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  • Risk-off on the Coronavirus
  • Commodity prices decline
  • Safe haven buying in gold, while silver and PGMs fall
  • Copper and oil have been falling knives
  • Selling sends prices into oversold territory

The summary of trade recommendations for the coming week are as follows:

A more detailed picture is available on the spreadsheet that is linked below.

 

Summary and highlights:

 

On Thursday, January 23, stocks were mixed with a small loss in the DJIA and marginal gains in the Russell 2000, S&P 500, and NASDAQ indices. March US 30-Year Treasury bonds were around 0-27 higher to the 159-21 level. The March US dollar index futures contract continued to rise as it settled at 97.484. Soybean futures declined, but corn and wheat posted gains. Selling pressure continued in the crude oil market, which probed below the $55 per barrel level on the March futures contract before recovering to settle at $55.59 per barrel. Gasoline and heating oil futures fell, but they outperformed the crude oil leading to modest gains in crack spreads. US oil production was again at a record 13 million barrels per day for the week ending on January 17. There were no surprises from the EIA when it came to natural gas inventories, which fell by 92 bcf as of January 17. Natural gas attempted to rally but selling returned to the market at the $1.98 level, and the price settled at $1.926 per MMBtu on the February contract. Gold edged higher, while silver and platinum posted losses. Palladium rose to yet another record high of $2427 per ounce as the bullish frenzy continues in the palladium market. Cattle price dropped, but lean hogs edged higher. Coffee bounced a touch higher, lumber was unchanged, while cotton, FCOJ, sugar, and cocoa futures all moved lower. Bitcoin moved $265 per token lower to the $8415 level.

On Friday, stocks fell on the continued worries over the spread of the Coronavirus out of China. The long bond futures were 1-00 higher to 160-18, and the dollar index moved 0.166 higher to 97.65. Grains moved lower across the board as did energy prices with crude oil and products slipping to new short-term lows. The price of nearby March NYMEX futures traded below the $54 per barrel level. Natural gas closed the week south of $1.90 per MMBtu. Gold, silver, and platinum prices edged higher while palladium posted a rate loss on the session. Live cattle were a touch higher, but feeder cattle and lean hogs moved lower. FCOJ and lumber posted marginal gains, but sugar, coffee, cocoa, and cotton prices moved to the downside. Bitcoin was $115 higher to $8545 per token. The impeachment trial going on the Senate was nothing more than a sideshow going into the weekend as the market focus was on the virus and potential pandemic emanating from China and its impact on the global economy.

On Monday, stocks moved significantly lower over continued fears on the back of the spreading Coronavirus in China. All of the leading indices dropped by more than 1%, with the NASDAQ falling 1.89%. The VIX index rose to 18.23, up 3.67 on the session, and traded to a high of 19.02. March US 30 Year bond futures moved 1-13 higher to 162-01. The dollar index in March was also higher to 97.767. Grain prices slipped on Monday, but corn, soybeans, and wheat did not suffer substantial losses. Crude oil was another story as the price of March NYMEX futures continued to take the elevator lower to a new low of $52.13 before settling at $53.14 per barrel and moving lower after the close. Oil product prices declined, but natural gas posted a marginal gain. The price of the energy commodity remained below the $1.90 per MMBtu level. Gold moved higher as investors and traders embraced the safe-haven status of the yellow metal, but silver, platinum, and palladium prices fell. Copper cascaded lower to under the $2.60 level as the price of the red metal continued to metal under the weight of concerns over China. Meat prices moved lower across the board with the most significant selling in the live and cattle futures market. Lean hogs posted a loss on the session. Cotton and cocoa were just a touch higher, while FCOJ, coffee, and lumber prices fell. Bitcoin moved higher on flight to quality buying. The digital currency gained $530 to $9075 per token.

On Tuesday, stocks rebounded as all of the leading indices bounced after there was no fresh news on the spread of Coronavirus. The impeachment trial in the Senate continued with President Trump’s attorneys finishing up their defense. The next significant event will be the debate over witnesses later this week. The US 30-Year Long bond futures were 0-27lower to the 161-06 level. As the stock market recovered, bonds moved lower on the session. The March dollar index futures contract was up marginally to the 97.835 level. The price of March corn futures moved higher, but soybeans and wheat moved lower. Crude oil, oil products, and natural gas posted gains, but all remained not far above their recent lows. Palladium recovered, but gold, silver, and platinum prices moved lower. Silver was the big loser on the session as the price of the precious metal fell over 60 cents per ounce. Live cattle posted a marginal loss, while feeder cattle and lean hog futures were slightly higher. Coffee and cocoa continued to slide, but cotton, FCOJ, sugar, and lumber futures moved higher. The price of Bitcoin futures was $100 per token higher to the $9175 level.

On Wednesday, fears over the Coronavirus continued to dominate the price action across all asset classes. Meanwhile, US President Trump signed the USMC trade agreement with Canada and Mexico. USMCA now awaits final approval by the Canadian legislature. At the first Fed meeting of 2020, the central bank left the short-term Fed Funds rate unchanged at the 1.50%-1.75% level. The statement and press conference told markets that the decision on rates was unanimous, the current level of monetary policy is appropriate, and the central bank continues to monitor global developments. There were no significant changes from the December statement. While the US economy continues to grow at a moderate pace, business investment and exports remain weak. Inflation is still well below the Fed’s 2% target rate. Stocks we little changed after the Fed meeting, and the March 30-Year long bond futures were 1-08 higher to the 162-18 level. As the Fed is unlikely to hike rates any time soon, the current level of monetary policy in the US is supportive of stocks, bonds, and gold prices. Grains moved lower across the board on Wednesday. Crude oil and oil products were on either side of unchanged on the session. Natural gas fell further away from the $1.90 per MMBtu level on the downside. Gold, silver, and palladium moved higher, but platinum fell below the $1000 per ounce level. Cattle edged lower, while hog futures were down almost 2.50 cents per pound on the April futures contract. Cocoa, lumber, and FCOJ prices were higher, while coffee continued to decline towards the $1 per pound level, and sugar posted a small loss. Bitcoin rose $350 per token to the $9525 level.

 

Weekly Spreadsheet:

Copy of Spreadsheets for The Hecht Commodity Report January 29, 2020

Stocks and Bonds

The outbreak of Coronavirus in China spread to other countries around the world. The potential of a pandemic weighed on markets across all asset classes. Since China is the world’s most populous nation with the second-leading economy, a health emergency in the Asian country is more than a significant concern. The more series the situation becomes, the more we are likely to see an impact on markets.

 

The S&P 500 moved 1.46% lower since the previous report, while the NASDAQ fell 1.16% since last week. The DJIA posted a 1.55% loss since the last report. While the leading indices moved to the downside, they remain near record highs. The outbreak of the Coronavirus triggered what could turn out to be an overdue correction in the stock market.

Chinese stocks moved lower since last week as the leading ETF product underperformed US indices. Since China is ground zero for the health emergency, FXI posted the most significant decline since last week’s report.

Source: Barchart

As the chart illustrates, the China Large-Cap ETF product (FXI) was trading at the $41.20 level on Wednesday, which was 5.22% lower than the closing level on January 22. Technical support is at $37.66 per share from August 14. FXI traded to a new high of $45.29 on January 13, which now stands as technical resistance. Above the most recent peak, the next level of resistance is at the early April high of $45.96 per share. The FXI is likely to move lower or higher depending on developments on the spread of the virus.

US 30-Year bonds moved significantly higher from last week. On Wednesday, January 29, the March long bond futures contract was at the 162-18 level, up 2.34%. The odds of any changes in Fed monetary policy in 2020 are low as it is an election year in the US. The Fed is an apolitical body and will exercise patience and restraint when it comes to any changes in interest rates that could impact the results of the election in November. The US central bank will likely remain on the sidelines over the coming months unless there is a severe political or economic shock to the system. A flight to quality during risk-off periods would put upward pressure on the long bond. The Fed left interest rates unchanged at its January meeting on Wednesday.

Open interest in the E-Mini S&P 500 futures contracts fell by 1.14% since January 21. Open interest in the long bond futures rose by 0.64% over the past week. The VIX moved appreciably higher since the previous report as the stock market moved to the downside. The volatility index was at the 16.31 level on January 29, 26.34% higher over the period.

Last week I wrote, “The current level in the volatility index limits its downside potential. I continue to look for buying opportunities that offer 2:1 reward versus risk opportunities using the VIX futures or VIXY-related products like VIXY or VIXX. The risk of a correction in the stock market will continue to rise with the prices of the leading indices. While I will continue to trade the volatility instruments from the long side, I will employ tight stops to limit risk and allow for entry at lower levels. Small losses could lead to far more significant gains if a correction occurs, which would lift the prices of VIX-related products.” I continue to favor buying the VIX and VIX-related products on price weakness when the stock market makes new highs and taking profits during periods when volatility rises as we witnessed over the past week.

 

The dollar and digital currencies

The March dollar index futures contract continued to move higher since January 22. The contract posted a 0.54% gain since last week. The index settled at 97.819 on Wednesday. Interest rate differentials between the US currency and the euro continue to provide support for the dollar index. The dollar index traded to its lowest level since July 2019 when it fell to 96.02 on December 31, which is now the technical support level, while resistance is at 98.045, the November 29 high on the March futures. Continuous contract support stands at 95.365 with resistance at the 99.33 level. The dollar index moved to the bottom end of its range at the end of 2019, but it has been crawling higher in early 2020. Bullish and bearish factors are pulling the dollar in opposite directions. While interest rate differentials are bullish for the greenback, Brexit and trade agreements could weigh on the dollar index in the coming weeks. At the same time, the 2020 US election could inject uncertainty over the future of US policy into currency markets throughout most of this year. The currency markets have been calm since last week.

The euro currency was 0.71% lower against the dollar since January 22 on the March futures contract. Since the euro accounts for 59.5% of the dollar index, we could see some euro and pound-related volatility as the deadline for Brexit is at the end of this week. Over the past week, the pound fell 0.87%. Technical support is at the $1.30 level against the dollar. I continue to expect more volatility in currency markets in 2020 compared to 2019 based on the contentious nature of the November 2020 US Presidential election. However, the foreign exchange arena has been stable so far in 2020.

 

Bitcoin moved higher since January 22. Bitcoin was trading at the $9,377.33 level as of January 29, as it moved 8.25% higher than the value on January 22. Ethereum rose by 5.39% and was at $177.19 per token on Wednesday. The market cap of the entire asset class moved 7.26% lower as it underperformed the price action in Bitcoin. The number of tokens increased by 24 to 5075 tokens since January 22. The rise in the number of digital currencies continues to dilute the asset class. In late 2017 the overall market cap was at over $800 billion with a fraction of the number of tokens available today. On Wednesday, the market cap stood at around $257.100 billion. Open interest in the CME Bitcoin futures fell by 4.32% since last week. Bitcoin futures seem to be heading for a test of the $10,000 level. Open interest has been moving higher during rallies and lower during dips in the Bitcoin futures market, which tends to be a bullish sign. As I have been writing, an ETF product in 2020 could cause even more interest and higher prices for the digital currency asset class.

The Canadian dollar moved 0.38% lower since last week. Open interest in C$ futures fell by 1.64% over the period. The C$ is highly sensitive to commodity prices as Canada is a mineral-rich nation that also produces significant quantities of energy and agricultural products. I expected the currency to continue making higher lows against the US dollar, which is a pattern that has been in place since late 2018. The support level for the Canadian currency is at just above $0.75 against the US dollar on the active month March futures contract. Risk-off conditions have weighed on commodities prices and the C$.

The Australian dollar is also a commodity-based currency with a high degree of sensitivity to China’s economy. The A$ fell by 1.24% since the January 22 report as the progress on trade provided a boost for the Australian currency, but the fires presented economic challenges down under. Moreover, geographical proximity to China is making the Australian dollar sensitive to the Coronavirus.

The British pound posted a 0.87% loss since the previous report. The pound rose to just over $1.35 after the December 12 election, the highest level since May 2018, but pulled back to the $1.30 level. I continue to believe the pound could be heading for higher levels and would be a buyer against the dollar and the euro on any dips. The end of this week is the deadline for Brexit.

The Brazilian real fell against the US dollar since January 22, as it moved 0.94% lower. The real remains not far above its multiyear lows and in a long-term downtrend. The Brazilian currency is a critical factor when it comes to the commodities that the South American nation produces and exports to the world. Coffee, sugar, oranges, and a host of other markets are likely to move higher or lower with any significant changes in the direction of the Brazilian real over the coming weeks. Meanwhile, supply concerns over the Brazilian coffee and sugar crops caused the soft commodities to work to higher levels over the past months. Coffee pulled back from recent highs at around the $1.40 per pound level to the $1.00 level. Sugar recently rose to a higher high than in October 2018 when it traded to 14.90 cents per pound before pulling back.

 

Gold moved a bit higher over the past week, while silver and the platinum group metals declined. The bullish trend in the gold market over the past months has made it more sensitive to risk-off periods as market participants have sought safety in the precious metal.

 

Precious Metals

Gold posted a gain since January 22, but silver, platinum, palladium, and rhodium markets did not follow. After rallying over the past weeks, the platinum group metals took a breather over the past week.

Gold rose by 0.88% since last week, while silver was 1.91% lower. The price of February gold was just over the $1570 per ounce level on Wednesday, while March silver was just below $17.50 per ounce. February gold futures reached a peak at $1613.30 on January 8, and March silver climbed to $18.895 on the same day at the height of the Iranian missile attack on Iraqi airbases. Gold made a new multiyear high, but silver did not reach the September 2019 peak of $19.54 on the continuous futures contract during the rally earlier this month. Gold attracted some safe-haven buying over the past week as other markets experienced risk-off conditions.

The price of April platinum declined by 4.50% since last week was at $975.30 per ounce. The level of technical resistance is at $1046.70, the January 16 high on the April futures contract. Support in platinum is at $952.50 per ounce. Rhodium is a byproduct of platinum, and the price of the metal has been in a bull market since early 2016. The price of rhodium surged higher since the end of 2019. The midpoint price of the metal was at $9350 per ounce on January 29, unchanged from the level on January 22. Palladium fell by 5.71% since the previous report. The price traded to a new peak at $2427 on January 23 on the March futures contract and settled at the $2202.20 per ounce level on Wednesday. The risk of significant volatility in palladium rises with the price of the metal.

Open interest in the gold futures market moved 9.86% lower over the past week. The metric reached a new record peak of 799,541 contracts on January 15 and was close to that level on January 28. The metric moved only 0.45% lower in platinum while it was 10.31% lower in the palladium futures market. Silver open interest fell by 0.82% over the period. The bullish trend in the precious metals sector remained intact as of the close of business on January 29, but price variance is increasing.

The silver-gold ratio moved higher since January 22, as gold outperformed silver.

Source: CQG

The daily chart of the price of February gold divided by March silver futures shows that the ratio was at 89.92 on Wednesday, up 2.52 from the level on January 22. The long-term average for the price relationship is around the 55:1 level. The ratio remains at an elevated historical level. Silver remains historically cheap compared to gold, and over the past week, it got more inexpensive. The ratio had dipped to a low at 79.13 on September 4, 2019, on the active month contracts when silver moved to its most recent high. The ratio tends to move lower during bull market periods and higher when there is bearish price action in the markets.

We are long the gold mining stock ETF products GDX and GDXJ, which did not move all that much since the last report.

Gold moved up by 0.88%, while the GDX was 0.03% higher since January 22, and GDXJ fell by 0.75% since the previous report. The mining stocks tend to outperform gold on the upside and underperform during corrective periods as it provides a leveraged return. Over recent weeks, GDX and GDXJ underperformed gold in a departure from the normal price behavior. I continue to rate both ETFs as a hold. We are also long SLV, the silver ETF product, which posted a 1.81% loss since January 22, which marginally outperformed the percentage loss in the silver futures market. I continue to believe that both gold and silver prices will head higher over time. However, the potential for periodic corrections will rise with prices, as we witnessed in silver over the past week.

Platinum and palladium prices declined since January 22. March Palladium was trading at a premium over January platinum with the differential at the $1226.90 per ounce level on Wednesday, which narrowed from the record level on January 22. April platinum was trading at a $595.10 discount to February gold at the settlement prices on January 22, which widened since the previous report as platinum underperformed gold since last week.

The price of rhodium, which does not trade on the futures market was at $9,350 per ounce on Wednesday. Rhodium is a byproduct of platinum production. The low price of platinum has caused a decline in output in South African mines, creating a shortage in the rhodium market. Rhodium is part of the reason that platinum is finally making a move on the upside. Some analysts projected that the price of the rare metal was heading for the $10,000 per ounce level, and the price action is taking the metal to that level. Markets rarely move in a straight line, and spreads are likely to widen the higher rhodium prices climb. The spread between the bid and offer rose to $900 per ounce at the current price level. Rhodium has been then best-performing precious metal since 2016. The price has moved higher from a low at $575 per ounce. Rhodium vaulted higher during the first three weeks of 2020 but was unchanged since January 22.

We are long the PPLT platinum ETF product, which moved 3.65% lower since January 22 as it outperformed the price action in the futures. Platinum continues to offer the most attractive value proposition in the precious metals sector even after the recent rally. Platinum needs to make a move and take out the $1200 resistance level to break to the upside on a technical basis.

We are long the ETFMG Prime Junior Silver ETF (SILJ) product at $10.36 per share to diversify risk. SILJ was at $10.98 on January 29, down 1.61% since the last report as mining shares outperformed the silver futures market.

I have been writing, “I continue to be bullish on the prospects for all of the precious metals. The period of consolidation and correction continued over the past week and could go on for a time. I believe that any price weakness in the sector will create excellent buying opportunities.” My outlook has not changed over the past week. Low interest rates and increased interest in precious metals should contain any corrections. Risk will continue to rise with prices, but any pullbacks in prices could be golden buying opportunities. The case for higher highs in gold and silver remains compelling. The risk-off conditions in other markets over the past week drove some buying into the gold market, which continues to consolidate below their most recent peaks.

 

Energy Commodities

Crude oil, oil products, and even the distillate crack spreads posted losses since last week as the bearish sentiment continued to hang over the oil patch. Natural gas slipped low and below the $1.90 per MMBtu level. While ethanol rose, coal edged lower since January 22. Crude oil is trending towards the bottom end of its trading range for the past year, which is just above the $50 per barrel level. Natural gas is threatening to test the March 2016 low at $1.611 per MMBtu after trading to its lowest level in January since 1999. The energy sector of the commodities market continued to decline over the past week.

March NYMEX crude oil futures fell 6.01% since the previous report. March Brent futures moved 5.30% lower since January 22, and the March contract prepares to roll to April this Friday. March gasoline was 3.30% lower, but the processing spread in March posted a 12% gain since January 22 as gasoline outperformed the price of crude oil over the period. March heating oil futures moved 5.57% lower since the previous report, and the heating oil crack spread fell 4.97% since the last report.

Technical resistance in the March NYMEX crude oil futures contract is at $59.77 per barrel level, the high from January 21, with support close by at the $50.18 level, the low from October 3 on the March futures contract. The energy commodity rallied early in January after tensions between the US and Iran reached a boiling point but ran out of steam on the upside and fell to the lowest price level since early November over the past week. Crude oil open interest rose by 1.17% over the period. The price of crude oil will be highly sensitive to the news cycle. Any hostilities between the US and Iran or Iran and Saudi Arabia could cause the price to return to levels above $60 per barrel. However, any signs of negotiations and movement towards a nuclear nonproliferation agreement could push the price of NYMEX futures lower. I expect lots of price variance in the oil futures arena in the coming weeks, be careful when approaching the energy commodity when it comes to any risk positions. While the situation in the Middle East has calmed since January 8, the odds do not favor peace breaking out in the world’s most turbulent political region anytime soon.

I continue to expect oil-related equities to outperform the commodity in 2020, but we have not seen that as of yet. Last year, the underperformance on a percentage basis should limit the downside potential for ETFs like the XLE, VDE, and OIH as well as for many of the stocks that make up those products. The dividend yields in the oil patch continue to be attractive. The energy equities did not show any signs of a recovery over the past week. I would be a buyer of energy-related equities on price weakness to add to long positions. The recent move in Apache Corp (APA), which rallied by around 30% after an oil discovery in Suriname is an example of what a piece of good news can do to a company in this sector that has lagged the stock market as well as the oil market from October through January 8. I believe the current price levels and lack of appreciation in oil stocks over the past months limit the downside potential, even if the price of NYMEX crude oil futures falls to the $50 per barrel level.

As I wrote last week, “Iran poses the most significant threat to oil supplies from the Middle East. Even though the tensions between the US and Iranians seem to have calmed since the January 8 missile attack on Iraqi airbases, the rhetoric between Teheran and Washington remains a clear and present danger to stability in the part of the world that is home to half the world’s crude oil supplies.” All has been quiet on the Middle Eastern front, which has allowed the price of oil to continue to decline over the past week.

The 2020 primary season for the Democrats in the US begins next week with the Iowa caucuses on February 3. The prospects for changes in US energy policy will hinge on the outcome of the November Presidential election. The US is currently the world’s leading producer of both crude oil and natural gas. OPEC is hoping that the US production of crude oil begins to decline in 2021. The oil cartel will review its current production cut in early March. With the price of the energy commodity dropping, OPEC is likely to keep the cuts in place throughout 2020. We could see the price of oil and gas begin to move with the political polls in the US later this year once the Democrats decide on a challenger to President Trump and adopt the “Green New Deal” as part of the platform for the contest.

The spread between Brent and WTI crude oil futures in March edged higher to the $6.55 per barrel level for Brent, which was only six cents above the level on January 22. The spread moved to a high of $6.70 on January 8 as Iranian missiles attacked Iraqi airbases that house US troops. The Brent premium tends to move higher during bullish periods in the oil market and vice versa. The Brent premium traded as high as $11.59 per barrel in late May, but the March contract reached a high at a lower level at $7.11 on the high in late April when it comes to the spread. The spread found what looks like a significant bottom at $3.93 on September 3. Tensions in the Middle East should keep a bid under the price of Brent crude oil and the spread between the two benchmarks. The critical level on the downside in NYMEX crude oil remains at $50 per barrel and $66.60 on the upside. After testing the upside and falling just 95 cents short of the 2019 high on January 8, crude oil is now approaching the downside support level at $50 per barrel.

US daily production remained at a record high of 13 million barrels per day as of January 17, according to the Energy Information Administration. As of January 17, the API reported a rise of 1.57 million barrels of crude oil stockpiles, while the EIA said they fell by 400,000 barrels for the same week. The API reported an increase of 4.50 million barrels of gasoline stocks and said distillate inventories rose by 3.50 million barrels as of January 17. The EIA reported an increase in gasoline stocks of 1.70 million barrels and a decline in distillates of 1.20 million barrels. Rig counts, as reported by Baker Hughes, rose by three last week to 676 rigs in operations as of January 24, which is 186 below the level operating last year at this time. The decline in the number of rigs with daily output at 13 million barrels per day level is a sign of the efficiency of the oil business in the US, which is a significant factor for the oil market. The inventory data from both the API and EIA was mostly bearish for the price of oil as product stocks continued to increase.

OIH and VLO shares fell since January 14. OIH fell by 8.82%, which kept pace with the action in NYMEX crude oil over the period. VLO moved 3.53% lower since January 22 as crack spreads declined. Strength in gasoline crack spreads over the coming weeks and months would be supportive of the price of VLO stock. We are long two units of the OIH ETF product at an average price of around $13.40 per share. OIH was trading at $11.06 per share level on Wednesday. I believe the ETF that reflects the price of oil service company shares remains too low at its current price level. I will consider adding to the position on further price weakness. Oil services stocks continue to underperform the other oil-related equities. I will wait before adding any more shares to the position in OIH. I believe that crude oil-related equities are far too inexpensive at current levels and could experience a rebound as sector rotation in the strong stock market occurs. As I mentioned in the report over the past weeks, “I have been trading the Direxion Daily Energy Bull 3X Shares (ERX) from the long side of the market. ERX is a triple-leveraged product, so time and price stops are significant for managing risk. ERX holds leveraged positions in the leading energy companies.”

ERX was 14.11% lower since last week’s report. I continue to use tight stops on long positions in the ERX product. Oil-related equities moved lower over the past week in a continuation of the 2019 trend. I was on the sidelines over the past week but will look to dip a toe into the oil-related stocks on the long side this week on price weakness with a tight stop.

March natural gas futures were at $1.865 on January 29, which was 2.15% lower than on January 22. The futures contract traded to a high of $2.778 on November 5. Natural gas traded at its lowest price since 2016, when it hit $1.83 on January 21 on the February contract. The now active month March contract fell to a low of $1.826 on the same day.

Natural gas followed through on the downside after putting in a bearish reversal trading pattern on the weekly chart during the week of January 13. A recovery in natural gas is overdue, but there are only around nine weeks left until the 2020 injection season begins in late March, and the price is already reflecting injection season trading conditions.

Source: EIA

The EIA reported a withdrawal of 92 bcf, bringing the total inventories to 2.947 tcf as of January 17. Stocks were 23.2% above last year’s level and 9.3% above the five-year average for this time of the year. Natural gas stocks fell to a low of 1.107 tcf in March 2019. With around nine weeks to go until inventories begin to climb, we would need to see an average withdrawal of 204.45 bcf to reach last year’s low in stockpiles, which is more than unlikely. This week the consensus expectations are that the EIA will report a withdrawal of 145 bcf from storage for the week ending on January 24. The EIA will release its next report on Thursday, January 30, 2020.

Open interest fell by 3.35% in natural gas over the past week. However, the metric had been rising over the past weeks as the price declined. The price action likely attracted trend-following and technical shorts to the natural gas futures market over the past weeks. Technical resistance is at $2.204 per MMBtu level on the March futures contract with support at $1.826. The $1.611 per MMBtu level from March 2016 stands as technical support on the continuous futures contract. Price momentum and relative strength on the daily chart are in oversold conditions. The price action suggests that sellers are lurking above looking to take advantage of any attempts at a price recovery.

The GASL ETF product was trading at $5.05 per share on January 29, 22.90% lower than on January 22, after losing over 26.5% last week. I have been on the sidelines in GASL but may consider dipping a toe back in on the long side at below the $5 per share level with a tight stop.

February ethanol prices moved 2.01% higher over the past week. Open interest in the thinly traded ethanol futures market moved 7.95% lower over the past week. With only 556 contracts of long and short positions, the biofuel market is untradeable. The KOL ETF product fell 7.02% compared to its price on January 22, but the price of April coal futures in Rotterdam fell by only 0.40% over the past week.

Late Tuesday, the API reported a 4.27-million-barrel decline in crude oil inventories for the week ending on January 24. Gasoline stocks rose by 3.27 million barrels, while distillate stockpiles fell 141,000 barrels over the period. The EIA reported a rise of 3.50 million barrels of crude oil inventories on Wednesday morning. They said that gasoline stocks rose by 1.20 million, while distillate inventories fell by 1.30 million barrels as of the end of last week. The API and EIA inventory reports were mostly bearish for the price of the energy commodity as stockpiles of oil and oil products continue to rise over the past months.

The potential for high volatility in the oil futures market has increased in 2020. Without any fresh news from the Middle East, the price is likely to follow inventory data over the coming weeks.

In natural gas, the price action continues to be bearish for this time of the year.

Source: NYMEX/RMB

As the forward curve over the coming months shows, the price at $1.865 in March on the settlement price on January 29, was 4.10 cents per MMBtu lower than on January 22. If the current trend continues, we could see a test of the $1.611 per MMBtu low. Meanwhile, the oversold condition of the market presents a chance for a technical recovery rally. We could see volatility increase over the coming weeks as the March-April spread becomes active. Since March-April represents the time of the year when withdrawals from storage end and injections begin, the spread has the nickname as “the widow maker” because of its history of extreme price volatility. The spread was trading at a 4.40 cents premium for April on January 29.

Keep in mind that price action tends to fill the gaps created by the island reversals on the daily and weekly charts. The top end of the gaps is an eventual target for the price action, but it could be quite some time before prices reach those levels. Time is not on the side of natural gas bulls. As I wrote over the past weeks, “The longer the price takes to recover, the lower the chances of any significant move to the upside. Sellers are likely to take advantage of any price recovery over the coming days and weeks. The rise in open interest could be a sign of increasing short positions, which could lead bears to push the price of the energy commodity lower as the winter season has not come with below-average temperatures across the US.” The price action over the past week continued to be bearish.

I have been tracking the price action in BG shares. BG is a significant producer of ethanol in Brazil. Since January 22, the price of BG shares moved 8.64% lower to $51.05 per share on January 29. We are working a stop on close in BG at $49.49 per share on the downside. Our average cost of the shares is at $54.82. I will continue to post weekly updates on this position.

I have been taking profits quickly and stopping losses looking for a 1:2 risk-reward ratio on forays into the crude oil futures market. UCO and SCO products can be helpful for those who do not trade futures. In natural gas, UGAZ and DGAZ have attracted lots of volume over the past week as the price of natural gas fell to new lows. I expect volatility to continue in both energy commodities.

We are holding a long position in PBR, Petroleo Brasileiro SA. We are long two units at an average price of $15.16 per share. PBR shares were 2.71% lower over the past two weeks at $14.37 per share. I will add another unit at a much lower price to lower the average cost of the long position.

The trend in the oil market remains lower as it approaches the area of critical support at the $50 per barrel level. Natural gas continues to experience selling pressure with more sellers lurking above the market. However, Iran continues to be a danger to supplies in the Middle East and could cause buying to come back to the oil market in the blink of an eye. In natural gas, the market is ripe for a recovery, but the timing is a problem as we are halfway through an overall warmer-than-average winter season in the US. I believe the odds of increased price volatility in both oil and gas markets remain high over the coming weeks. The trend in both energy commodities remains lower, for now.

 

Grains                                                             

Grain price moved lower since the previous report with losses in wheat, soybeans, and corn futures markets. Soybeans have been the most sensitive to the Chinese economy, so the outbreak of Coronavirus weighed on the oilseed futures. Corn prices slipped lower since January 22. While wheat declined, the price remains the strongest of the grains. The USDA will release its February World Agricultural Supply and Demand Estimates report on February 11 at noon EST.

 

March soybean futures declined by 2.27% over the past week and was at $8.93 per bushel on January 29. Open interest in the soybean futures market rose by 5.89% since last week. Price momentum and relative strength indicators on the daily chart fell further into oversold territory on January 29.

The March synthetic soybean crush spread moved a bit higher over the past week and was at the $1.0525 per bushel level on January 29, up 0.50 cents since January 22. The crush spread is a real-time indicator of demand for soybean meal and oil. Therefore, price trends in the crush spreads can cause buying or selling in the raw oilseeds at times. Any significant moves in the crush spread are likely to translate into price movement in the soybean futures. The move higher since mid-January could be supportive of soybean prices as it declined below the $9 per bushel level on the March futures contract.

March corn was trading at $3.8425 per bushel on January 29, which was 1.16% lower on the week. Open interest in the corn futures market fell by 0.08% since January 21. Technical metrics were one either side of neutral territory in the corn futures market as of Wednesday. The price of March ethanol futures rose by 2.01% since the previous report despite weakness in energy and corn futures. Ethanol likely moved higher as President Trump signed the USMCA agreement on Wednesday. March ethanol futures were at $1.3700 per gallon on January 29. The spread between March gasoline and ethanol futures narrowed to 17.08 cents per gallon on January 29, down 7.96 cents since last week.

 

March CBOT wheat futures were 2.68% lower since last week. The March futures were trading $5.6225 level on January 29. Open interest rose by 0.42% over the past week in CBOT wheat futures. Technical metrics crossed lower and were heading for oversold territory on Wednesday. Wheat traded to a high of $5.925 on January 22, just one-half cent below the technical resistance on the longer-term charts.

As of Wednesday, the KCBT-CBOT spread in March was trading at an 90.25 cents per bushel discount with KCBT lower than CBOT wheat futures in the March contracts. The spread widened by 5.00 cents since January 22. The long-term norm for the spread is a 20-30 cents premium for the Kansas City hard red winter wheat over the CBOT soft red winter wheat. The CBOT price reflects the world wheat price, and it is the most liquid wheat futures contract. The KCBT price is often a benchmark for bread manufacturers in the US who purchase the grain from suppliers. As I have been writing, “at a discount to CBOT, consumers are not hedging their requirements for KCBT, which is a sign that they continue to buy on a hand-to-mouth basis.”  The spread continues to be at a level that is bearish for the wheat market. Any sudden problem in the wheat market that causes consumer hedging to increase could result in a dramatic change in the spread between the hard and soft winter wheat futures contracts.

I will continue to build long core positions in futures and the CORN, WEAT, and SOYB ETF products over the coming weeks on price weakness. The trade deal resulting in a de-escalation of the trade war is supportive of the prices of grains. The outbreak of the Coronavirus has been a bearish factor for the grain markets. The uncertainty of the 2020 crop year could add volatility to the market as the spring planting season gets underway. I would be a scale-down buyer of beans, corn, and wheat on price weakness.

The long-term average for the corn-soybean spread is around the 2.4 bushels of corn value in each bushel of soybean value level. When the spread is higher, farmers tend to plant more beans than corn, and when it is lower than the 2.4:1 average, they tend to plant more corn than soybeans on their acreage.  Farmers are now watching the spread to determine how best to utilize their acreage during the upcoming 2020 planting season.

Source: CQG

The chart of the November 2020 soybean futures divided by December 2020 corn futures shows that the ratio moved higher over the past week and was at the 2.35040:1 level on January 29, down 0.0216 since last week. The ratio is below the long-term norm. The beginning of the year is an excellent time to put the corn-bean ratio on your radar as any significant moves in the spread could provide clues about the path of least resistance for the prices of the grain and the oilseed futures markets. On January 29, the spread was at a level that provides a clue about farmers planting behavior in the coming months. If it continues to decline, farmers would likely increase corn crops at the expense of soybeans when it comes to the planting season in the early spring.

The uncertainty of the 2020 crop year is likely to add price variance to the grain futures markets over the coming weeks. I will look to build long positions during periods of price weakness. The deal with China should limit any downside until the 2020 growing season during the summer months. However, Coronavirus has weighed on the prices over the past week. Lower price levels could create a buying opportunity in the agricultural products that feed the world for the coming weeks and months.

 

Copper, Metals, and Minerals

It was a rough week for copper and all base metals as industrial commodities prices posted losses. Since China is the demand side of the equation for the raw materials that are the building blocks for infrastructure, the uncertainty created by the Coronavirus is weighing on the prospects for an economic rebound in China. In the base metals sector, losses ranged from over 3% over almost 8% over the past week. Iron ore and the Baltic Dry Index declined on the back of the virus in China. Uranium and lumber prices posted marginal gains over the period.

Copper fell 7.63% on COMEX, while the red metal posted a 7.10% loss on the LME since the last report. Open interest in the COMEX futures market moved 11.83% lower since January 21 as market participants closed long positions as the price declined. March copper was trading at $2.5540 per pound level on Wednesday. Copper is one of the leading barometers when it comes to the trade war between the US and China. The “phase one” agreement pushed the price of the red metal higher and above the $2.80 level before the recent selling. The outbreak of Coronavirus has weighed on Chinese economic growth. At the same time, the Lunar New Year holiday and vacations in China led to lower prices. Copper is a leading indicator in the base metals sector. The latest report on stockpiles at the LME continued to weigh on the price of the nonferrous metal.

Since the previous report, copper inventories rose significantly on the LME, but stocks edged lower in COMEX warehouses.

The LME lead price moved lower by 3.31% since January 21. The rise in demand for electric automobiles around the world is supportive of lead in the long term as the metal is a requirement for batteries. Shares of Tesla exploded to the upside over the past weeks, which is a sign of rising demand for electric automobiles. The price of nickel fell by 7.34% over the past week. The export ban in Indonesia began on January 1, 2020 but has had little impact on the price of the nonferrous metal. Tin fell 7.78% since the previous report. The illiquid metal fell below the $16,500 per ton level. Aluminum was 3.22% lower since the last report. The price of zinc was down 7.36% since January 21. Zinc was just above the $2250 level on January 28. Base metals will continue to be highly sensitive to any news and developments on trade between the US and China. The path of least resistance of the US dollar could also impact prices. The current level of global interest rates is supportive of the prices of nonferrous metals, but the Coronavirus is a negative factor as it weighs on Chinese economic growth.

March lumber futures were at the $428.00 level, up only 0.66% since the previous report. Interest rates in the US will influence the price of lumber. The US Fed paused at the December and January meetings. Lumber is a requirement for new home construction, which is a function of the level of interest rates. Low rates are likely to support the price of wood in 2020. The price of uranium for March delivery was up just 0.20% at $24.50 per pound. The volatile Baltic Dry Index fell another 21.77% since January 22 to the 539 level as shipping demand tends to decline during the winter months in the northern hemisphere. June iron ore futures fell 8.88% compared to the price on January 22. Open interest in the thinly traded lumber futures market increased by 1.02% over the period.

LME copper inventories continued to rise and were 13.73% higher to 185,300 metric tons since last week after a significant increase the previous week. COMEX copper stocks fell by 2.23% from January 21 to 33,627 tons. Lead stockpiles on the LME were up 0.83%, while aluminum stocks were 5.09% lower. Aluminum stocks declined to the 1,242,425-ton level. Zinc stocks moved 1.23% lower since the last report. Tin inventories moved 2.55% lower since January 21 to 6,870 tons. Nickel inventories were 3.22% higher compared to the level on January 21. The export ban from Indonesia took effect on January 1, so consumers likely increased inventories over the past month.

The dollar, US interest rates, trade, and the overall direction of the global economy are the primary factors when it comes to base metal prices. Trade and the Chinese economy are bound to have the most significant impact on the path of least resistance for the nonferrous metals. The trade deal provided some support for the sector but concerns over the virus took precedence over trade driving prices lower over the past week. A risk-off period in markets is not a supportive factor for industrial commodity prices.

We own two units of Energy Fuels Inc. (UUUU), a US producer of uranium and vanadium, at an average of $2.55 per share. We are working a stop at $1.19 and have an initial profit target at $6 per share. There is a double bottom on the long-term chart at the $1.29 level. I am giving this position plenty of room and plenty of time. If the shares continue to fall, I will add another one and possibly two units to this trade to average down the price on the long position. UUUU was trading at $1.47 per share on Wednesday, down 19 cents over the past week. Low uranium prices continue to weigh on the share prices of most producers.

We own the January 2021 $15 call on X shares at $3.30 per share, and it was trading at 55 cents on January 29, down 13 cents since last week after US Steel issued a warning on earnings in December. I believe this option is an inexpensive way to hold a long-term position in X shares at a low level for the next twelve months. The details for the call option are here:

https://finance.yahoo.com/quote/X210115C00015000?p=X210115C00015000

 

US Steel shares were at $9.32 per share and moved 6.52% lower since January 22 after the company’s earnings warning.

We own two units of FCX shares at an average of $10.56. The stock was trading at $11.29 on Wednesday, $1.03 lower since the previous report. I will maintain a small long position in FCX shares.

The base metals and other industrial commodities are likely to move higher and lower based on the news cycle on trade between the US and China over the coming months. However, if the Coronavirus continues to spread, it will cause concerns over the Chinese economy. China is the demand side of the fundamental equation for the raw materials in the industrial sector.

I remain cautiously bullish on the prospects for base metals and industrial commodities prices in 2020, but this is a time for caution. I would be a buyer on price weakness, leaving plenty of room to add at lower prices in all of the industrial commodities.

 

Animal Proteins

Animal protein futures prices moved appreciably lower across the board since last week. Cattle and hog prices fell in sympathy with agricultural commodities prices on the back of the virus in China. The USDA will release its February WASDE report on February 11, which will provide the latest data on supply and demand for beef and pork markets.

February live cattle futures have rolled to April and were at $1.20225 per pound level down 5.17% from January 22. Technical resistance is at $1.28550 and $1.3000 per pound. Technical support stands at around $1.20000 per pound level, as the market fell sharply. Price momentum and relative strength indicators were at oversold readings on Wednesday. Open interest in the live cattle futures market moved 7.58% lower since the last report. The total number of open long and short positions in the live cattle futures market had been moving higher since mid-October, but the price is taking the elevator lower causing longs to scramble for an exit to risk positions over the recent week.

March feeder cattle futures underperformed live cattle as they fell by 5.65% since last week. March feeder cattle futures were trading at the $1.34975 per pound level with support at $1.3000 and resistance at $1.47750 per pound. Open interest in feeder cattle futures fell by 0.02% since last week. While live cattle futures have a delivery mechanism, feeder cattle are a cash-settled futures contract. Sometimes live cattle prices lead feeder cattle prices, while at others, the opposite occurs.

Lean hog futures underperformed the cattle futures since the previous report. The active month April lean hogs were at 68.825 cents on January 29, which was 7.43% lower from the level on January 22. Price momentum and the relative strength index were at oversold readings on Wednesday. Support is at 68.450 cents with technical resistance on the April futures contract at 76.525 cents per pound level, the January 8 high.

The forward curve in live cattle is in backwardation from February 2020 until August 2020, and the market shifts to contango from August 2020 through April 2021. Backwardation returns until June 2021. The Feeder cattle forward curve is in backwardation from January 2020 through March 2020, and then there is contango from March 2020 through November 2020.

In the lean hog futures arena, there is contango from February 2019 until July 2020. From July 2020 through December 2020, the curve is in backwardation, but contango returns from December 2020 through June 2021. The forward curves reflect the seasonal trading patterns in the meat markets. In lean hogs, the shortage in China could impact the forward curve over the coming weeks and months now that the trade war de-escalated. China needs US pork exports given the current situation, and we could see purchases as a result of Chinese concessions as the nation continues to suffer from a severe shortage of pork. The hog market continues to wait for more progress on trade and the potential for Chinese buying of US pork. The Coronavirus could increase demand for pork from China as the country is banning the consumption of other meat products, which could be the source of the virus. However, the kneejerk reaction to the virus has caused selling in the lean hog futures arena.

The long-term average for the spread between live cattle and lean hogs is around 1.4 pounds of pork for each pound of beef. Over the past week, the spread between the two in the April futures contracts moved higher as the price of live cattle outperformed lean hogs on a percentage basis.

Source: CQG

Based on settlement prices, the spread was at 1.74680:1 compared to 1.70510:1 in the previous report. The spread increased by 4.17 cents as live cattle became more expensive compared to lean hogs. The spread moved away from the historical norm on the April futures contracts.

We are entering the final half of the winter in the northern hemisphere, which is still the offseason for demand in the US. Production in Argentina and Brazil and any moves in the currency markets for the peso or the real could impact the prices of beef and pork. A rise in the Brazilian real and Argentine peso could provide support for meat prices. Lower values for the South American currencies would likely weigh on futures prices as they cause production costs to decline. Grain prices over the coming weeks could also impact the path of least direction for the prices of meat futures. Lower grain prices over the past week make animal feed prices lower and weigh on meat prices. As we move towards the 2020 peak grilling season in the US that begins in late May, the focus will shift towards increased consumption over the coming weeks and months.

I believe that lower cattle and hog futures prices create scale-down buying opportunities. The ban on alternative meats in China could bolster the demand for US pork exports to the world’s most populous nation, given the shortage of the meat because of the African Swine Fever in 2019.

 

Soft Commodities

The prices of four of the five soft commodities that trade in the futures market on the Intercontinental Exchange moved lower over the past week. FCOJ posted a marginal gain over the period. Coffee futures continued to lead the way on the downside, followed by cocoa. Sugar and cotton prices fell. The Brazilian real continued to trade towards its multiyear low.

March sugar futures fell 1.16% since January 22, as the price of the sweet commodity was around the 14.49 cents per pound level. Technical resistance is at 14.90 cents with support at 14.05 cents. Sugar made a new high at 14.90 cents on January 23 but failed to carry through on the upside and challenge the 15 cents per pound level. Nearby sugar futures traded to a low at 11.74 cents on September 12, which is a critical level of longer-term support. The value of the January Brazilian real against the US dollar slipped again over the past week and was at the $0.2371 level against the US dollar on the February contract, down 0.94% over the period. The Brazilian currency remains near its multiyear lows, which is a factor for the price of sugar and other commodities where Brazil is a leading producer and exporter. The currency remained above the critical support level at $0.23040 since 2015, during the extended period of weakness. Anyone with a risk position in sugar should keep an eye on the price action in the Brazilian real. Price momentum and relative strength on the daily sugar chart were crossing lower in overbought territory as of January 29 and drifting towards neutral readings. The metrics on the monthly chart crossed higher from a neutral condition and are headed for overbought territory. Sugar made a new high above its 2019 peak, and the next significant target on the upside is the early 2018 high at 15.49 cents per pound.  Open interest in sugar futures was 4.51% higher since last week. Open interest had been rising with the price, which was a bullish technical factor for the sweet commodity.

March coffee futures continued to plunge over the past week as they fell 8.06% since January 22. March futures were trading at the $1.0205 per pound level. The first level to watch on the downside is 95.80 cents. Below there, support is at around 92.20 cents on the continuous futures contract. Resistance is now at $1.1370 on the nearby contract. I continue to favor coffee on the long side, but coffee can be a highly volatile commodity in the futures market. Our stop on the long position in JO is at $27.99; we are long two units of the ETN at an average price at $34.92 per share. JO was trading at $33.00 on Wednesday. Open interest in the coffee futures market rose by 3.22% since last week. I am holding only a small long core position in the coffee futures market and the JO ETN product after taking profits scale-up in late 2019. Volatility has increased in the coffee futures market. Supply concerns over Brazilian production in the off-year for crops had been supportive of the price of the soft commodity from mid-October through December. The ICO has warned that a deficit between supply and demand could be in the cards for the market because of the 2019/2020 crop year. Coffee had made higher lows since reaching 86.35 cents in mid-April. The ultimate target is the November 2016, high at $1.76 per pound. Coffee had moved into overbought territory on the short-term chart and crossed lower. Price momentum and relative strength continued to display deeply oversold readings on Wednesday. On the monthly and quarterly charts, the price action is threatening to turn bearish again as the metrics are crossing lower. As I wrote in the previous report, “The risk rises with the price in the volatile coffee futures market. We should expect wide intraday trading ranges in the coffee futures market.” I began rebuilding a long position over the past week and will add on further price weakness leaving plenty of room for lower prices.

The price of cocoa futures ran out of upside steam over the past week. On Wednesday, March cocoa futures were at the $2727 per ton level, 2.71% lower than on January 21. Open interest rose by 4.84%. Relative strength and price momentum crossed lower and were in neutral territory on January 29. The price of cocoa futures rose to a new peak and the highest price since May 2018 at $2859 per ton on the March contract on January 22. We are long the NIB ETN product at $25.76. NIB closed at $31.82 on Wednesday, January 29. As the Ivory Coast and Ghana attempt to institute a minimum $400 per ton premium for their exports of cocoa beans, it should provide support to the cocoa market on price dips. The level to watch on the upside above the recent high is at $2914 per ton. On the downside, short-term technical support stands at $2467 per ton.

March cotton futures fell 1.50% lower over the past week on the back over concerns about the Chinese economy. On August 26, the price of nearby futures fell to a low at 56.59 cents, less than one cent above the critical 2016 low at 55.66 cents per pound. March cotton was trading at 70.06 cents on January 29. On the downside, support is at 65, 61.73, 56.19, and 55.66 cents per pound. Open interest in the cotton futures market rose by 2.94% since January 21. Price momentum and relative strength metrics were at neutral readings on Wednesday. The “phase one” trade agreement between the US and China was a bullish factor for the price of the fiber futures, but Coronavirus cuts the other way. Cotton is coming into a time of the year when the price tends to peak. However, news out of China will determine the path of the fiber futures over the coming weeks.

March FCOJ edged a touch higher since last week. On Wednesday, the price of March futures was trading around 97.10 cents per pound. FCOJ nearby futures moved 0.83% higher over the past week. Support is at the recent low of 94.25 cents level. Technical resistance is at $1.00 per pound. Open interest rose by 3.01% since January 21. The Brazilian currency could support the price of FCOJ futures if it posts gains against the US dollar. $1 per pound could become a critical pivot point for the OJ futures market if it decides to rebound.  FCOJ put in a bullish reversal on January 22 on the daily chart, but so far, it failed to follow through appreciably on the upside.

The health situation in China is having a significant impact on all agricultural commodity prices, and soft commodities are no exception. After recent rallies in sugar, coffee, cocoa, and cotton, prices are pulling back. The low level of the Brazilian real continues to weigh on sugar, coffee, and FCOJ prices.

 

A final note

Risk-off periods in markets are a time when the prices of most assets fall. In a sign of strength, gold continues to consolidate under its most recent high at over $1600 per ounce from January 8. We could see lots of volatility in stocks, bonds, and commodities markets over the coming week if concerns over the Coronavirus intensify.

It appears that the US Senate will acquit US President Donald Trump of the charges stated in the two articles of impeachment. In the aftermath of the acquittal, legislators in Washington will get back to no business, as usual, no pun intended. However, the 2020 election will kick into a higher gear over the coming week as the primary season opens with the Iowa caucuses. In the UK, the deadline for Brexit with a deal is this Friday. After a prolonged period of negotiations and political wrangling, the British will leave the EU, setting the stage for independence and a paradigm when it comes to globalism in Europe.

Keep stops tight in the current environment. Risk-off periods can defy fundamental and technical factors. An increase in volatility will present trading opportunities, but only approach markets with a plan when it comes to risk and reward.

 

 

 

Until next week,

 

Andy Hecht

 

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.   

 

 

 

 

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