Open: New York Session | Forex, Metals, Oil, Agriculture September 25, 2020

A member of the National Guard plays a trumpet during a flag rai


In its monthly update, the inter-governmental body reduced its global corn crop forecast by 6 million tonnes to a still record high of 1.16 billion tonnes. Corn yields have also been pretty solid, though this is a minor crop for SLC Agricola. With corn, prices are quite a bit weaker in Brazil, as COVID-19-related disruptions have reduced demand for corn-based ethanol for vehicle fuel. As I said, though, corn is a minor crop for SLC Agricola, so this isn’t too disruptive.
Raw sugar prices edged back up towards the previous session’s one-month high on Thursday, boosted by worries over adverse weather conditions in several growing regions. The other major crop, cotton, is currently in its growing phase. Cotton is a different situation.


However, the trough for the week in the dollar came on Friday and the dollar’s value has risen since then. Alongside the decline in stocks, the dollar rallied — with the Bloomberg Dollar Spot Index pulling off a two-year low — and gold and copper slumped. One further plus-point for developing-nation stocks was the potential for a weaker dollar, they added.Fundamentals for the dollar will remain unsupportive medium term, the Citi team wrote. Investors still seem to believe that a strong dollar is important and will support the dollar when possible.
When the dollar was taken off the gold standard, the dollar was fatally weakened and the pandemic showed that weakness. Gold has been under pressure this week as the US dollar is being seen as the preferred safe-haven asset amid renewed risk aversion in global financial markets. The euro closed 0.08% higher yesterday, as it managed to turn around an unpleasant week against the dollar. To reiterate: July economic concerns continue, first real challenge in dollar tightening since June, with several key indications being folded into that negative mix.
The dollar rallied from a low at the start of the week near MXN20.8450 and peaked yesterday near MXN22.70, before reversing lower. The dollar was on track for its best week since early April, driven by risk aversion.


At present, gold and silver are basically tied in terms of performance with silver outperforming gold by about 3% over the past year. Historically speaking, when gold is outperforming silver by this amount, we tend to see the price of silver appreciate by 15% in the next year. An additional metric which is suggestive of further price rallies in silver is the relative performance of gold and silver. Specifically, when investors see silver outperforming gold, this can serve as a buy signal for momentum trades, leading to additional capital flowing into the silver.
Over the past few months, we have seen quite a bit of volatility in the silver markets, with the outright price of silver seeing substantial upside. “Recently there are more uncertain factors impacting the market, fluctuations in gold and silver prices have increased, market risks have increased,” said the exchange in an online statement. Silver fundamentals are setting up for a strong rally over the next year as both market volatility and relative performance to gold are bullish at this point.
This benchmark, according to AGQ’s prospectus, “is intended to reflect the performance of silver, as measured by the price of COMEX silver futures contracts”. Take a look at the graph below, comparing SLV’s performance since 2006 against that of a 2x leveraged gold fund, the ProShares Ultra Gold ETF (UGL). However, within the last two weeks, gold was outperforming silver by around 20%.


Like we said in yesterday’s update, most of the selling recently has centered around oil majors, or, to be more precise, mega-cap integrated oil companies. SBR is essentially a function of crude oil and natural gas since it generates royalty income based on crude/ng prices and sales volumes. Uganda and Kenya are both newcomers on the oil scene with hopes to join the oil exporting community soon. Brent crude futures, the global oil benchmark, rose 0.60 per cent to USD 42.19 per barrel.
There is also the popular crude oil futures ETF (USO), but contango and fees have caused that fund to lose 95% of its value since inception.
SBR has declined recently, first due to the collapse of oil prices in spring and even more recently due to the smaller decline this month. One of the biggest producers on the continent, meanwhile, is working on a new exploration strategy to boost its oil and gas reserves. Crude oil was at a similar price back then due to a temporary global economic slowdown. While most oil stocks in the US fell last week, increasing coronavirus cases across the world are sinking traders spirits and increasing demand worries.
Demand has since stabilized, but production has declined around the world, resulting in storage drawdowns that are beneficial for oil prices.

United States

Figure 4 (right frame) shows also that the domestic PMI (ISM manufacturing) has been surging in the US and also prices in a higher 10Y yield. Pending further progress on government stimulus, the Fed is left reiterating its commitment to loose policy to help get inflation get back to target. The Fed probably still has the best shot among its peers in the largest developed economies of hitting its inflation goal, but that’s not saying a lot. This would imply that investors still would like to see the US government’s budget policy become more disciplined, fiscally.
The last ace Fed holds is that when inflation rises to 2% using their numbers, they will put a cap on the 30-year bond interest rate. Of course, the US economy should be rebounding strongly following the record plunge of (annual rate) in the 2Q, sparked by the COVID-19 pandemic and the ensuing economic lockdown. Figure 2 Source: Eikon Reuters Another interesting financial variable that has generally acted as a strong 6M leading indicator of the US 10Y yield is South Korean equities.
Amazon (NASDAQ:AMZN) showed off a host of new devices at its online hardware event on Thursday, including spherical Alexa speakers and two new Fire TV products. It should also be noted that the US stock market followed in the same direction. This time around, the Dallas Fed Energy Survey included some additional special questions, many of which have plenty of relevance to investors.


That makes President Xi Jinping s declaration to the UN General Assembly this week that China plans to achieve carbon neutrality before 2060 all the more surprising, and significant. Beijing s new target seems to have come despite current politics in Washington, not because of them. Management is headed by founder, Chairman and CEO Mr. Tao Yang, who was previously manager of ZICT Technology Co. and vice president of Beijing Feinno Communication Technology.


Shortly afterwards a cabinet office document of ‘worst case scenarios‘ was revealed that detailed what may happen should a no deal Brexit coincide with a ‘second wave‘ of Covid-19. Boris Johnson’s deadline of October 15th for a trade deal, which coincides with a European Council meeting, is quickly approaching, as is the threat of a second lockdown. She said legislation is required to close the tax loopholes and ensure transparency, in a call to EU countries to revamp rules.
Bracing for Brexit | A sense of urgency is dawning in European Union board rooms as talks over a post-Brexit trade deal head into the critical end-game. Brexit can and I think will play a part in global planners attempting to reconstruct the economic system in their own image. UK Prime Minister Boris Johnson said the country My deepest condolences go to the family, friends and colleagues of the police officer who was killed in Croydon last night. Central bankers speak of the ‘post Brexit architecture‘ in terms of the the future make-up of the global economic system.
They are clear that they can no longer bank on the U.K. after it said it would renege on part of the Brexit Withdrawal Agreement.
AstraZeneca has secured the European Union’s backing in a confidential agreement which reflects the lower price sought by the British drugmaker, the official said. Police chiefs from across the UK sent tributes to the fallen officer, and PM Boris Johnson took a brief break from the ongoign COVID-19 emergency to deliver a statement.