years to improve the store footprint, but Dollar Tree stores have grown 26%.
Invariably, whenever the dollar shows weakness, commentators abound who forecast the demise of the Dollar as the anchor currency of the global monetary system. Since the dollar started weakening, the Bank of China has allowed the Yuan to strengthen against the dollar, thereby reversing some of the tariff-offsetting exchange rate moves. One aspect of the recent Dollar weakness that we find particularly surprising is the weakness of the Dollar against the Chinese Yuan.
Dollar Tree is just like Dollar General in that each company is a leader of operating variety stores. In my opinion, I think waiting for a dip in Dollar General is a better option than going for Dollar Tree at the current price. Overall, Dollar Tree is lacking in what Dollar General has; a solid plan that has lowered costs long term.


When looking at the net present value of similar gold projects held in Nevada and Idaho, KORE also appears to be a value opportunity among junior gold developers. In 2002 when gold was $300 per ounce, MAM recommended to its investors to put 50% of their investment assets into physical gold stored outside the banking system. With a market cap around $110 million and a total resource inventory of 3.9 million ounces gold, the company is being valued at a reasonable $29 per ounce.
less A discussion about how the gold ETFs, GDX and GDXJ have fairs over the past month compared to the smaller gold juniors. Even gold and gold miners do not appear to be the strong risk-reward opportunity they were before. His thoughts on gold are captured each week on a program called Gold Game Film in collaboration with Kitco News and Results of a new PEA show a post-tax $263 million NPV and 40% IRR using a $1,600 per ounce gold price. These exceptional operating results, coupled with a higher gold (GLD) price translated to a revenue growth rate of 93% year-over-year and net mine cash-flow up 211% to A$354.5 million.
They have taken advantage of a gold bull market and seen their share price rise 300% in one year.
Fortunately, share price weakness in the top-10 gold producers often creates opportunity, and I don’t see any reason this time will be any different.


Moreover, OPEC+ will have to consider the impact that the recovery of Libya’s crude oil production and exports could have on oil prices. It s a big deal for an oil major to call the top on oil demand. Oil producers have to adjust to the new outlook for oil prices. The Energy Information Administration reported that U.S. crude supply and commercial crude oil inventories fell by 4.4 million barrels from the previous week. Next year’s demand outlook was lowered by 400,000 b/d as well, with global oil demand expected to rise by 6.6 million b/d vs 2020.
OPEC and 12 non-OPEC producers (including Russia) currently withhold around 7.7 million b/d of crude oil production, in an effort to rebalance supply and demand. One of the biggest international oil companies has concluded that oil consumption will peak this decade. less Crude oil prices have traded higher across the week, recouping some of the losses suffered over the prior week. Looking back across the last four weeks, US crude oil imports have averaged 5.3 million barrels per day.
Elsewhere, the data showed that US crude oil imports averaged 5 million barrels over the week.

United States

Federal Reserve keeps interest rates unchanged.Fed pledges to keep rates low until inflation exceeds 2%.Why U.S. consumer spending may slow if no stimulus deal is reached. On the surface, it would seem that a Fed committed to rates near zero through at least 2023 would be something that would inspire the opposite reaction. After a two-day policy meeting, the Fed released new projections in which 13 of 17 officials said they expect to keep rates near zero until 2023.
The question is whether keeping the Fed funds target rate near zero for years will lift inflation any time soon? The US regulator decided to leave the federal funds rate anchored in the range of 0.00-0.25% and pledged that rates would be kept low for a long time. Would the Fed show any rate hikes in its updated forecasts, which now include the central bank’s expectations for 2023 for the first time? This new development adds another layer of complexity in the upcoming election and what the future global trade regime might look like under another four years of President Trump.
Yesterday, the Fed meeting took place, during which the regulator left the key interest rate unchanged at 0.00-0.25% per annum, as experts expected. Also-ransWhile reaction to yesterday’s Fed decision remains the main factor driving markets today, there is plenty of other central bank action to keep an eye on. Judging by the new economic projections released by the Fed, rates will remain on hold for several years.


The Beijing-based company is partnering with (ORCL) to form a new U.S.-based firm that would run TikTok’s global operations, where it will continue to hold a majority stake.


That said, in light of rising concerns over a possible second wave of COVID cases and a sizeable market repricing in no-deal Brexit risks. That said, the BoE meeting is unlikely to provide much in the way of volatility with external factors (Brexit, Risk Environment) playing a larger role for the currency. In the bigger picture, nothing has changed: the ECB will probably increase its purchases going forward, announce more stimulus in December and core yields will remain in negative territory.
EU emissions are already declining in almost every sector except road and air transport making those sectors prime targets for emissions-reducing policies and regulations.
EU-UK Trade Negotiations: Political uncertainty and the repricing of no-deal Brexit risks have been heightened in recent sessions. In addition, Nether 01/2052 will be eligible for ECB purchases prior to FRTR 0.75% 05/2052, which should support the bond early in 2021. It is noteworthy, that the Nether 01/2052 is not eligible for the ECB purchases until mid-January next year, because of the maturity criteria. To be eligible for the ECB purchases, the maximum remaining maturity must be less than 31 years, which applies both the PSPP and the PEPP.
On the other hand, uncertainty about Brexit, the furlough scheme, and the virus – as Northeastern England is hit by new restrictions – may weigh on the outlook. David Merkel is an investment professional, and like every investment professional, he makes mistakes.