Daily Close | Forex, Metals, Oil, Agriculture September 15, 2020

Agriculture

Major competitive or other industry participants include: Management says it believes its competition is primarily ‘legacy products that are refined-sugar laden, highly processed, and have undecipherable ingredient lists. There is still plenty of time for rains to start planting in the latter two areas as well as in the US Winter Wheat areas. General Comments: Winter Wheat markets were a little higher and Minneapolis Spring Wheat closed a little lower.
Winter Wheat futures rallied with firm world prices.

Currencies

The Australian Dollar is strengthening broadly on the back of solid economic data out of China, which could encourage wait-and-see RBA policy. Also, the Aussie-Dollar continues to generally hold its positively sloped 20-day moving average, which could help sustain the broader bullish trend. Earlier this year, HWC sold a large portion of the energy portfolio for pennies on the dollar.

Metals

(Credit: Eldorado Gold) However, that post-tax value jumps by about $100 million for every $100/oz increase in gold prices, which puts the NPV closer to at spot gold prices. Eldorado Gold (EGO) is a mid-tier gold miner with a $1.9 billion market cap, which has guided for 2020 gold production of 520,000-550,000 ounces at $850-$950 all-in sustaining costs. Credit: Eldorado Gold) Eldorado is highly profitable in the current gold environment as its production and low operating costs allow it to produce strong cash flow and earnings.
Its stock is undervalued when compared to its mid-tier mining peers such as IAMGOLD (IAG), Yamana Gold (AUY), and Alamos Gold (AGI). The feasibility study completed in 2019 estimated its value at $313 million using a $1,400/oz gold price. An open-pit gold project in Brazil that’s estimated to produce 170,000ozAu per year at $615/oz AISC with a 10-year mine life. Eldorado also owns some promising development projects in Romania and Brazil, that, if put into production, would increase its low-cost gold production.
Skouries is 95%-owned by Eldorado, and it’s a gold-copper deposit that contains 3.8 million ounces of gold and 1.7 billion pounds of copper in reserves. Eldorado Gold shares are undervalued based on several key financial metrics. The bottom line is that any deeper correction in gold or the miners is likely to be short-lived… and followed by fresh “money printed” highs! An open-pit gold/silver project that’s 80.5% owned by Eldorado Gold.
Will doing nothing be enough to encourage investors to bid gold higher? In 1971, President Nixon abolished the post WWII Bretton Woods system and severed the USD’s final links to gold, thereby removing cumbersome restraints. The triangle pattern is arguably negative, and gold could ease to $1800-$1775 if the breakout is to the downside. This is an open-pit gold-silver project that is estimated to produce 106,000ozAu annually at sub-$500/oz AISC with a 12-year mine life.
realized price of US$1,726/oz), and it’s worth noting that the miner saw minimal impacts from COVID-19. Now, here are two steel-booted kickers: Kicker #1: A significant portion of MDP’s long-term debt has been obtained at a fixed rate.

Oil

Venezuela Faces The Real Possibility Oil Production Dropping To Zero Bold Mine Analysts predict Venezuela’s oil production could fall to zero by 2021. OPEC + Russian oil production averages between 52% and 55% of total world oil production. UAE crude oil production was up 180,000 barrels per day in August. Strange.Saudi Arabia increased production by 475,000 barrels per day in August.All OPEC data below is from the September OPEC Monthly Oil Market Report. The combined, OPEC crude only and Russian C+C was up 1,241,000 barrels per day in August to 33,906,000 barrels per day.
Mining production fell 2.5 percent in August, as Tropical Storm Marco and Hurricane Laura caused sharp but temporary drops in oil and gas extraction and well drilling.
Algeria crude oil production was up 47,000 bpd in August. Unlike the tar-like crude from Venezuela’s Orinoco region, the light oil from Monagas state is the only kind that’s easy to process into fuel at the country’s aging refineries. OPEC 13 crude only production was up 763,000 barrels per day in August. Super-volatile oil prices are largely to blame for this; having ranged from $19 to $140 per barrel over this same period.
The assets and quality of cash flows change from quarter to quarter, not just from the company’s normal operations but also from the price of oil. This is not a reversal of the trend.US oil production is set to keep declining into year-end to ~10.5 mb/d. Take out oil, and you get a much better idea of where things are going on a year-to-year basis. The price of oil has been by far the most volatile of any commodity.
It’s not a stock I’m excited about; in fact, the oil & gas industry as a whole isn’t too exciting. Against expectations of a modest build, API reported a major 9.5mm barrel crude inventory draw last week (and a surprise gasoline build)… More importantly, note how the scale for crude goes from 1.4 to 280 (i.e., crude prices have increased by a factor of almost 200 times! As a result, we estimate that for every month WTI is below $40/bbl, the absolute production is lowered by ~500k b/d.
NYMEX WTI has been trading steadily below $40 per barrel last week with demand concerns globally. Russia is the only other oil-producing nation with production data through August 2020.

United States

People would speculate if this was the first change of many even if the Fed said that it wouldn’t change its guidance. Billionaire hedge fund manager Stanley Druckenmiller, for one, says the Fed’s actions and congressional spending could take inflation to 5% to 10% in the next four to five years. He will continue to do that as the Trump administration works to end the outbreak and help Americans get back to work,” Deere said. T Following Mr Trump’s intervention, China announced new restrictive rules on technology exports, which would have restricted ByteDance from selling its algorithms to a non-Chinese company.
If the Fed was to project a rate hike in 2023, it would cause the stock market to swoon because that’s a hawkish move. However, we suspect that, given the rather numerous headwinds currently facing the markets, from the Fed to the election, a failure at lower highs would not be surprising. Dr. Atlas has provided President Trump with the latest scientific information and fact-based advice on how to safely reopen schools and get America’s economy back on track.
The report said that officials from both the Obama administration and the Trump administration have .
What’s more likely is consumers will continue spending the overwhelming majority of their time at home, benefiting businesses like Amazon (NASDAQ:AMZN). Jacob Schlesinger and Eliza Collins, writing in the Wall Street Journal, present a picture of what a Biden Administration budget would look like. The paper speculated this might be one way of satisfying President Trump’s request that the deal include a payout to the Treasury.
The high-flying Nasdaq 100 appeared to get hit the hardest, with the Dow Jones Industrial Average sinking down to a zone of potential support as taken from prior resistance. People are very interested in the Fed’s projection for the unemployment rate in 2021 since it has fallen so much recently. CNBC reported on Tuesday that the Trump administration could approve the deal as soon as Tuesday afternoon. The last couple of years in the US were the exception, with tax cuts and fiscal spending combined with relatively tighter monetary policy.
In an interview with CNBC on Monday, Steven Mnuchin, Treasury secretary, said ByteDance had committed to “create TikTok Global as a US-headquartered company”. What hadn’t yet appeared was the zone of support currently helping to hold the lows in the Nasdaq. We all don’t expect the Fed to raise rates for the next year at least, so it’s obviously not going to do so this week. Well, right now, the Trump team has not put out any plans for next year or beyond.
Image via Reuters President Trump fired the original inspector general in charge of the recent internal probe at the behest of Secretary of State Mike Pompeo.

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