June 28, 2019

  • Bitcoin blasts off to the upside
  • Markets wait for news on the US-Chinese Trade meeting
  • Bullish reversals in gold, corn, and coffee in Q2
  • Crude oil waits for the OPEC meeting next week
  • Stocks move higher on window dressing as the second quarter ends

The story of this week:

 

The Second Quarter Ended On Friday- The Most Significant Event For Commodities Is On Saturday!

 

End of Q2 in markets across all asset classes was different than past quarters. Timing is everything in markets and life, and since Friday, June 28 was the last day of trading in Q2 the market did not get to incorporate the results of the most significant event of the period which will occur on Saturday, June 29.

The long-awaited summit between Presidents Trump and Xi will take place on Saturday, which will set the tone for markets at the start of the third quarter and second half of 2019. Protectionism distorts commodities prices. The trade dispute has also increased volatility in markets across all asset classes. The result of the meeting will likely influence the future path of interest rates in the US, and one of the most significant “crosscurrents” cited by the Fed at its June meeting of the FOMC was the impact of the trade dispute between the US and China on the global economy. Therefore, June 29 is perhaps the most important day of the second quarter for markets, and it comes after the settlement prices for the period are set in stone.

Next week is the July 4 holiday in the US, but don’t expect quiet markets as they will digest the results of this weekend’s summit, and OPEC will meet on July 1 and 2 to decide on production policy for the second half of this year. The markets will need a holiday once next Thursday rolls around.

Some of the highlights of the second quarter were bullish reversal trading patterns on the quarterly chart in corn, gold, and coffee futures based on Friday’s settlement prices. All three markets traded lower prices than in Q1 and settled Q2 above the Q1 highs. Meanwhile, cotton put in a bearish reversal for the period. On Friday, crop progress reports sent the prices of corn and wheat lower while soybean futures went the other way and posted a gain on the session. Crude oil fell in late trading on Friday as the price settled around the midpoint of the trading range from the late April high to the early June low in the energy commodity.

Fasten your seatbelts for Q2 and the second half of 2019. Issues from trade to Iran, along with a myriad of other events facing markets will continue to make each day an adventure in markets across all asset classes. I will be posting my quarterly reports beginning on Monday.

Highlights in commodities:

  • Gold rises 0.97% on the week and rises to a new high at $1433.30 per ounce on the continuous futures contract
  • September silver edges 0.48% lower as the silver-gold ratio approaches a record high
  • Platinum recovers 3.33% higher since last week. October platinum was at a $572.60 per ounce discount to August gold futures, which narrowed slightly since last week
  • Palladium gains 2.53% for the week as the rally continues and pushes palladium over the $1500 per ounce level
  • September copper rose 0.43% but waits for the outcome of the trade summit
  • September iron ore futures rose 0.97% since last week on supply issues in Brazil
  • The BDI rises 12.23% since June 21 on the back of optimism over trade, lower US interest rates, fuel prices, and seasonality
  • Rotterdam coal falls 2.10%
  • September lumber was down 6.97% as the market corrects below the $400 level
  • August NYMEX crude oil moves 1.81% higher since June 21 as inventory data from the API and EIA was bullish for the week ending on June 21.
  • August Brent crude oil rolls to September and rises 0.34% since the previous report. September Brent was at $64.67 per barrel on Friday as the Brent underperformed WTI crude oil
  • The premium for Brent over WTI in September closes Friday at the $6.20 level down 70 cents since June 21 as the OPEC meeting is next week
  • August gasoline moves 4.43% higher while August heating oil futures gain 0.90% over the past week as the prices continue to reflect the loss of the Philadelphia refinery
  • The gasoline crack spread in August was 13% higher while the August heating oil crack moved down 0.77% since June 21
  • Natural gas recovers 5.73% on August futures closing the week at $2.3080 per MMBtu. The EIA reported an injection of 98 bcf into storage on Thursday for the week ending on June 21
  • August ethanol falls 3.72% on late week selling in the corn futures market
  • November soybeans edge 0.62% lower since last week
  • December corn declines 5.16% on the week on crop progress
  • CBOT September wheat moves 0.66% lower since last week. September KCBT wheat trading at a 65.75 cents discount under CBOT wheat. The discount remains far from the historical norm with KCBT wheat trailing
  • October sugar rises 1.12% since June 21 and closes at 12.62 cents per pound
  • September coffee rises 8.74% on the week
  • September cocoa moves 3.08% lower since last week
  • December cotton gains 0.79% after the contract roll
  • September FCOJ futures moved 0.73% higher, as the price closes at $1.0405 per pound
  • August live cattle moves 2.08% higher since last week
  • August feeder cattle gain 2.38% since June 21
  • August lean hog futures fall 2.44% over the past week
  • The June dollar index futures contract declines by only 0.05% on the week
  • September Long-Bond futures trading at 155-17 up 0-26 on the rising prospects for lower short-term rates from the Fed
  • The Dow Jones Industrial Average closes at 26,600 on Friday, June 28, down 119 points from June 21. The S&P 500 declines by 0.29% since last week. The VIX falls 0.32 was trading at around 15.08 on Friday
  • Bitcoin was trading at $12,266.81 on Friday up $2,344.52 or 23.63% since June 21. Bitcoin trades to almost $14,000 during the week.
  • Ethereum was trading at $309.62 on Friday, up 5.61% since the last report

 

Price Changes for the week:

DBC closes at $15.73 per share, up 3.0 cents per share since June 21

Source: Barchart

 

DBC is the Invesco DB Commodity Tracking product which represents a diversified basket of commodities futures contracts, has net assets of $1.61 billion and trades an average daily volume of 892,618 shares. The fund summary for DBC states that it holds a diversified group of commodities futures but is weighted towards energy.

Have a great weekend and a happy, healthy, and safe Fourth of July holiday!

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.