Daily Close | Forex, Metals, Oil, Agriculture August 13, 2020

Agriculture

The US corn and soybean crop is progressing well ahead of 2019 levels, which could be supportive of strong fall applications.” USDA said that net weekly Upland Cotton export sales were 6,900 bales this year and 8,800 bales next year. Brazilian soybean acreage is expected to increase approximately 5 percent in the upcoming planting season.” Brazilian soybean and corn prices continue to be historically high. Export demand for US Cotton has been poor for the last few weeks.

Currencies

The U.S. Dollar Index contains six component currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. The euro, sterling and the Canadian dollar traded higher on the back of U.S. dollar gains. That means, for example, a falling U.S. dollar can translate to rising prices in dollar-denominated futures markets (all else being equal). Good numbers should help the Australian dollar, which sold off despite strong labor market numbers.
Traditionally, a rally in the Dollar Index has proven to be very beneficial for Managed Futures. In essence, the desire to hold U.S. dollars fades as more countries begin to recover economically, which in turn weighs on the U.S. dollar. Which currencies are included in the U.S. Dollar Index? Meanwhile, the New Zealand dollar fell sharply on the back of dovish comments from the Reserve Bank. The Dollar ended the day lower but rallied as the SHTF this afternoon… The U.S. Dollar Index was created by the U.S. Federal Reserve in 1973.
So bring on that U.S. dollar weakness. A U.S. dollar sell-off! The euro replaced the last five of these currencies. As ICE points out above, the euro holds a 57.6% weight, while the other weightings are JPY = 13.6%, GBP = 11.9%, CAD = 9.1%, SEK 4.2%, CHF 3.6%.

Metals

In my silver update three weeks ago, Silver: 4-year Highs and More to Come, I made the case that silver was cheap relative to gold. Later on in 2008, he began researching areas of the gold and silver market that, curiously, the majority of the precious metal analyst community have left unexplored. Indeed, gold has all the physical properties that make for sound money: Even though officially demonetized in the early 1970s, people haven’t stop appreciating gold’s “moneyish” qualities.
A lot of the gold imported into the U.S. was due to delivery issues, as many of the large gold refineries were shut down. The panic to get more gold to the U.S. exchanges suggests that there is way too much paper gold leverage in the system. If we look at how silver compares to gold so far this year, the outperformance has been stunning. Unlike gold, which is mostly a monetary metal, silver is also an industrial metal. The company’s attributable gold equivalent production this quarter was ounces compared to 166,399 ounces in the prior-year quarter.
I pointed to the gold to silver ratio which had, at the time, reverted from an all-time high of 124 to 1, to 87.4 to 1. That’s why we published a new, 50-page long Ultimate Guide on Gold & Silver that you can download here. Silver is slowly recovering now after lagging gold significantly. At the time, silver was $21 and gold was $1,840. On the investment side, silver demand was up 10% in the first half of 2020, led by ETFs along with silver coins and bars.
As I track silver’s moves, I’ll be sure to let you know when I think silver has bottomed and looks set to resume its climb. 13, 2020 3:05 PM ETby: Frank HolmesFrank Holmes Growth at reasonable price, contrarian, gold & precious metals, commoditiesU.S. I expect the gold price to continue weakening with some ups and downs but with an apparent lower lows trend. The company sold more than it produced this quarter with total sold GEOs of Geos at a record high for gold again.
If you answer no to any of these questions, pronouncing last rights on the gold bull market might be premature.
So, with the global contagion pulling down global oil demand by 25% in April, it forced investors into the safe-haven of gold. The price of gold dropped more than 5%, falling far below the $2,000 level.

Oil

Oil is a global commodity, and Asian demand is not the most important factor in setting the global oil price. 70-75% of Saudi Aramco’s crude oil sales head to Asia, so the company is set up to benefit more from rising Asian oil demand. Aramco’s cost of production is so inexpensive that even when the price of oil is down, Aramco can lift its profit by selling more oil to Asia. While process industries held up better, companies like (EMR), (HON), and (ROK) still saw double-digit declines in the chemicals sector and even worse declines in oil & gas.
As of January 1st, 2020, the trust had approximately 4.0 million barrels of proven oil reserves and 5.4 billion cubic feet of proven natural gas reserves remaining. These properties consist of 332 net productive oil wells, 106 net producing gas wells, and 120 net injection wells. However, without higher prices and without the demand to sell markedly more oil, investors should not expect great news. Process industries will probably be weaker, though Emerson thinks they’ll return to growth in 2021, and oil & gas is likely looking at a multiyear recovery cycle.
In addition to that, a low breakeven price allows for further business improvements and dividend/repurchase budget hikes if oil prices start to improve. Even Saudi Aramco (SE:2222), the most profitable oil company in the world, reported a 73% decline in profit compared to the same quarter last year. According to CEO Amin Nasser, the energy giant is banking on growing oil demand in Asia to help it recover profits in H2.
Permian Basin holds an overriding royalty interest in several oil and gas properties in the United States. I’m also definitely concerned about the significant exposure VDM has to oil & gas markets. The trust has oil and gas producing properties in Texas. This is particularly true when it comes to oil and gas royalty trusts. World GDP growth is tied to global oil production growth… PERIOD. Crude oil, gasoline and diesel inventories all remain well above average for this time of year.
EIA published its short-term energy outlook this week and one thing that’s not surprising to anyone following the natural gas market is that EIA expects production to keep falling. The same goes for dividends that are likely to normalize if the oil price allows it. China, in particular, has been keen to purchase more oil for storage when the price is low.

United States

So you could get a form of yield curve control here where inflation is rising, demand for government debt is declining and the Fed insists on keeping rates low. “Just in case you thought Biden’s candidacy was going to be anything other than completely nuts, team Trump has released a new video,” the tweet said. The Fed kept rates artificially low following the turn-of-the-century “Dot Com” Crash. Duluth Holdings Inc. (NASDAQ:DLTH), casual lifestyle workwear and accessories retailer has just completed a multi-year transition from a catalog retailer to omni-channel retailer with significant revenue from online sales.
The S&P 500 is within spitting distance of new all-time highs while NASDAQ continues to make one new high after another.
Michigan Democrat Rashida Tlaib, one of two Muslim women and the first woman of Palestinian descent in Congress, said: “We won’t be fooled by another Trump/Netanyahu deal. Please consider Apple’s $44 Billion China Market Threatened by Trump WeChat Ban Apple Inc. spent years building China into a $44 billion growth driver. The worst part is, if inflation ticks higher, the Fed has made it clear they won’t raise rates any time soon.
Big tech is now approximately half the market cap of the NASDAQ and 26% of the S&P 500. Even though most people Campus Reform spoke with were not Trump supporters, one student said while referencing the CARES Act. On Wednesday, the Department of Labor gave instructions on how to implement the executive order that extends federal unemployment benefits signed by President Donald Trump over the weekend.
Of course, the pressure isn’t only coming from the US…Europe is redoubling its efforts to circumscribe American tech giants’ role in the European digital marketplace. Joe Biden, the president’s Democratic rival, has criticised administration efforts to move the US embassy from Tel Aviv to Jerusalem, which critics have argued undermines Palestinian territory. There was speculation online that Mr Cain caught the virus while attending Donald Trump’s dud rally in Tulsa, Oklahoma, where social distancing and face mask usage were not enforced.
So how is Trump’s reelection bid looking so far, according to Mr. Market? Consider President Trump’s most recent memorandums and executive orders, signed this past weekend. Donald Trump‘s administration has abandoned its plan to rescind certain visas for foreign college students whose universities would be moving to online-only courses. Likewise consider that the Fed was slashing rates, printing money and growing its balance sheet before the coronavirus reared its ugly head.
It also has orphan drug designation in both the US and Europe, along with fast track title in the United States for prolonging the survival in patients with rGBM. Apple AAPL is about to lose a $44 billion market thanks to President Trump.

China

The Brazilian embassy in Beijing did not immediately respond to a request for comment.

Europe

Acerinox management is seeing the U.S. market recovering a little more quickly than the European market, but the EU has recently issued some improved anti-dumping measures that should help. British Prime Minister Boris Johnson has welcomed said that the “decision to normalise relations is hugely good news.”

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