- New highs in gold, but silver leads the way with a move to over $19 per ounce
- Energy prices steady to higher on the week
- WASDE weighs on soybeans and corn, but the weather supports wheat
- Coffee, sugar, and cocoa decline, while cotton and FCOJ move higher- Meats steady on the week
- Stocks higher, the dollar lower, and digital currencies edge to the upside
Over the past week, the rising number of coronavirus cases in the US caused rising concerns that business activity could run into roadblocks over the coming weeks and months. Meanwhile, gold moved to a new high over the past week, silver was over the $19 level on the September futures contract, and copper was flirting with the $2.90 per pound level at the end of last week. Crude oil continued to trade around its $40 pivot point on the nearby August NYMEX futures contract. Natural gas recovered to over the $1.90 per MMBtu level, but failed and was around the $1.80 level on the August futures contract at the end of last week.
Grain prices moved higher over the week, but selling hit corn and soybeans on Friday, while wheat continued to make higher short-term highs. Corn and beans fell as trade tensions between the US and China rose. The USDA released its July World Agricultural Supply and Demand Estimates report on Friday. I reached out to my friend, Sal Gilberte, the founder of the Teucrium family of agricultural ETF products. Sal’s take on the July WASDE was:
“The July WASDE report confirms ample supply across the entire grain spectrum, but there is also solid global demand for all grains as well. The wheat complex, even with record high global inventories, is showing price resiliency due to robust demand and unusually widespread production issues around the globe. Soybeans, with a nearly 200-million-bushel decline in year-on-year ending inventories in the US, are the most vulnerable to any weather issues; even a 1 or 2 bushel decrease in yield will tighten the US domestic soybean balance sheet considerably. Corn, along with all the grains, will be susceptible to any weather-related supply disruptions, but until gasoline usage picks up corn supplies are more than adequate to meet demand. Of particular interest is the increasing level of Chinese corn imports, much sourced by recent purchase commitments in the United States, which is likely the result of 5-year highs in Chinese domestic corn prices. China has also returned to US soybean markets in its quest to fulfill a projected record volume of annual soybean imports in the coming year. Weather is key and bears close watching, especially in early August for soybeans.”
Sugar fell below the 12 cents per pound level, coffee was under $1 per pound, and cocoa continued to experience selling pressure with the price below the $2200 per ton level on September futures. Cotton and FCOJ futures moved higher since last week. Live cattle and feeder cattle were steady around the $1 and $1.36 per pound levels, while lean hogs were just below 50 cents per pound on the August futures contract. The pressure continued in the dollar index, which was around the 96.6 level on September futures on July 10.
Expect lots of volatility in markets across all asset classes over the coming months. Coronavirus remains the primary factor for markets, but the US election could take the center of the stage over the coming months as it will determine the domestic and international policy directions for 2021 and beyond. Expect the unexpected in markets, and you will not be disappointed.
Highlights in commodities:
- August gold rose by 0.66% on the week, settling at $1801.90 per ounce after reaching a new peak at $1829.80
- September silver rose 3.99% for the week as the precious metal settled at $19.053 per ounce on July 10 after trading up to $19.445
- October platinum rallies 1.72% on the week. October platinum was at a $956.00 per ounce discount to August gold futures, which marginally narrowed since last week
- September palladium rose 3.47% and settled at $1,994.40 per ounce. Rhodium was at a midpoint of $7,500 per ounce up $700 from July 2
- September copper was 5.42% higher to the $2.8975 level since last week
- August iron ore futures moved 8.60% higher over the past week
- The BDI edged 0.71% lower since July 3 to the 1,810 level
- August Rotterdam coal moved 4.68% lower since last week
- September lumber was 13.71% higher since July 2 and was at the $498.40 per 1,000 board feet level
- August NYMEX crude oil declined by only 0.25%. The August contract closed the week at $40.55 per barrel
- September Brent crude oil moved 0.05% higher since last week to $43.21 per barrel
- The premium for Brent over WTI in September closed Friday at the $2.45 level as the spread was up $0.02 per barrel since last week
- August gasoline rose 1.90% while August heating oil futures posted a 0.82% gain over the past week
- The gasoline crack spread in August was 9.56% higher since last week. August heating oil crack moved 2.57% to the upside since July 2 as gasoline and heating oil outperformed crude oil for the second consecutive week
- Natural gas recovered by 4.09% on the August futures contract closing the week at $1.805 per MMBtu. The EIA reported an injection of 56 bcf into storage on Thursday for the week ending on July 3
- August ethanol rose 2.33% on the week on strength in gasoline
- November soybeans moved 0.67% lower since last week in post-WASDE trading after spending the week above the $9 level
- December corn was 2.48% lower on the week after the release of the July WASDE report
- CBOT September wheat rose 8.54% since last week to $5.34 per bushel level on global weather concerns.
- October sugar fell 3.92% since July 2 and closed at 11.76 cents per pound on Friday
- September coffee posted a 5.62% loss since last week as the price was at the 97.40 cents per pound level
- September cocoa fell 0.87% since July 2
- December cotton rose 2.16% since last week as the fiber futures were at the 64.31 cents per pound level
- September FCOJ futures rose 3.73% since the previous report to $1.2920 per pound
- August live cattle moved 0.60% higher since last week to settle at $1.00 per pound
- August feeder cattle rose 0.65% since July 2
- August lean hog futures recovered by 1.37% over the past week and settled at just under 50 cents per pound
- The June dollar index futures contract fell 0.71% on the week to 96.614
- September Long-Bond futures were trading at 179-17 up 0-31 for the week
- The Dow Jones Industrial Average closes at 26,075 on Friday, July 10 up 248 points from July 2. The S&P 500 rose 1.76% since last week. The tech-heavy NASDAQ continued to lead the way on the upside as it closed at a new record high of 10,617.44. The VIX was trading at around 27.29 on Friday down 0.39 on the back of the rally in stocks
- Bitcoin was trading at $9,227.13 on Friday up $147.34 or 1.62% since July 10
- Ethereum was trading at $239.50 on Friday, up 5.99% since the last report
Price Changes for the week:
DBC closes at $12.66 per share, up 20 cents since July 2
DBC is the Invesco DB Commodity Tracking product which represents a diversified basket of commodities futures contracts, has net assets of $851.27 million, and trades an average daily volume of 1,041,520 shares. The fund summary for DBC states that it holds a diversified group of commodities futures but is weighted towards energy. The average volume fell, net assets were higher over the past week, and the price of the ETF moved higher.
Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.