Daily Close | Forex, Metals, Oil, Agriculture October 14, 2020



China’s corn output is expected to fall this year after typhoons flattened crops in some parts of the countries northeastern Corn Belt. While China corn futures hit a new record high because of crop damage from typhoons and selling their once huge state reserves. The most actively traded corn futures on the Dalian Commodity Exchange for delivery in January hit 2.566 yuan or $380.70 per ton, the highest on record. On the Corn front, the market traded higher against Monday’s drop, with funds net-sellers of 27,500 contracts.
General Comments: Wheat markets were mostly a little higher, but traded much higher early in the session. It also covers the commodities market daily focusing on in-depth technical developments in GOLD, CRUDE OIL, SILVER, CORN & WHEAT. There is optimism as yesterday morning was announced of large corn sales to Mexico and an overall healthy export inspection data. These areas are trying to plant the next Winter Wheat crop but the dry weather and the dry soils are keeping farmers out of the fields.
In the overnight electronic session, the December corn is currently trading at 390 which is 1 ¼ of a cent lower. World demand for US Wheat depends mostly on lower prices for US Wheat to compete with Russia, Europe, and other sellers.


Nikola Motor (NKLA) currently trades at a $9 billion dollar market cap with barely any revenue after former CEO Trevor Milton stepped down. SIVR has rebounded decently since late September, which has been triggered by a renewed fall in the dollar. A potential fly in the ointment for the British Pound after a Brexit deal is achieved?


Source: Bloomberg, Orchid Research Because silver remains cheap vs. gold judging by historical standards, we think that retail ETF investors may continue to express strong buying interest for silver. : The positive sentiment toward silver among ETF investors is bullish for the COMEX silver spot price and thus SIVR. The net spec length in COMEX silver has rebounded well since August, which points to improved sentiment toward silver among the speculative community.
As can be seen from the graph below, there is a very strong correlation between the prices of silver and iShares Silver Trust ETF. In the long run, however, the Fed would have to ease the monetary conditions even further, thus, bringing the gold and silver prices to new highs. That said, silver’s spec positioning remains light because the net spec length, which represents 27% of open interest, is well below its all-time high of 57% of open interest. So, the two shiny metals tend to move in the same direction.However, the investment market for silver is not as large as that for gold.
Although the gold:silver ratio has declined substantially since it reached an all-time high of ~120 in March, it remains above its average from 2010. Let us also be mindful of the fact both gold and silver tend to be safe havens in case of any political headwinds. The physically-backed methodology prevents investors from getting punished by the contango structure of the Comex silver forward curve (forward>spot), contrary to a futures contract-based methodology.
: Speculative positioning is light, which is potentially bullish for the COMEX silver spot price and thus SIVR. Some conservative experts even said silver might reach $86 or $130 per ounce in the next several years. As concerns millennials, many of them consider both gold and silver to be old-fashioned. That’s why silver is more volatile.Gold has great potential to move higher due to unprecedented levels of uncertainty and quantitative easing.
Source: Orchid Research ETF investors left their silver holdings a little changed (-14 tonnes) in the week to October 9, according to our estimates.
I believe the fiscal and monetary stimuli will force the demand for industrial metals, including silver, upwards in the longer run. But silver has an even greater potential to appreciate.Silver has had a fabulous time this year. Investor sentiment toward silver is bright, which is due to the macro uncertainty resulting from the COVID-19 shock and the policy response to it. My colleague Adam wrote a very interesting article about silver’s potential to plunge in price.
The same experts only expected the silver price to reach $18 this year alone.


When global lockdowns kept consumers inside their homes, oil & gas companies lost billions of dollars and the price of crude oil reached $0 for the first time ever. Oil & Gas companies relied on gas stations to drive profits as consumers pulled up to the gas tank to refill. Oil prices are currently too low to sustain the government strategy of both nations. Last week’s US$ -denominated government bonds to Russia and Saudi Arabia have fallen, mainly due to lower oil prices and U.S. election issues.
The world’s largest oil company has already put several major new projects on hold, while at the same time reassessing investment levels of others. Without higher crude oil prices, not only is the Kingdom’s flagship Saudi Aramco suffering but most government projects too. International traders are openly questioning the current OPEC+ move to put extra oil on the market, as there is no current need for these barrels. Asian importers, especially China and India, have been reaping the rewards of this low price environment, filling their oil storage tanks to the brim.
Just take a look at the YTD performance of the iShares Global Clean Energy ETF (ICLN) vs. iShares U.S. Oil & Gas Exploration & Production ETF (IEO). Despite good data and rise in oil prices, USD/CAD found support above 1.31. Saudi Arabia, supported by its main ally UAE, and Russia are both looking at a financial crash of unknown magnitude if oil markets don’t recover soon. A more aggressive move by Riyadh towards market-share or oil prices is not at all unthinkable.
Statements made these weeks that Saudi Arabia wants to be the last oil producer standing or the “Sole Survivor” should not be taken lightly. It’s insulated from oil & gas price movements with . In 2020 we had oil prices go negative. OPEC+ seems to be looking at things differently though, with oil taps in Saudi Arabia, Russia, and other OPEC+ member countries opening once again. OPEC production cuts compliance is still around 100%, but the coming months will see that figure fall.
It is a worrying time for the two main architects of the OPEC+ agreement.
This time, both IOCs-independents and some weaker OPEC+ producers will suffer.

United States

China’s $10+ trillion stock market cap makes it the second-largest global stock market behind the US. Driving sales growth for the quarter was a surge in demand in the small kitchen appliance industry in the U.S market. Consumer demand in their U.S and Canadian markets was strong enough to offset declining sales in its commercial segment. This is unfortunate since infrastructure spending is a critical determinant of the health of the US economy in both the short and long term.
Another big quarter for trading desks across Wall Street was good at Goldman Sachs, too, with trading revenue up 29% from a year earlier. Wall Street analysts are behind Catalyst Pharmaceuticals as well with an average analyst price target of $7.75, signaling as much as 145% upside from current prices (Figure 3). China is the only country other than the US that can boast a double-digit share of the world market cap. Following the release of the interim results, UBS reaffirmed its buy investment rating on the stock, raising its price target to 3,230p.
As a percentage of total world market cap, Chinese equities now account for 10.86% compared to 41.85% for the US. Going forward, I expect the proposed stimulus package in the US to be supportive of new vehicle sales. That said, strong consumer demand in the U.S and Canada is offsetting the weak performance in its commercial and international segment. Mnuchin’s prompted weakness in stock markets but a glance at Nasdaq and it would seem that as op-ex looms on Friday, the ‘gamma-squeezers’ have backed off…
Indeed, a commitment to increased infrastructure spending was one of the few sensible economic planks that the Trump Administration ran on in 2016. It thus seems unlikely that the consumer side of the US economy will be especially weak in the near term. *But Infosys INFY sold too soon, boosted revenues and guidance today, rising 4.74% at the opening is aiming at $20 again today but fell after Wall Street did.
While the Fed and the federal government have really backstopped this market and are working on more mitigation efforts (i.e. Meanwhile, the US continues to make up a bigger and bigger slice of the pie and is basically in its most dominant position of the last 10+ years. “That tells me there is a lot of day trading going on related to the Nasdaq 100,” said Tribeca Trade Group CEO Christian Fromhertz. It also appears there aren’t enough engagements in the Fed vertical to turbocharge growth.
The airline says the man, who was also wearing a “Black Voices for Trump” hat, refused multiple requests to wear a face covering.


The UK operations may also suffer from uncertainties related to a no-deal scenario in the ongoing trade talks between the UK and the European Union.