Open: New York Session | Forex, Metals, Oil, Agriculture July 31, 2020

Agriculture

Dry conditions started hitting wheat crops in early June, prompting the exchange to cut its 2020/21 wheat planting estimate to 6.5 million hectares from an original 6.8 million. The U.S. Agriculture Department said on Thursday that private exporters sold 1.937 million tonnes of corn to China for delivery in the 2020/21 marketing year. Waves of pain | As harvests get under way across Europe, a season of droughts and floods have taken their toll on the continent s wheat crop.
It also covers the commodities market daily focusing on in-depth technical developments in GOLD, CRUDE OIL, SILVER, CORN & WHEAT. Despite an announcement made by the Government for a quota of 20.50 lakh tonnes for August, sugar prices remained steady. The president named Hamed Bakayoko as the new prime minister of the world’s biggest cocoa producer. A product the size of a sugar packet could be part of the solution. The Bombay Sugar Merchants Association spot rates (₹/quintal): S-grade 3,322-3,382 and M-grade 3,410-3,580.
That’s because these are coffee can stocks. Michael McKoy at the Monkey Cage on Tom Cotton, Martin Luther King and patriotism.

Currencies

Dollar index:The dollar index continues to make fresh lows. This is all about the US dollar and how it is behaving, so pay attention to the US Dollar Index. The dollar index fell, while gold gained as investors sought refuge in the precious metal. The U.S. dollar index fell, while gold gained as investors sought refuge in the precious metal. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.40 per cent to 92.65.
“The US dollar extended losses this morning in Asian trade weighed down by weak economic data and President Trump’s tweet on elections,” Reliance Securities said in a research note. If the US dollar index continues to weaken, then it should continue to drive gold higher and of course vice versa. At the interbank forex market, the rupee opened at 74.74, gained further ground and touched 74.69 against the US dollar, up 15 paise over its last close of 74.84. London copper was on course for a fourth consecutive monthly rise, buoyed by a sliding dollar and better-than-expected factory activity in top consumer China.
The dollar strengthened mildly but it was nothing more than very tepid profit-taking as investor sentiment continues to be very negative against the greenback.

Metals

New Gold will sell the project to Artemis Gold (OTCPK:ARGTF) for $142 million in cash and $15 million in Artemis Gold’s shares. As 201,514 toz of gold equivalent was produced in H1 2020, 213,486-253,486 toz of gold equivalent should be produced in H2 2020 to meet the revised guidance. But gold and silver are less about price, and more about this… Since gold and silver are money, it’s important to view them as such, and not as “investments”. (Source: Author’s own processing, using data of Seeking Alpha and New Gold) New Gold’s cash position improved notably during Q2, to $700.2 million.
(Source: Author’s own processing, using data of Seeking Alpha and New Gold) Back in April, New Gold withdrew its 2020 production and cost guidance. In Q2 2020, New Gold produced 98,079 toz of gold equivalent. Moreover, the upside provided by the strong gold prices is limited by gold hedges that will expire only at the end of this year. (Source: New Gold) Probably the most important event that occurred in Q2, besides the debt refinancing, was the sale of the Blackwater gold project.
New Gold will also retain an 8% gold stream on the Blackwater mine production.
It is expected that the overall 2020 production will equal 284,000-304,000 toz gold and 65-75 million lb copper.

Oil

The Brazilian state-run oil firm on Thursday posted a loss of 2.7 billion reais in the second quarter, hurt by tumbling oil prices despite record export volumes to China. While too tight supply can send prices higher, endangering economic recovery, too much supply can lead to lower prices and jeopardise oil producers aim of achieving reasonable prices. Indonesia, which has been increasing the palm oil content of its biodiesel since 2015, wants to cut its energy imports and increase consumption of palm oil.
That probably bodes well for crude oil prices, which may have scope to retrace some recent losses if the upbeat mood carries through into the week-end. The plunge in energy prices negatively impacted MLPs, because the majority of companies structured as MLPs transport and store oil and natural gas. I have worked in the areas of oil refining, natural gas production, synthetic fuels, ethanol production, butanol production, and various biomass to energy projects.
In the near term, Transocean stock will remain a playground for traders whose trading dynamics will mostly depend on fluctuations of oil prices. Crude oil prices fell, echoing broader weakness in cyclical assets. Fuel oil inventories dropped the most by 201,000 mt to 1.26 million mt and are now the lowest since mid-March. As such, their fortunes aren’t as subject to the ups and downs of oil and gas prices.

United States

Hope apparently springs eternal in fed funds markets, though, where traders still nurture positions that would benefit from a negative policy rate in year from now. A Word on Inflation One takeaway from this week s understated Fed meeting is that, in these trying times, the market has faith in Federal Reserve Chairman Jerome Powell. Indeed, Fed policy could well get easier before central bankers start even thinking about thinking about raising interest rates (Powell reiterated Wednesday that he s not).
They reduce the balance of MBS on the Fed’s balance sheet, and the Fed has to buy large amounts of MBS just to keep the balance level. Although export volumes remain relatively high into the first few weeks of August, the market is facing growing concerns over rising coronavirus cases in Europe and the US. As well, we note the strength in the long end of the US bond market we discuss below – as lower yields have historically been JPY-supportive.
President Donald Trump’s suggestion that November’s election could be delayed until after the Covid-19 pandemic eases is meeting with fresh skepticism, even within his own party. Elsewhere, the US reported its GDP estimate for Q2, with a staggeringly dire reading on its economy showing a 32.9% decline, the worst since records began in 1947. Meanwhile, an uptick in the Fed’s favored PCE US inflation gauge will probably be judged moot considering the central bank’s loud protestation against even thinking about rate hikes.
The US economy plunged by a record-shattering 32.9 per cent annual rate last quarter.

China

Downing Street later said Britain would continue to have a constructive relationship with Chinese companies, but warned Beijing its relationship with the UK “does not come at any price”. GT often serves as an unofficial foreign policy arm of Beijing signaling the communist government’s intent and messages to the West. Alyssa McDonald Taming Taiwan With Hong Kong’s national security law in place, fears are growing that China’s President Xi Jinping will now turn his attention to conquering Taiwan.
Lam said she was invoking the Emergency Regulations Ordinance in doing so, Beijing supports canceling September’s legislative elections? For decades, Communist Party leaders have sought to bolster their legitimacy by bringing more territory under Beijing’s control. But Beijing was never going to risk an embarrassing electoral defeat in the LegCo.

Europe

“There was nothing in the prime minister’s speech for the 3.2 million people in hospitality, or the 2.9 million in retail,” the Labour leader told Boris Johnson. Pro-Brexit supporters celebrating in Parliament Square, after the UK left the European Union on 31 January. News > UK > UK Politics The wearing of face coverings will become mandatory in cinemas, museums, and places of worship from next weekend, Boris Johnson has announced. Sir Keir Starmer has accused Boris Johnson in the House of Commons of being “blind to the risks” of easing the coronavirus lockdown.
Source: Wizz Air Just this week, the European Union updated its border list, which shows that only foreigners from 12 non-Schengen countries could enter the countries of a union. Both sides this month agreed to intensify the schedule of discussions, but issues like fishing rights, EU regulations, governance, and police cooperation and proving to be major sticking points. Alstom’s chairman and CEO Henri Poupart-Lafarge expressed optimism over the outcome of talks with European Union regulators, expected later in the day, over its acquisition of Bombardier’s rail business.
Sources told Reuters this week that Alstom was set to gain EU antitrust approval to buy the business. The London exchange may sell Borsa Italiana or the unit s stake in the MTS bond trading platform to win EU approval for its $27 bln Refinitiv bid. Note, the monumental rise in European FX in recent weeks is well timed with the EU recovery fund agreement worth €750bn.

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