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Misery over for Silver?This isn't a trade set up because I am on the fence with it at the moment, the commodity is at a make or break as it heads towards the $15 support line from 2010; The $15 - $17.50 mark is an important and wildly watched range for the commodity - There may be a bit more of a hit for silver to take over the week or two but using price action I wouldn't be surprised if silver started to make gains over the coming weeks due to the dependence on it for our gadgets as well as the ever growing demand for 'free technology'. If it begins to drops significantly below the $15 mark I would then consider a bearish trade down to the $7.50 support line (more on that if it comes to it !).
FX:XAGUSD
by DarrenWells
NZDCHF: waiting for correction before jumping inCommodity currencies are just squeezing up and it seems like there is more space to go... Going long in NZD against CHF seems like an opportunity to participate in this move. NZDCHF has broken key resistance level around 0.5985, which now turned into support and it might act as possible price for joining bulls with S/L around 0.5900 and T/P around 0.6375. Obviously we might not get this price, but entering now would be more like jumping into a moving train. Make your own analysis before entering position. // Feel free to share your opinion/position via comment and follow me to stay updated + support my work by hitting like.)
Long
by GIgor_021
Commodity Outlook: Finding antivenoms in the Year of the SnakeWe are about a month into the Chinese Year of the Snake. The preceding Year of the Dragon (10 February 2024 to 28 January 2025) brought significant momentum to the asset class with broad commodities rising 10%, precious metals rising 36%, industrial metals rising 12%, and even energy and agriculture mustering a late gain (close to 2% each)1. However, the Year of the Snake presents several macro challenges for commodities. Renewed trade protectionism from the US, under the new Trump Administration, is likely to dampen global trade. Additionally, higher bond yields and a strong US dollar create further headwinds for the commodities market. China’s reticence to stimulate big is also holding back the asset class. Despite these headwinds, we have identified several micro factors that could provide support for certain commodities—what we refer to as our ‘antivenoms’. We remain optimistic about precious metals, aluminium, and European natural gas. Additionally, some of the macroeconomic challenges may ultimately prove less severe than initially anticipated, creating potential upside opportunities for commodities that currently reflect bearish sentiment. Strong US dollar The recent strength of the US dollar has historically correlated with weaker commodity prices. While this pattern has been inconsistent post-COVID-19, the dollar's resurgence could once again pressure commodities. Historical data suggests a strong dollar often aligns with declining commodity values. Trump’s trade policies and market impact Donald Trump’s return to the presidency introduces uncertainty into trade and commodity markets. Trump's first presidency saw a trade war with China and other nations, negatively impacting global trade and commodity prices. While extreme tariff measures have often been bargaining tactics, the risk of real implementation remains. In his second term, some tariffs were announced and then delayed; at the time of writing, we still have no real guide as to whether they will be implemented or when. This uncertainty is already dampening market sentiment and increasing long-term interest rates, further constraining commodities. Economic and inflationary concerns Tariffs could raise inflation in the US while simultaneously depressing global commodity prices due to reduced demand. This dynamic may complicate the Federal Reserve’s (Fed) efforts to control inflation, potentially leading to prolonged high interest rates. Climate policy reversals Trump has vowed to withdraw from the Paris Climate Agreement and declared a “national energy emergency,” reversing climate regulations and boosting fossil fuel production. His administration is expected to cancel a $6 billion Department of Energy program aimed at industrial emissions reduction and repeal incentives for electric vehicles. These changes could suppress demand for critical materials used in clean technology, such as base metals. At the same time, deregulation of oil, gas, and mining operations may increase the supply of key commodities like copper, aluminium, nickel, and cobalt. Major projects, such as Rio Tinto’s copper mine in Arizona, could proceed after years of delays. While immediate production increases are unlikely in 2025, long-term supply growth is possible. Geopolitical risks and energy markets A ceasefire between Israel and Hamas, brokered just before Trump's inauguration, has eased some geopolitical risk, though its stability remains uncertain. As we write, a peace deal between Russia and Ukraine is being brokered by the US. Short-term oil price spikes are possible if sanctions are initially tightened to get parties to the negotiating table but, ultimately, we could see easing oil and gas prices if a deal is hashed out. The US has been pressuring Europe to purchase more American natural gas, but Russia’s LNG shipments to the EU remain significant. A resolution of the Russia-Ukraine war could weaken US leverage in energy negotiations, making Europe less dependent on American gas. Stricter enforcement of Iranian oil sanctions under Trump could drive oil prices higher. However, OPEC2 members may counteract this by increasing supply, potentially offsetting price gains. China’s economic strategy and commodity demand China remains the world’s largest consumer of commodities, yet its recent economic weakness has limited demand growth. Unlike previous economic cycles where China launched large stimulus measures, its current approach focuses on smaller, targeted interventions. The government has stabilised the real estate sector but remains wary of excessive stimulus due to debt concerns. China is investing heavily in clean technology and renewable energy infrastructure, supporting metal prices despite weak real estate demand. US tariffs on China could accelerate its push toward energy independence, promoting domestic adoption of solar, battery, and electric vehicle technologies. Trade tensions could escalate into retaliatory actions, such as China restricting exports of critical materials, as seen with gallium, germanium, and graphite in response to semiconductor disputes. Further restrictions could impact global supply chains for energy transition materials. China’s depreciating Yuan complicates economic policy. The People’s Bank of China has been intervening to stabilise the currency, limiting its ability to cut interest rates. While a policy shift to boost growth led to short-term market gains in 2024, further action remains constrained by currency pressures. Conclusion In the Year of the Snake, we are searching for antivenoms to counter the potential threats posed by trade wars, a strong US dollar, and a China that may be unable or unwilling to overcome its economic weakness. We see strong opportunities in gold, silver, aluminium, copper, zinc and European natural gas, as each of these has compelling drivers that could withstand broader headwinds in the commodity complex. As policies become clearer, we may find that our fears were overstated, potentially paving the way for a relief rally across the broader commodity complex. Until then, we place our confidence in these antivenoms.
CBOT:AW1!
by aneekaguptaWTE
Commodity Outlook: Cyclical pressures vs structural strengthsCommodities have been enjoying a strong revival in recent years, with broad commodities returning 27% in 2021 and 15% in 2022. A combination of fiscal and monetary support in the early phases of the COVID-19 pandemic helped to soften the damage to demand from one of the deepest economic shocks in modern times. As COVID-19 restrictions lifted, commodity demand bounced back strongly. In 2022, the Ukrainian invasion presented a supply shock, restricting energy and agricultural product supplies and further supporting commodity prices. Whilst many developed world central banks tightened monetary policy in the first half of 2022, inflationary pressures became the most extreme since 1981. Commodities proved again to be one of the best asset classes to hedge this extreme inflation. After arguably falling behind the curve, developed world central banks sought to get ahead and became the most hawkish since the early 1980s. Commodities emerged as a refuge in the storm. Cyclical headwinds have emerged Commodities, often seen as a late-cycle asset performer, struggled in late-2022. Energy prices, which had been propelling the asset class, declined by Q3 2022, joining metals, which had been weak since Q1 2022. Economic deceleration resulting from monetary tightening in developed nations weighed on the asset class. Composite lead indicators (CLIs)—designed to provide early signals of turning points in business cycles—turned decisively even before 2022 started. Commodity performance peaked later in 2022. CLIs are still declining, indicating the cyclical headwinds faced by commodities are still present. China reopening to counter economic headwinds elsewhere The global economic rebound experienced in 2021 and 2022, and the accompanying commodity rally, occurred largely without China’s contribution. Chinese policy makers pursuing a zero-COVID policy up until November 2022 hamstrung their economy, and growth was disappointing. Although Chinese exports remained relatively strong due to international demand for Chinese goods, constant supply disruptions restrained export volumes during the zero-COVID period. Now that China has abandoned its zero-COVID policies, domestic economic activity is picking up strongly. In fact, the January and February prints of Purchasing Manager Indices (PMIs) in 2023 look encouraging. Both manufacturing and non-manufacturing PMIs rose clearly above 50 (the demarcation between growth and contraction). The February figure (released on 01/03/2023) showed manufacturing PMIs hitting levels not seen since 2012, underscoring that the domestically driven recovery is reaching industry as well as services (manufacturing is more commodity-intense than services, so that is arguably the most important of two indicators). What about the commodity supercycle? We believe commodities should see long-term structural support from an energy transition and an infrastructure spending rebound. Furthermore, these catalysts could drive another supercycle in commodities. Supercycles coincide with periods of industrialisation and urbanisation when the supply of commodities failed to keep up with the growth in demand. The last supercycle occurred after China joined the World Trade Organization in 2001, which turbocharged development as barriers to commerce were removed. After two strong years of commodity market performance (2021 and 2022), could we be on the cusp of another supercycle? We believe there are some strong structural underpinnings but, for now, business cycle dynamics (including a rising risk of recession) could dominate price behaviour in the short term. Energy transition In a scenario where net zero emissions are targeted by 2050 in order to limit temperature increases to 1.5 degrees Celsius above pre-industrial levels, we should see a significant rise in demand for metals. Metals are critical for the manufacture of batteries, electrification of power energy consumption, electrolysers, heat pumps, and other technologies needed for the energy transition. International Energy Agency data indicates that, in a net zero emissions scenario, supplies of critical materials are going to be woefully short of demand, both in terms of mining and material production. Infrastructure rebound In the US, three Acts with partially overlapping priorities - the Bipartisan Infrastructure Bill (2021), the CHIPS and Science Act (August 2022), and the Inflation Reduction Act of 2022 (IRA, August 2022) – have a combined budget of close to US$2 trillion in federal spending and the infrastructure intensive projects are only just starting. Just looking at the energy funding from the Bipartisan Infrastructure Bill and the Inflation Reduction Act, a total of US$370 billion is earmarked to be spent over the next 5 to 10 years, primarily to facilitate the clean energy transition. The IRA encourages the procurement of critical supplies domestically. In order to meet the supply chain requirements, we expect large infrastructure spending on mineral extraction, processing and manufacturing. The European Union’s REPowerEU plan—designed to wean the economic bloc off Russian hydrocarbon dependency—will also require a large spend on energy infrastructure. The EU is already building liquified natural gas capacity at breakneck speed, aiming to expand capacity by one-third by 2024.1 The EU estimates that delivering the REPowerEU objectives will require an additional investment of €210 billion between 2022 and 2027. The green industrial ‘arms race’ takes off After decades of underspending for the climate policy goals governments have signed up to, we may be witnessing a tipping point. Some of the protective features of IRA (regional sourcing requirements) may propel tit-for-tat policies that drive local sourcing elsewhere. Many nations recognising China’s dominance in critical materials had already been designing policies to mitigate the risk of overreliance on the country. This process is likely to drive an upsurge in ex-China green infrastructure spending globally. Conclusions After several years of commodity market outperformance, the asset class is already experiencing cyclical headwinds. However, a China reopening is likely to mitigate some of these pressures, and we are seeing tentative evidence of China’s economy rebounding. Commodities are likely to be underpinned by global policy support for an energy transition. Whilst general infrastructure spending may also face cyclical headwinds this year, green infrastructure spending is likely to lead to a new ‘arms race’ as countries compete to support their industries and maintain energy/resource security.
CBOT:AW1!
by aneekaguptaWTE
Commodity OutlookRecession may be a red herring for a market fuelled by a supercycle While broad commodities have outperformed most major asset classes year-to-date1, the pressure of rising interest rates, a strong US dollar and fears of several large economies tipping into recession has led to a pull-back since the summer of 2022. In our Market Outlook, we argued that the current negative business cycle pressures on commodities are likely to be temporary and give way to the larger forces pushing the demand for commodities higher and constraining supply of those commodities. Historically, commodities have been a cyclical asset class, generally declining when the business cycle turns negative. But even history illustrates that commodity prices can continue to rise long after a business cycle has turned if fundamentals are supportive. Oil price shocks in the 1970s and 80s are a case in point. Admittedly they are unusual cycles but, today, we are likely to be living in another energy price shock. Energy price shocks continue Since we published our Market Outlook, the Organization of the Petroleum Exporting Countries and partner countries (OPEC+) has announced a large cut to oil production from November 2022, amounting to 2 million barrels per day. As we expected in our Outlook, OPEC+ reacted to the price weakness in oil after the summer and sought to raise prices of Brent oil to over US$90/barrel (prices had fallen to US$84/barrel on 26 September 2022, just over a week before the OPEC decision). They have been successful in keeping prices above US$90/barrel since that decision but have laid the groundwork for further cuts by painting a pessimistic picture on demand forecasts (giving the group an excuse to intervene in the market again). Meanwhile, the Ukraine war shows no sign of improving and natural gas supplies into Europe from Russia have fallen to a trickle. The European Union has taken various measures to try to soften the shock. However, we view several of the proposals with scepticism. For example, introducing price caps on natural gas imports could simply divert natural gas to other countries and worsen the energy shortage for the EU. Interfering with price benchmarks, such as the Title Transfer Facility (TTF), could send incorrect pricing signals and lead to overconsumption of energy resulting in additional shortages2. Supply shortages of commodities extend beyond energy A combination of rising energy prices and interest rates have driven many metal smelters to shutter production. High fertiliser prices (petrochemical product) are also constraining crop yields. Looking across the commodity spectrum, all commodities have lower-than-normal levels of inventory. Base metal supply is especially low The inventory of base metals is considerably lower than their respective 5-year averages, yet base metals have seen the largest price declines of all the commodity sub-sectors. The markets are pricing in demand weakness from an economic deceleration. However, demand has not weakened yet. On the other hand, supply is declining fast. Let’s take the example of copper. The International Copper Study Group (ICSG)’s first forecast for 2022 copper balances (demand less supply), cast on October 2021, was for a sizeable surplus of 328 thousand tonnes. Its latest forecast (cast on 19 October 2022) is for a deficit of 328 thousand tonnes in 2022. Judging by historical revisions, their 2023 forecast of a surplus is likely to be revised down. Their initial forecasts tended to assume no production disruptions. Yet, as we have observed this year, production disruptions can be very large. China’s economic deceleration is countered by policy support China’s zero-COVID polices have slowed economic growth and, thus, its demand for commodities. That matters because China is the largest commodity consumer in the world. However, its central bank has been loosening policy and President Xi has called for an ‘all-out effort’ to increase infrastructure spending (and given local governments free rein to raise debt financing to fund these projects). However, the future course of China’s policy will become clearer after we write this blog. At the time of writing (21 October 2022), China's 20th Communist Party Congress is still in process and will wrap up in the coming days. Xi Jinping is poised to clinch his third five-year term in charge of the nation. We expect national security to take a greater role in policy priority than the economy. Commodity supercycle An energy transition and a revitalised global infrastructure spend are likely to drive the demand for commodities significantly higher over the coming years. However, today, we are living in the down-phase of a business cycle. Even though many commodity markets are visibly tight, commodities are not sufficiently pricing the tightness. The Inflation Reduction Act in the US and the Infrastructure Bill are both strong tailwinds for commodity demand. In Europe, the sharp focus on weaning off Russian energy dependency is adding a new urgency to the energy transition, and we expect to see accelerated energy infrastructure plans take place. Conclusion As a headline, economies going into recession doesn’t inspire huge confidence in a commodity rebound. However, history does suggest that an economic slowdown combined with high inflation has been associated with positive commodity and gold performance. The energy price shock has set off a vicious circle of supply contraction from metals, fertilisers, and other energy intensive commodities. The energy transition and infrastructure led supercycle remains in play even if short-term business cycle phenomena dictate headlines today. As we emerge from this phase of the business cycle, we may find commodity markets extraordinarily tight.
CBOT:AW1!
by aneekaguptaWTE
Commodity Report: Are Higher Prices Here To Stay? 1. Commodity Currencies Australia, Canada, and New Zealand all have commodities that fluctuate with respect to commodity prices. As demand for these countries' export has risen and commodities have increased in value, these three currencies have appreciated. As the dollar depreciates, commodities become cheaper. A. Aussie Dollar Australia is a major supplier of copper, iron, and aluminum. As manufacturing picked up during the reopening, demand increased. Minerals and fuels make up close to 50% of Australia’s total exports. B. Canada Dollar Canada is a top 5 exporter of Oil. The price of Oil and the CAD will move together in the medium-long term. Canada is rich in Lumber, Gold Mines, Iron Ore, Copper Ore, Aluminum, Coal, Lumber, and Nat Gas. C. Kiwi Dollar New Zealand's economy is heavily dependent on Agricultural products used for food around the world. Dairy, Beef, and various fruits are supplied to the world from New Zealand. D. US Dollar Cash is King. Notice how commodities move with AUD, CAD and NZD compared to USD. 2. Agriculture and Food DBA (Pictured in Featured Chart) - Food is the most important commodity in the world because it is needed for survival. If a breakout occurs from the ten-year channel consumers will see higher food prices. DBA holds exposure to Soybean, Corn, Sugar, Coffee, Hog, Cattle. Unlike other markets, food does not see a decrease in demand when prices increase. DBA has increased due to Covid, Supply Chain issues, below-average crop yield, and an increase in inflation. When food gets too expensive be on the lookout for social upheaval, riots, and unhappy citizens. In poorer countries, more of a household's income goes to food. When looking at commodities, we need to focus on the relationship between demand and supply. If general demand for goods continues with strength there may be an investment opportunity here. Increased supply along with any negative effects to supply will cause an even bigger price increase. A. Chinese Yuan As you may have seen in the news, China is incredibly susceptible to these increases in food prices because they import a lot of it. On the other hand, the US is the biggest exporter of food. The Chinese Yuan exchange rate with the US dollar moves with US inflation and global agricultural prices. The Yuan will rise with respect to the US dollar. With the dollar depreciating, the US balance of trade ( export-imports) will increase improving the competitiveness of domestic goods in foreign markets. B. Soybean Soybeans demand has increased as it is being used in biofuel production, animal feed and food products outpaced production growth, resulting in a significant hike in soya prices. China has been a big bidder of soybean and has taken the brunt of the higher prices. US and Brazil have started to up their production to cope. Soybean is used a lot as a feeder for livestock. C. Corn Brazil has been ravaged by drought making its crop yield fall below expected production. With ethanol production coming back to normal, it has affected the allocation for food. "For corn, the USDA pegged the U.S. old-crop ending stocks at 1.10 billion bushels vs. the trade estimate of 1.20 billion bushels and the USDA’s May estimate of 1.25 billion. For soybeans, the U.S. ending stocks were 135.0 million bushels vs. the May estimate of 120 million bushels. The trade expected the USDA to print 122 million bushels today. In its report, the USDA pegged the U.S. wheat ending stocks at 852 million bushels vs. the trade’s expectation of 869 million and the USDA’s previous estimate of 872 million." - Agriculture.com All in all, it seems like the market for Corn, Soybean, and Wheat is in the process of reverting back to the mean if, heavy droughts do not persist. The US will continue to see a high demand for these crop exports. D. Live Stock: Cattle and Hog The Cattle market IMO is the most manipulated market. The Big 4 distributors Cargill, JBS, Tyson, and National Beef control 80% of the cattle market. Feed Cattle is cattle that need to be sent to a feedlot to fatten up and get ready for butcher. The price ranchers receive for their cattle has only increased by 5% while, the wholesale price the big 4 packagers receive has increased 50%. This is good news for the Big 4 corporations but negatively affects the ranchers and consumers. Packers have artificially been affecting the price of cattle to benefit them by coordinating bids and creating artificial cattle surpluses to push down prices. Hog Prices have been affected by increased feed prices, supply chain issues, and the swine flu. 3. Energy Energy trades have outperformed FANG stocks, SPY, IWM, and Tech stocks by over 40%. Individual stocks have experienced higher returns. Most Energy names are approaching overhead resistance however, it looks like they are starting a rally rather than ending. As the world reopens, the basket of energy trades will benefit. A. Crude and WTI As the economy reopens, people are starting to utilize cars and planes for travel and work. The demand for gasoline will increase. Looking at Oil prices from the last 15 or so years, we see the oil still has room to upside. Do you believe that we are in the early stages of demand recovery? Global oil demand has already increased by a million and a half per day; by the end of summer can we see 99 million barrels? Oil bulls would like to see us drawing from inventories. B. Natural Gas Natural Gas has been in a decade-long bear run. With a very hot summer expected, there will be a lot of people pumping their ACs. Industrial demand is expected to remain strong and as Liquified Natural Gas returns to pre-pandemic levels. There is a possibility this can run higher. However, like other agriculture and energy products, it can make for a choppy trade. As oil production increases, associated natural gas which is a by-product of oil will increase the natural gas supply. Many producers are saying that even if there is a big increase in the price of natural gas, they will not increase their production. C. Uranium Uranium is looking to explode out of the base it has formed. The uranium spot price is hovering around $32 well below $60 which is needed to incentivize miners to find new suppliers. Uranium is one of the most undervalued commodities IMO. Biden's clean energy initiatives will call upon Uranium. He is pouring money (~1.8 billion) into Nuclear power research D. Coal Coal continues to head higher based on higher demand. E. Clean Energy ETF Clean Energy looking for a place to bounce from. F. Small Cap Energy Small-Cap Energy IMO has the best potential for upward mobility in the commodity sector. Energy has not taken off like other commodities and with more energy products being used with reopening and travel along with higher prices; we can see these smaller names blast off. I would not be a buyer of Oil but a buyer of Oil producing companies. They have the most to gain from higher oil prices. The same goes for other types of energy. For example, my biggest winners have been OIH, TELL, and CCJ. ex. GUSH, GTE, CDEV, CPG, REI G. Oil and Gas Exploration Energy prices are soaring, Ethanol, Natural Gas, and OIl have benefitted from inflation and increased demand. XOP has a very diverse portfolio and is undervalued relative to the price of Oil. The last time oil was in the $70s, XOP traded around 130-160. Look at the price now. Looks bullish with the bottom in place 4. Metals Many Mining and processing companies suffered large losses from bad demand during covid and now they are with a limited amount of capital to scale back up. This ETF will go down once there is sufficient supply to handle the current level of demand. Raw materials are the input used in the industrial and manufacturing sectors. When XME outperforms markets the economy grows. When XME underperforms, the economy slows. The business cycle peaks with rising interest rates, energy prices, and when inflation reduces consumers’ purchasing power due to higher input prices. This results in less demand, slowing economic growth. Businesses will be forced to cut production to reduce inventories. Decreasing the purchase of raw materials, slashing the labor force. Less borrowing occurs due to interest rates. The result is lower commodity prices, lower wages, and lower interest rates. The result is steadily declining inflation. During such times sectors such as staples, healthcare, utilities, and bonds outperform the markets. Pretty much the sectors whose demand stays constant. Cyclicals, industrial, metals and mining, and financials underperform the markets. A. Silver Silver looks pretty neutral right now. It has been trading rangebound since August. Silver in the long term moves with Gold. B. Gold - Cost of Carry Gold is a hedge against real interest rates. If rates go down, expect Gold to go up. If rates go up, expect Gold to go down. 50% of Gold is used in Jewelry, 37% in Electronics, and 13% are used in Coins/Misc. If you ask a Jewelry store when business is best they will say when Gold prices are low. Gold prices are Low when the economy is booming and people got money to spend. (Rates are low) Also, when people got money to spend they buy more electronics. When there is uncertainty in the market Gold booms. It is best to hold Gold when there is "blood on the streets" - Rothschild. C. China Iron Ore and US Steel FEF1!- Ran up a lot. High Iron Ore prices do not attract as many buyers. This chart tracks the price of China's Iron Ore import from the port in Tianjin. (62 percent grade Spot Cost and Freight) Iron Ore is used to creating Steel. Iron Ore and other compounds are placed in a furnace and blasted with heat. China is by far the biggest importer of Iron Ore then their factories are used to transform it into steel. back in the early 70s, Mao Zedong looked to transform China from an agricultural-based economy to an industrial nation. Steel is needed for buildings, factories railways, bridges, roads, and dams. So, they looked to Australia for Iron Ore. Initially, Australia's iron ore mining was meant to supply the Japanese Steel factories. China took advantage of this and their GDP accelerated in the following. However, this has left China heavily reliant on Australia and Brazil the two biggest exporters. A trend in China has been to reduce its exposure to higher commodity prices. This can be seen best with Soybean and Iron Ore. China has banned the export of steel in an effort to reduce prices and stir a trade war with Australia. China's steel production is at an all-time high. Steel demand is seasonal, highest in the early summer months due to peak construction. With supply coming back in Australia and pandemic stimulus slows, Iron Ore should come down in price. X - US Steel The so-called "booming" US economy has led to higher Steel prices and a surge in demand. Steel prices will continue to be high if there is a below-average supply and if China's export ban increases global steel prices. There is still a lot to be determined. Again we need to look at supply and demand. D. Copper Copper just like steel has benefited from the relation trade but is now seeing weakness due to China not accepting these higher prices. China decided to release its reserve and introduce higher levels of supply to the market. Copper prices reached all-time highs on the back of higher manufacturing and industrial output. If you are bullish on FCX and copper prices you would believe that China would be unsuccessful in holding Copper prices down. The top chart shows the relationship between Copper/Gold. The ratio can be simplified to Risk On vs Risk-Off; the physical economy vs financials. Copper is heavily dependent in the cyclical sectors (industrial and manufacturing) leading to economic growth is a leading indicator for US treasury bonds. Copper is mainly used in electronics. The latest news is that there is an excess demand for Copper leading to a shortage. dd. Chile's currency appreciates along with its biggest export Copper. Looking at USD CLP will help us decide the direction Copper goes and in turn if the economy continues to grow. E. Platinum and Palladium Platinum and Palladium have historically been used in automobiles for catalytic converters. However, Palladium has replaced Platinum in recent years due to it being a cheaper alternate. As automobile manufacturing picks up, Palladium has been in such hot demand that companies are looking to go back to using Platinum. Palladium and Platinum are both hard to mine so, the price appreciated with the increased demand and dwindling supply. ee. Platinum/Gold and Copper/Gold tell the same story. They are both leading indicators for the US10Y. We see their price action have all been very similar. US10Y could be heading lower?! F. Aluminum 5. Lumber, Housing Index, Mortgage Backed Securities A. Lumber Lumber is one of my favorite commodities because it tells you so much about the economy. It tells a story about Agriculture, Industry, Manufacturing, Production, and Transport. Lumber cannot be transported by USPS or a regular delivery man. Lumber relies on large-scale transportation to get to its destination. As you may have heard Lumber has been at incredibly high levels. However, now we are seeing Lumber give off some of its gains. The demand for Lumber is dropping. How low will Lumber prices fall? With such high Lumber prices, consumers no longer wanted to purchase at such high prices and held off their use for Lumber. XHB, The homebuilder ETF has also slowed down. Homebuilding has been hurting because of the higher lumber prices leading to more expensive houses and fewer houses being built. aa. Markets usually follow this ratio. Lumber is sensitive to housing and domestic economic growth. Housing is usually the bulk of an American's capital expenditure because, buying a house is inherently risky due, to the leverage component. Most Americans are in the housing market, not the stock market. Housing has always been the best leading indicator. Gold on the other hand is ubiquitously popular in periods of high volatility and defensive play. This ratio tells you when to ‘apply more gas’ or ‘take your foot off the pedal’. Whenever, this ratio has been bullish, Lumber > Gold. I have allocated a larger percentage of my portfolio into small caps. Hiding out in small caps when you see a sustained uptrend in Lumber/ Gold is a simple trading strategy. Higher Lumber prices signal consumer wealth which goes hand in hand with small caps which are sensitive to the domestic economy and the spending habits of consumers. Even as rates have risen, Lumber has not faltered. Mortgage rates have a huge effect on housing prices. As rates rise, loans get more expensive and less money can be offered for houses. Americans are known to make speculative plays with their houses. Refinancing, floating-rate mortgages, and home equity loans are ubiquitous leading to a very fragile market. Americans view their house as a piggy bank. This works until housing prices fall. aaa. Holds companies that deal with building and prefabrication of residential homes, mortgage insurers, and suppliers of building materials B. Mortgage Backed Security ETF Will Americans be able to pay their mortgage? Let's not forget that the FED is buying MBS and Treasurys every month. This ensures that mortgage rates stay low. ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ As we go into the two-day FOMC meeting, one may wonder if the Fed will be forced to tighten economic conditions. Chances are the Fed writes off the inflation experienced by markets as transitory. With the Fed looking for full employment they may seem to not mind seeing the economy run hot. There is no reason for the Fed to make a move now. However, with the economy heating up this summer it will be important to watch commodity prices for any future moves the fed may make. There are many inflationary pressures and the ten-year yield looks to reach 2%. The stimulus for businesses and people, foreclosure moratoriums, overall debt build-up (credit cards, auto loans, student loans, margin loans), large amounts of QE, and rent moratoriums have caused an unstable market. With inflation creeping up the Fed will eventually have to cut back on QE and raise the Fed Funds rate as history has denoted. With many commodities on the verge of breaking out, we can see a blow-off top through the summer followed by a credit bust similar to 2008. A seemingly inflationary environment can be put on its head and lead to deflation with 50-70% drawdowns in many overvalued stocks. Will Cash reign as King again? What you will see in common with the charts below are that most of these commodities formed a bullish head and shoulder pattern from the fall of 2019 and are now approaching levels of resistance such as agriculture and energy whereas, commodities like Lumber and Copper have moved parabolically. In 2008, you will notice a lot of these commodities were at very high prices; there must be a chance we see these levels with the amount of debt floating around. Rising commodity prices lead to winners and losers. Those selling the commodities benefit in the short run and buyers are forced to take on the higher prices. Be Greedy when those are Fearful and Fearful when they are Greedy. People are super fearful of Inflation, should you get greedy on the contrarian view? I know this article sends a lot of mixed signals but, I do not predict the future nor can I teach you how to invest. I am trying to shed light on what you should be looking at to make your investment decisions.
AMEX:DBA
by arama-nuggetrouble
34
Commodity Markets VS the Stock MarketI have long said that commodities always go down over the long term. This chart shows that perfectly, and also adds on another component which is the well-known fact that stocks always go up over the long term. As a result, what we see is an index that only ever is in one of 2 states: 1) Pullback to the upside 2) Trending to the downside Currently, we are in the first state, which is much rarer and provides far more opportunity. It allows us to actually short this chart! All you need to to is sell/short commodities, and buy stocks. This is the chance of a lifetime to short commodity markets at these bubble prices! As the fed chokes the life out of risk assets and beats inflation to death, commodity prices will fall. As we discover new and amazing technology at an ever-increasing rate, commodity prices will fall and innovative stock will rise. When we finally reach a superintelligent AI which can help us find ways beyond our knowledge to make commodities, commodity prices will fall and innovative stock will rise. When we gain the ability to harvest the nearly infinite amount of precious metals such as gold from outer space, commodity prices will fall and innovative stock will rise. Think of it as The Infinity Trade. Oil going to negative was just the start.
AMEX:DBCShort
by bowtrix
1
Weekly copper market review 12/21/2020.Support us by consulting our free magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COPPER Last week, COMEX copper futures closed higher at $3.6320 per pound. Copper prices were at highs not seen since February 2013. Speculative trading is still pushing copper prices, however, net positions in the net commitments of COT traders, after exceeding 80K for the first time, fell slightly last week to 72.12K. Copper stocks are historically low at 269453 MT, a drop of more than 10% in one week and 16% in December. As can be seen on the stock chart below, total stocks of the red metal are at historically low levels not seen in the last 5 years. China, the main consumer of copper, is in a phase of accelerated growth, with a recovery in the electronics and automotive exporting sector which has boosted demand for industrial metals. Figures released last week show that in November the Chinese economy continued to accelerate, a process driven by the recovery in domestic and external demand. Industrial production increased by 7%, the highest rate in 20 months, and investment is supported by government infrastructure programs. Expectations suggest that credit growth and stimulus will continue in 2021, the year for which the IMF forecasts GDP growth of 8.1%. On the international front, Senate Republican leader Mitch McConnell announced Sunday evening that a $900 billion deal would be reached. The Fed said its purchases of securities would continue at the current rate of $120 billion per month until substantial additional progress has been made. The brexit saga continues, with the European Parliament's Sunday night deadline for a deal passed, but negotiations will continue. No one seems to want to take responsibility for a possible failure. After Pfizer, the FDA also approved Moderna's vaccine. As far as the pandemic is concerned, the vaccination campaign has started in the United States. The new strain of coronavirus detected in Great Britain worries, it would be 70% more contagious. The global death toll is rising, we have just passed 76 million cases worldwide, with more than 1.692 million deaths. The United States is still the most affected country, with 317,000 deaths and more than 17 million cases. The Dollar fell last week, with the DXY closing lower at 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. ECONOMIC RESULTS - On Monday, industrial production in the Euro zone came out at +2.1% compared to +0.1% the previous month. - On Tuesday, industrial production was +7.0% compared to +6.9% in the previous month. The Chinese unemployment rate was 5.2%. US industrial production was 0.4% compared to 0.9% the previous month, and the New York FED manufacturing index was down 4.90 compared to 6.30 in October. - On Wednesday, manufacturing PMI in the Euro zone rose to 55.5% from 53 the previous month. U.S. retail sales declined to -0.9% from -0.1% in October. U.S. manufacturing PMIs were 56.5 compared with 56.7 the previous month. - On Thursday, inflation in the Euro zone came out at -0.3% in November as expected. U.S. building permits surprise positively up to 1.639M, U.S. unemployment registrations disappoint at 885K, and the Philadelphia FED manufacturing index falls sharply to 11.1 from 26.3 the previous month. CERTIFIED COPPER STOCKS - London Stock Exchange copper stocks are down to 123400 MT from 146325 MT last week. - Copper stocks on the Shanghai Stock Exchange were down to 74222 MT from 82092 MT the previous week. - Copper stocks on the New York Stock Exchange were down to 71831 MT for 72520 the previous week. - Total copper stocks were down to 269453 MT compared to 300937 MT the previous week. Total copper stocks are below the five-year average. THE DOLLAR The DXY index representing the Dollar against a basket of foreign currencies closed last week down to 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. The possibilities of reaching an agreement on a contingency plan to support the U.S. economy, as well as the possibility of an economic recovery, are expected to continue. Disappointing economic results weighed on the currency last week. Indeed, U.S. Retail Sales down to -0.9% and Unemployment Claims up to 885K disappointed. A low dollar is generally favorable for dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The net speculative position on the copper futures markets is down this week to 72.12 K instead of 80.039 K.
COMEX:HG1!
by Commodity-market-review
Weekly cotton market review 12/21/2020.Support us by consulting our free magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COTTON Last week, ICE U.S. cotton futures closed higher at $77.16 cents per pound. Cotton prices ended up sharply last week returning to pre-pandemic levels and 2019 highs. ICE U.S. cotton stocks were down to 78031 bales. Total cash transactions were 782746 bales this week compared to 630082 bales the previous week, an increase of 152664 bales this week compared to 98938 bales the previous week and 109251 bales at the same time last year. Demand has been good, with China, Korea and Vietnam showing interest. Harvesting is complete in most areas, but continues further north in Oklahoma and Kansas. According to the latest USDA report, the 2020/21 global cotton production forecast has been revised down to 113903K bales from 116112K previously. The decrease is due to the U.S. and Indian production. World cotton consumption estimates have been revised upwards to 115625K bales from 114050K previously. The 2020/21 market will therefore be in deficit, with a drop in stocks to 97520K instead of the 101435K initially forecast. The stocks according to the forecasts will therefore be down but historically high. On the international level, the Republican leader of the senate Mitch McConnell announced Sunday evening that a 900 billion agreement would have been reached. The Fed said its purchases of securities would continue at the current pace of $120 billion per month until substantial additional progress has been made. The brexit saga continues, with the European Parliament's Sunday night deadline for a deal passed, but negotiations will continue. No one seems to want to take responsibility for a possible failure. After Pfizer, the FDA also approved Moderna's vaccine. As far as the pandemic is concerned, the vaccination campaign has started in the United States. The new strain of coronavirus detected in Great Britain worries, it would be 70% more contagious. The global death toll is rising, we have just passed 76 million cases worldwide, with more than 1.692 million deaths. The United States is still the most affected country, with 317,000 deaths and more than 17 million cases. The Dollar fell last week, with the DXY closing lower at 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. WEATHER IN THE UNITED STATES The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week's rainfall was normal. ICE US CERTIFIED COTTON STOCKS ICE cotton stocks at the height of the harvest season were down to 78031 bales from 86544 last week. Stocks are above the five-year average for the same period. THE DOLLAR The DXY index representing the Dollar against a basket of foreign currencies closed last week down to 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. The possibilities of reaching an agreement on a contingency plan to support the U.S. economy, as well as the possibility of an economic recovery, are expected to continue. Disappointing economic results weighed on the currency last week. Indeed, U.S. Retail Sales down to -0.9% and Unemployment Claims up to 885K disappointed. A low dollar is generally favorable for dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The speculative net position on the cotton futures markets is up this week to 81.341 K instead of 67.96 K.
ICEUS:CT1!
by Commodity-market-review
Weekly cocoa market review 12/21/2020.Support us by consulting our free magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COCOA Last week, ICE U.S. cocoa futures closed lower at $2,506 a ton. Cocoa prices fell sharply last week from over $2,650 to just $2,500. Even the falling dollar could not provide support for cocoa. Last week was therefore a weather-oriented market. Indeed, above-average rains combined with sunny periods in most cocoa-growing areas of Ivory Coast should improve the quality and size of beans at the end of the main harvest. Ivory Coast, the world's leading cocoa producer, is in the dry season, which runs from mid-November to March, when rains are normally light and infrequent. Producers welcomed a second consecutive week of good rains, which they say will trigger a new flowering mid-harvest from April to September and also boost the yield of the last stage of the main crop from October to March. Farmers said they expected large volumes of beans to leave the bush until the end of January. Fears of reduced demand with an ICCO report predicting a surplus in the 2020/21 crop and a crop that looks good explain last week's drop. For the 2020/21 season, the arrivals in Ivorian ports are 996K tons as of November 22, against 883K tons at the same period the previous season. Cocoa stocks are down to 2908 thousand bags of 60 Kg. The International Cocoa Organization ICCO has revised down the cocoa surplus to 19,000 tons compared to a previous forecast of 42,000 tons. The ICCO estimated world cocoa production at 4.697 million tonnes, about 27,000 tonnes less than its previous forecast. World cocoa grindings are forecast at 4,631 thousand tonnes, 4 thousand less. On the international level, the Republican leader of the Senate Mitch McConnell announced Sunday evening that an agreement of 900 billion would have been reached. The Fed said its stock purchases would continue at the current rate of $120 billion per month until substantial additional progress has been made. The brexit saga continues, with the European Parliament's Sunday night deadline for a deal passed, but negotiations will continue. No one seems to want to take responsibility for a possible failure. After Pfizer, the FDA also approved Moderna's vaccine. As far as the pandemic is concerned, the vaccination campaign has started in the United States. The new strain of coronavirus detected in Great Britain worries, it would be 70% more contagious. The global death toll is rising, we have just passed 76 million cases worldwide, with more than 1.692 million deaths. The United States is still the most affected country, with 317,000 deaths and more than 17 million cases. The Dollar fell last week, with the DXY closing lower at 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. WEATHER IN WEST AFRICA Ivory Coast and Ghana experienced above normal rainfall in October with an average rainfall of more than 150mm. They were more mixed in November. The southern parts of these 2 countries received above normal rainfall and the northern parts were 50mm below normal. Cocoa trees are more affected by rainfall than any other climatic factor. The dry season started in Ivory Coast and Ghana and lasts from mid-November to March. Producers hope that the Harmattan will not come too early this year. It is a dusty wind from the northeast of the Sahara that blows during the dry season. Harmattan can have a negative impact on crops. The wind would already be present in the northern part of the country, which explains why rainfall was already more concentrated in the coastal areas. Last week, the rains were higher than normal. ICE US CERTIFIED COCOA STOCKS Cocoa stocks are down to 2908 against 2967 thousand 60 kg bags last week. ICE US and EU cocoa stocks are above last season's stocks at the same period. THE DOLLAR The DXY index representing the Dollar against a basket of foreign currencies closed last week down to 89.924, hitting a 2 1/2 year low. The long-term trend is still bearish. The possibilities of reaching an agreement on a contingency plan to support the U.S. economy, as well as the possibility of an economic recovery, are expected to continue. Disappointing economic results weighed on the currency last week. Indeed, U.S. Retail Sales down to -0.9% and Unemployment Claims up to 885K disappointed. A low dollar is generally favorable for dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The speculative net position on the cocoa futures markets is up this week to 34.575 K instead of 32.379 K.
ICEUS:CC1!
by Commodity-market-review
Weekly copper market review 12/14/2020.Support us by consulting our free magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COPPER Last week, COMEX copper futures closed higher at $3.528 per pound. Speculative trading is pushing copper prices up, with net positions of COT commitments of traders exceeding 80K for the 1st time, they are on historical highs. Copper stocks are historically low at 300937 MT and are about to fall below the 300 mark which represents less than 5 days of world consumption. China, the main consumer of copper, is in a phase of accelerated growth, with a recovery in the electronics and automotive export sector which has stimulated demand for industrial metals. In November, refined copper imports fell for the second consecutive time, down 9.2% compared to October. Imports of copper concentrates increased by 8.3% in November. China's exports grew by 21.1% in November, far exceeding the expected 12%. Internationally, the ECB increased its asset buyback program by 500 billion, the US support plan is still slow to come, and a brexit no-deal is increasingly likely. The FDA in turn is approving the use of Pfizer's vaccine, and vaccination begins this week in the US. In terms of the pandemic update, we have just surpassed 72 million cases worldwide, with more than 1.607 million deaths. The U.S. is still the most affected country, and will approach and surpass the 300,000 mark in deaths and more than 16 million cases. The Dollar consolidated last week as the DXY closed higher at 90.976, with the long-term trend still bearish. ECONOMIC RESULTS - Last week, Chinese exports grew by 21.1% in November and imports declined by 4.5%. Euro-zone GDP was up 12.5% in Q3, the ZEW Economic Sentiment Index surged to 54.4 from an expected 37.5. US unemployment registrations disappointed at 853K for 725K expected. - On Monday, industrial production in the Euro zone came out at +2.1% compared to +0.1% the previous month. - On Tuesday, industrial production was +7.0% compared to +6.9% in the previous month. The Chinese unemployment rate was 5.2%. US industrial production was 0.4% compared to 0.9% the previous month, and the New York FED manufacturing index was down 4.90 compared to 6.30 in October. - Wednesday, Euro-zone Manufacturing PMI, U.S. Retail Sales and U.S. Manufacturing PMI. - Thursday, Euro-zone inflation, U.S. building permits, U.S. unemployment registrations, and Philadelphia FED manufacturing index. CERTIFIED COPPER STOCKS - London Stock Exchange copper stocks are down to 146325 MT from last week's 149675 MT. - Copper stocks on the Shanghai Stock Exchange were down to 82092 MT from 97783 MT the previous week. - Copper stocks on the New York Stock Exchange were down to 72520 MT for 73233 the previous week. - Total copper stocks were down to 300937 MT compared to 320691 MT the previous week. Total copper stocks are below the five-year average. THE DOLLAR The DXY index representing the Dollar against a basket of foreign currencies closed last week up at 90.976, although the long-term trend is still bearish. The DXY consolidated last week. The ECB increased its asset repurchase program by $500 billion, and, the U.S. support plan is still lagging behind, still failing to agree on emergency aid of just over $900 billion. The dollar has also strengthened against the pound sterling, on an increasingly likely no-deal, as the disagreements seem so deep. A low dollar is generally favorable to dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The net speculative position on the copper futures markets is up this week to 80.039 K instead of 79.856 K.
COMEX:HG1!
by Commodity-market-review
Weekly cotton market review 12/14/2020.Support us by consulting our free magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COTTON Last week, ICE U.S. cotton futures closed higher at $74.08 cents per pound. ICE U.S. cotton stocks were down to 86544 bales. Total cash transactions totaled 6,30082 bales this week compared to 5,31144 bales the previous week, an increase of 9,8938 bales this week compared to 5,0282 bales the previous week and 1,4261 bales at the same time last year. Demand has been good, with China, Pakistan and Vietnam showing interest. Harvesting is complete in most areas, but continues further north, in Oklahoma and Kansas, with an advance of about 80%. According to the latest USDA report, the 2020/21 global cotton production forecast has been revised down to 113903K bales from 116112K previously. The decrease is due to US and Indian production. World cotton consumption estimates have been revised upwards to 115625K bales from 114050K previously. The 2020/21 market will therefore be in deficit, with a drop in stocks to 97520K instead of the 101435K initially forecast. The stocks according to the forecasts will therefore be down but historically high. On the international level, the ECB has increased its asset buyback program by 500 billion, the US support plan has been delayed again and again, and a brexit no-deal is increasingly likely. The FDA in turn is approving the use of Pfizer's vaccine, and vaccination begins this week in the US. In terms of the pandemic update, we have just surpassed 72 million cases worldwide, with more than 1.607 million deaths. The U.S. is still the most affected country, and will approach and surpass the 300,000 mark in deaths and more than 16 million cases. The Dollar consolidated last week as the DXY closed higher at 90.976, with the long-term trend still bearish. WEATHER IN THE UNITED STATES The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week, many areas experienced their first significant frost of the season. Wet and cold weather, with slightly above normal rainfall in the delta was reported last week. ICE US CERTIFIED COTTON STOCKS ICE cotton stocks at the height of the harvest season were down to 86544 bales for 101220 last week. Stocks are above the five-year average for the same period. THE DOLLAR The DXY index representing the Dollar against a basket of foreign currencies closed last week up at 90.976, although the long-term trend is still bearish. The DXY consolidated last week. The ECB increased its asset repurchase program by $500 billion, and, the U.S. support plan is still lagging behind, still failing to agree on emergency aid of just over $900 billion. The dollar has also strengthened against the pound sterling, on an increasingly likely no-deal, as the disagreements seem so deep. A low dollar is generally favorable to dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The speculative net position on the cotton futures markets is down this week to 67.96 K instead of 70.799 K.
ICEUS:CT1!
by Commodity-market-review
Weekly cocoa market review 12/14/2020.Support us by consulting our free magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COCOA Last week, ICE U.S. cocoa futures closed lower at $2,622 a ton. Ivory Coast lifts suspension of sustainability programs imposed on industrialist Hershey. Indeed, the U.S. chocolate maker has committed to pay the LID, a premium introduced by Ghana and Ivory Coast to ensure a decent income for producers. This marks a break in the tensions between the two countries and the manufacturer. Cocoa prices fell to 2520 dollars per ton, before recovering over the weekend regaining 100 dollars in 2 sessions. The downward movement seems to be running out of steam between the hopes brought by the vaccine, the vaccination campaigns that will follow, and low ICE stocks. Cocoa stocks are down to 2967 thousand 60 kg bags. The International Cocoa Organization ICCO has revised the cocoa surplus downward to 19,000 tons from a previous forecast of 42,000 tons. The ICCO estimated world cocoa production at 4.697 million tonnes, about 27,000 tonnes less than its previous forecast. World cocoa grindings are forecast at 4,631 thousand tonnes, 4 thousand less. The dry period in West Africa has begun and runs from mid-November to March. Producers fear the arrival of the Harmattan. It is a dusty wind coming from the northeast of the Sahara and which blows during the dry season. The above-normal rainfall last week, however, improves the prospects for the end of the main harvest between January and March, and reassures producers in the more central parts of Ivory Coast, which had received less rain. Ivory Coast seems to have turned the page on its troubled presidential election, and it is now the turn of its neighbor and world's second largest cocoa producer Ghana. President Nana Akufo-Addo is re-elected, but the opposition rejects the results of a close ballot. Half a million votes separate the incumbent president and his opponent, John Mahama. Internationally, the ECB has increased its asset repurchase program by $500 billion, the U.S. support plan is still slow in coming, and a brexit no-deal is increasingly likely. The FDA in turn is approving the use of Pfizer's vaccine, and vaccination begins this week in the US. In terms of the pandemic update, we have just surpassed 72 million cases worldwide, with more than 1.607 million deaths. The U.S. is still the most affected country, and will approach and surpass the 300,000 mark in deaths and more than 16 million cases. The Dollar consolidated last week as the DXY closed higher at 90.976, with the long-term trend still bearish. WEATHER IN WEST AFRICA Ivory Coast and Ghana experienced above normal rainfall in October with an average rainfall of more than 150mm. They were more mixed in November. The southern parts of these 2 countries received above normal rainfall and the northern parts were 50mm below normal. Cocoa trees are more affected by rainfall than any other climatic factor. The dry season started in Ivory Coast and Ghana and lasts from mid-November to March. Producers hope that the Harmattan will not come too early this year. It is a dusty wind from the northeast of the Sahara that blows during the dry season. Harmattan can have a negative impact on crops. The wind would already be present in the northern part of the country, which explains why rainfall was already more concentrated in the coastal areas. Last week's above-normal rainfall of more than 25 mm in some areas has reassured producers. ICE US CERTIFIED COCOA STOCKS Cocoa stocks are down to 2967 from 3048 thousand 60 kg bags last week. ICE US and EU cocoa stocks are above last season's stocks at the same period. THE DOLLAR The DXY index representing the Dollar against a basket of foreign currencies closed last week up at 90.976, although the long-term trend is still bearish. The DXY consolidated last week. The ECB increased its asset repurchase program by $500 billion, and, the U.S. support plan is still lagging behind, still failing to agree on emergency aid of just over $900 billion. The dollar has also strengthened against the pound sterling, on an increasingly likely no-deal, as the disagreements seem so deep. A low dollar is generally favorable to dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The speculative net position on the cocoa futures markets is down this week to 32.379 K instead of 35.147 K.
ICEUS:CC1!
by Commodity-market-review
Weekly copper market review 12/07/2020.Support us by consulting our free daily magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COPPER Last week, COMEX copper futures closed higher at $3.5245 per pound. Speculative trading is pushing copper prices higher, as net positions of the net commitments of traders at +79K are at historical highs. Copper stocks are historically low at 320691 MT. China, in November, developed at the fastest pace in 10 years, exceeding expectations. Currently, the manufacturing sector in the country is the main driver of copper demand worldwide. The increase in appliance sales, caused by the containment and rebound in car and truck production, has reactivated the manufacturing sector and led to the consumption of industrial metals such as steel, copper and aluminum. The relative scarcity of the red metal has pushed industrialists to accumulate copper stocks to face a possible 2nd wave in producing countries such as Chile or Peru. Caixin's manufacturing PMIs stood at 54.9 in November, exceeding expectations and expanding for the 7th consecutive month. Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the resistance of the 92, is moving towards the 90's, and the Euro approached $1.22 after disappointing US empoys figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline. Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy has passed the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases in 24 hours on Saturday. The United Kingdom, the first country to authorize Pfizer vaccine, begins vaccination on Tuesday. ECONOMIC RESULTS - Last week was rich in results. Manufacturing PMIs all showed an increase, in China they stood at 52.1 in November against 51.4 in October, in the Euro zone they stood at 53.8 in November against 53.6 in October, in the US they rose to 56.7 in November against 53.4 in October. US job creation disappointed, falling to 245K against 610K the previous month. Orders to US industry were up 1.0% compared to 1.3% in October. - On Monday, Chinese exports rose by 21.1% in November and imports fell by 4.5%. - Tuesday, GDP in the Euro zone, the ZEW index of economic sentiment. - Wednesday, inflation and producer prices in China. - Thursday, inflation and U.S. unemployment registrations. - Friday, U.S. producer prices and Michigan consumer confidence index. CERTIFIED COPPER STOCKS - London Stock Exchange copper stocks are down to 149675 MT from 150775 MT last week. - Copper stocks on the Shanghai Stock Exchange rose to 97783 MT from 92912 MT the previous week. - Copper stocks on the New York Stock Exchange were down to 73233 MT for 74019 the previous week. - Total copper inventories increased to 320691 MT compared to 317706 MT the previous week. Total copper stocks are below the five-year average. THE DOLLAR The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply. A low dollar is generally good for dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The net speculative position on the copper futures markets is up this week to 79.856 K instead of 73.771 K.
COMEX:HG1!
by Commodity-market-review
Weekly cotton market review 12/07/2020.Support us by consulting our free daily magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COTTON Last week, ICE U.S. cotton futures closed lower at $71.57 cents per pound. ICE U.S. cotton stocks were down to 101220 bales. Total cash transactions were 531144 bales this week compared to 479062 bales last week, an increase of 52082 bales this week compared to 83328 bales last week and 53680 bales at the same time last year. Demand has been good, with China, Pakistan and Vietnam showing interest. -In the Southeast, a cold bottom passed through the region over the weekend, and many areas experienced their first major frost. Alabama, Florida, Georgia experienced up to 7 centimeters of rain, interrupting work, then resuming where the soils were sufficiently firm. Harvest was 80% complete in Alabama and Georgia, 74% in North Carolina, 77% in South Carolina, and 62% in Virginia, where harvest was late due to wet conditions. -In the Delta, a cold front resulted in lower temperatures and low precipitation in the region during the week. Up to 5 cm of precipitation was reported during this period, with light snow in the northern regions. Field activities were for the most part completed. A few growers reported disappointing yield results and/or grade reductions, which they attributed to wet weather throughout the harvest season, resulting in boll rot in some of the areas. Harvest was 100% complete in Arkansas, 95% in Missouri and Tennessee, 100% in Louisiana and 98% in Mississippi. -In Texas, intermittent rains were reported in parts of southern Texas. Ginning is continuing in the coastal zone. Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking through the 92 resistance, is heading towards the 90's, and the Euro was close to $1.22 after disappointing U.S. empoi figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline. Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy passes the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases Saturday, in 24 hours. The United Kingdom, the first country to license Pfizer vaccine, begins vaccination Tuesday. WEATHER IN THE UNITED STATES The hurricane season in the North Atlantic is officially over, and the U.S. cotton harvest is also coming to an end. Rainfall in October was above normal, but lower than normal in November. Last week, many areas experienced their first significant frost of the season. Slightly above normal rainfall was reported last week in parts of the southeast, south delta and southeast Texas. ICE US CERTIFIED COTTON STOCKS ICE cotton stocks at the height of the harvest season were down to 101220 bales for 115929 last week. Stocks are above the five-year average for the same period. THE DOLLAR The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply. A low dollar is generally good for dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The speculative net position on the cotton futures markets is down this week to 70.799 K instead of 73.111 K.
ICEUS:CT1!
by Commodity-market-review
Weekly cocoa market review 12/07/2020.Support us by consulting our free daily magazines with color stock charts and weather maps on our commodity-market-review.com website. TECHNICAL ANALYSIS OF COCOA Last week, ICE U.S. cocoa futures closed higher at $2,654 per ton. Ivory Coast lifts suspension of sustainability programs imposed on industrialist Hershey. Indeed, the U.S. chocolate maker has committed to pay the LID, a premium introduced by Ghana and Ivory Coast to ensure a decent income for producers. This marks a break in the tensions between the two countries and the manufacturer. The latter was accused last week of wanting to sabotage the LID by buying abnormally high volumes of cocoa directly on the futures market in order to avoid paying the premium. For the 2020/21 season, the arrivals in Ivorian ports are 740K tons as of November 29, against 607K tons at the same period the previous season. Cocoa stocks are down to 3048 thousand bags of 60 Kg. The dry period in West Africa has begun and runs from mid-November to March. Producers hope that the Harmattan will not come too early this year. It is a dusty wind coming from the northeast of the Sahara that blows during the dry season. Harmattan can have a negative impact on crops. Below-normal rainfall in recent weeks could reduce the prospects for the end of the main harvest between January and March. In Ivory Coast, Laurent Gbagbo would have received his passport on December 4 to be able to return to the country, a sign of appeasement sent by President Ouattara, certainly wanting to turn the page on the recent violence caused by the Ivory Coast presidential election. Internationally, last week was marked by the sharp fall of the dollar. The DXY, after breaking the resistance of the 92, is heading towards the 90, and the Euro approached $1.22 after disappointing U.S. employment figures. Hopes for a vaccine, the FED reaffirming that the priority remains to support the economy, and the joint Democratic and Republican proposal for a $908 billion emergency plan are driving equity markets. Curiously, commodities as a whole did not benefit from the dollar's decline. Discussions between the British and the Europeans continue as the December 31 deadline approaches in the hope of reaching a post-brexit trade agreement. Regarding the pandemic update, we have just passed the 67 million cases worldwide, with more than 1.537 million deaths. The United States continues to be the most affected country with more than 282,000 deaths and more than 14.7 million cases. Italy passes the 60,000 death mark, and the United States is facing a spectacular rebound of the epidemic with more than 230,000 cases Saturday, in 24 hours. The United Kingdom, the first country to license Pfizer vaccine, begins vaccination Tuesday. WEATHER IN WEST AFRICA Ivory Coast and Ghana experienced above normal rainfall in October with an average rainfall of more than 150mm. They were more mixed in November. The southern parts of these 2 countries received above normal rainfall and the northern parts were 50mm below normal. Cocoa trees are more affected by rainfall than any other climatic factor. The dry season started in Ivory Coast and Ghana and lasts from mid-November to March. Producers hope that the Harmattan will not come too early this year. It is a dusty wind from the northeast of the Sahara that blows during the dry season. Harmattan can have a negative impact on crops. The wind would already be present in the northern part of the country, which explains why rainfall was already more concentrated in the coastal areas. Last week the rains were lower than normal in Ivory Coast and Ghana. ICE US CERTIFIED COCOA STOCKS Cocoa stocks are down to 3048 against 3111 thousand 60 kg bags last week. ICE US and EU cocoa stocks are above last season's stocks at the same period. THE DOLLAR The DXY index representing the Dollar against a range of foreign currencies closed last week down to 90.701, and the trend is still bearish. The DXY after breaking the 92 resistance, plunged last week and is on its way to the 90. The Euro rose as high as 1.2175 on Friday after very disappointing U.S. employment figures. As a backdrop, Powell said the priority remains to support the economy, and Democrats and Republicans are working together on a $908 billion emergency support proposal as a first step. For later, once the Joe biden administration is in place, work for a more substantial plan. Forex traders are anticipating an increase in the money supply. A low dollar is generally good for dollar-denominated commodity markets. COMMITMENTS OF TRADERS The weekly COT (Commitments of Traders) report of the Commodity Futures Trading Commission (CFTC) shows all the positions opened by all market participants. The COT report is published on Friday, and reflects the open positions on Tuesday of the same week. It shows the position of commercial traders (producers, commodity buyers, ...) but also non-commercial (speculators). The net positions of speculators on the futures markets are particularly interesting to observe. The speculative net position on the cocoa futures markets is up this week to 35.147 K instead of 34.465 K.
ICEUS:CC1!
by Commodity-market-review