• The President pushes for negative interest rates, but the Fed pushes back
  • Precious metals stable with gains across the board
  • The energy sector slips lower with losses in Brent, oil products, crack spreads, natural gas, and coal. WTI posts a gain
  • Gains weak in post-WASDE trading
  • Stability in copper and base metals, the Baltic Dry Index declines by 24.7% in a sign of global economic weakness


Summary and highlights:

On Thursday, May 7, the stock market moved higher with the S&P 500 up 1.15%, the DJIA 0.89% higher, and the NASDAQ posting a 1.41% gain. The small-cap Russell 2000 was the leader as it rose 1.58%. June US Treasury bonds were 2-13 higher to 181-04, and the dollar index was at 99.906, down 0.23 on the day. Grains were higher across the board with soybeans leading the way with an 11.75 cents per bushel gain. July wheat was five cents higher, and corn gained 3.75 cents per bushel. June crude oil fell 44 cents per barrel to $23.55 after reaching a new short-term high of $26.74. Gasoline outperformed crude oil, sending the gasoline crack spread higher, while heating oil posted a gain, and the distillate crack was marginally higher. Precious metals all moved to the upside. Gold was $37.30 higher, silver gained 57.5 cents, platinum moved $16.60 to the upside, and palladium added $76.80 per ounce on the June contract. Copper futures were 3.35 cents higher to $2.3805 per pound. Live and feeder cattle were substantially higher in a continuation of the recovery rally. Lean hogs corrected lower after the recent gains. Coffee edged lower, FCOJ was unchanged, but cotton, sugar, cocoa, and lumber futures all moved to the upside. Bitcoin closed at $10,010 per token, up $670 after Paul Tudor Jones said he was buying the cryptocurrency. The markets were anxiously awaiting Friday’s employment report for April, which will be the worst in history.

On Friday, the US Labor Department reported the loss of 20.5 million jobs in April sending the unemployment rate to 14.7%. The report was the worst in history since the Labor Department began tracking data in 1939. In a sign that the economic fallout from the pandemic is impacted the people who can least afford to lose jobs, average hourly wages rose by 7.9%. Approximately 35% of low-earning workers lost job. Despite the frightening data, stocks rose on Friday as stimulus continues to provide stability to markets. The DJIA was 1.91% higher, the S&P 500 rose 1.69%, and the tech-heavy NASDAQ moved 1.58% to the upside. The Russell 2000 continued to storm higher with a 3.64% gain on the final session of the week. The June long bond futures were 1-17 lower to the 179-19 level. The June dollar index settled just below the 100 level at 99.769, down 0.137 on the day. July corn and soybean futures posted marginal gains, while wheat futures edged lower. Crude oil and oil products rallied, but natural gas fell back towards the $1.80 per MMBtu level. Ethanol was 2.3 cents higher on the June contract to $1.104 per gallon. Gold edged lower, silver higher, and platinum was modestly higher. Palladium continued to retreat, but the loss on the session was small. Copper closed above the $2.40 level on the July contract for the first time since mid-March. June live cattle were a touch higher, feeder cattle in August were down 1.2 cents, and June lean hog futures were down 2.2 cents on the session to 61.7 cents per pound. Sugar posted a marginal loss, but cotton, FCOG, coffee, cocoa, and lumber prices all moved higher. Bitcoin moved over the $10,000 level to $10,030 per token, up $20 on the session.

On Monday, stocks turned in a mixed performance. The S&P 500 rose only 0.01% as the NASDAQ was 0.78% higher. The DJIA fell 0.45%, with the Russell 2000 slipping 0.63%. The June long bond futures moved 0-24 lower to 178-30. The June dollar index was back over the 100 level, settling at 100.270. The grain markets were waiting for Tuesday’s WASDE report from the USDA during the first session of the week. Corn fell 0.75 cents, soybeans were 4.5 cents higher, and wheat was 4.75 cents lower on the July futures contracts. Crude oil slipped despite Saudi Arabia’s announcement that it would cut production by another one million barrels per day starting on June 1. Other producers in the Middle
East expressed their intentions to reduce output, given the demand situation in the energy commodity. June crude oil on NYMEX was at the $24.14 level with July futures at $25.08 per barrel. July Brent was trading at just above the $30 per barrel level. Gasoline and heating oil futures in June edged lower on the session. Natural gas was close to unchanged at a settlement price of $1.826 on the June contract. June ethanol gained 2 cents to $1.11 per gallon. Palladium moved higher over the $1830 level, but gold, silver, and platinum prices all moved lower. Copper fell to the $2.38 level on the July futures contract. Live and feeder cattle futures prices fell along with lean hogs after recent gains in the animal protein markets. Cotton and cocoa prices moved to the upside, nut FCOJ, coffee, sugar, and lumber all posted losses on the first session of the week. After flirting with the $10,000 level late last week, Bitcoin declined by $1235 per token to $8795.

On Tuesday, comments by Doctor Anthony Fauci likely sent stocks lower when he warned against moving too fast when it comes opening the economy. The DJIA fell 1.89%, with the S&P 500 declining 2.05%. The NASDAQ moved 2.06% lower, while the Russell 2000 turned in the worst performance with a drop of 3.46%. The June 30-Year Treasury bond was 1-12 higher to 179-28. The June dollar index fell below the 100 level to 99.956. The USDA released its May WASDE report, which did not create much volatility in the grain futures markets. Corn was 3.75 cents per bushel higher on the July contract, but soybean futures declined by 3 cents. Wheat was 2.75 cents per bushel lower in post-WASDE trading. Crude oil was higher, but oil product prices slipped, sending crack spread in gasoline and heating oil lower. Selling hit the natural gas market, which probed below the $1.70 per MMBtu level on June futures before settling at $1.72. Ethanol edged lower. Gold was a touch higher, but silver was near unchanged. Platinum was lower, but palladium hardly moved. Copper futures in July fell to $2.359 on the session. Cattle and hog prices moved to the upside after the latest USDA report. Coffee and cocoa prices fell, but cotton, FCOJ, sugar, and lumber posted gains. Bitcoin was $75 higher to $8870 per token.

On Wednesday, stocks continued to slip. Caution from scientists on Tuesday gave way to the same from Fed Chairman Jerome Powell on Wednesday. The stock market declined as the reality of a prolonged period of economic weakness is ahead on the back of the global pandemic. President Trump, a consistent critic of the Fed and his appointee, Chairman Powell, called for rates to fall into negative territory with a tweet on Tuesday.

Source: Twitter

On Wednesday, Fed Chairman Powell told markets that the central bank has plenty of tools in its toolbox, and it is not considering negative rates. We have learned never to say never in markets. All of the leading stock indices posted declines on Wednesday. The DJIA was 2.17% lower, with the S&P 500 falling 1.75%. The NASDAQ declined 1.55%, and the Russell 2000 fell 3.32%. The June long bond rose 0-24 on the back of the decline in the stock market to 180-18. The June dollar index climbed 0.335 to 100.291 as the 100 level remains the pivot point. Grain prices posted across the board declines in the wake of the May WASDE report. Corn futures in July were 4 cents lower, soybeans fell 12.5 cents, and CBOT wheat was 12.75 cents per bushel lower. Crude oil edged lower on the June and July futures contracts on NYMEX. Brent fell even further as the price probed below the $29 per barrel level. Gasoline and heating oil were lower on the session. Natural gas fell below the early April low to $1.595 before settling at $1.616 per MMBtu on June futures. Ethanol fell to the $1.09 per gallon level. Gold was up around ten bucks per ounce on Wednesday, while silver was marginally lower. Platinum and palladium prices fell. Copper also declined to settle at $2.3460 on the July contract on COMEX. Meat prices gave up some of the recent gains with declines in live and feeder cattle and June lean hog futures. Cotton, coffee, and lumber prices slid, but FCOJ and cocoa posted gains. Sugar was only one tick higher on the session. Bitcoin was over $300 higher to the $9200 per token level.


Weekly Spreadsheet:

Copy of Spreadsheets for the The Hecht Commodity Report May 13, 2020


Stocks and Bonds

Despite the worst jobs data in history, the stock market turned in a mixed performance since May 6, courtesy of the unprecedented levels of fiscal and monetary policy stimulus in the US and around the globe. The tidal wave of aid that is pushing the money supply higher each day has installed a giant put option below the bond market and is bullish fuel for stocks. However, we could be on the verge of a house of cards that takes stocks far lower, or a massive move to the upside in the stock market if the global pandemic ends. Time will tell. The price action over the past days has been bearish.


The S&P 500 fell by 1.00% since last week. The NASDAQ was 0.10% higher, and the DJIA posted a 1.76% loss.

Corporate earnings will be horrendous in the second quarter, but government bailouts are steadying the markets for the short-term. A continuation of the optimism in the stock market depends on gradual improvement in the global pandemic and no severe outbreaks over the coming weeks and months. It could take a year or more to find out if the economy is past the worst of Coronavirus. However, companies will learn to do more with less, so the unemployment rate is not likely to come down quickly. Statements by government health officials and the Fed on Tuesday and Wednesday brought selling back to the stock market.

Chinese stocks outperformed US stocks over the past week. The Trump administration is considering tariffs or some other retaliatory measures against China for allowing the spread of the pandemic. A new chapter in the trade war could cause a return of downside volatility to stocks over the coming weeks and months. For now, the Chinese market has been signaling a slow return to economic growth in the world’s most populous nation. Never discount the potential for government intervention in the Chinese market.

Source: Barchart

As the chart illustrates, the China Large-Cap ETF product (FXI) was trading at the $38.67 level on Wednesday, as it rose by 1.50% since the previous report. The trend is always your friend in markets, and since mid-March, it has been higher in the shares of Chinese companies.

US 30-Year bonds edged higher over the past week. While optimism has returned to the stock market, the Fed and other central banks have installed a put option under the bond market, which is likely to remain in place for the long-term. Rates are not going to move significantly higher anytime soon, given the impact of Coronavirus on the economy. On Wednesday, May 13, the June long bond futures contract was at the 180-18 level, 0.84% higher than on May 6. Short-term support for the long bond at 178-01 with resistance at 183-02. The bonds were at the middle of the trading range, given the recent rise in stock prices.

Open interest in the E-Mini S&P 500 futures contracts rose by 0.13% since May 5. Open interest in the long bond futures rose 1.96% over the past week. The VIX moved lower to the 35.01 level on May 13, 2.61% higher from last week’s level after dipping to the lowest level since early March. The VIX traded to a high of 85.47 on March 18, the highest level since 2008. I continue to believe that risk-reward favors buying the VIX and VIX-related products with tight stops and reestablishing positions after the market triggers stops is the optimal approach in the current environment.

At below 30, the VIX was at a level that is attractive and could experience periods of sudden dramatic increases. The VIX related products like VIXX and VIXY are short-term, trading tools. I continue to look for at least a 2:1 reward over risk on any long positions in the VIX or VIX-related products. Over the past week, the strategy continued to work.

Parts of the US and global economy are now slowly opening, which is fueling the rise in the stock market. However, the V-shaped price action in stocks could turn out to be a mirage if outbreaks of Coronavirus return and governments decide to shut down again. The price weakness on Tuesday and Wednesday is a concerning sign. Social distancing is likely to remain in place over the coming months as uncertainty lingers over the virus. Scientists and governments have learned a lot about Coronavirus over the past months, but there is more they still do not know. The potential for mutations and further outbreaks remains high. The losses of jobs for over 33 million people in the US is a cause for significant concern. In the April employment report, average hourly wages rose significantly, which is a sign that the divide between the wealthy and poor is widening. Government policies to address the gulf between the shrinking number of haves and the growing number of have nots in the US could cause lots of turbulence in the stock market. The upcoming November Presidential election in the US will only serve to exacerbate the situation as the nation remains deeply divided on the political front. The VIX is telling us that the threat of price volatility is declining; the data indicates the opposite.


The dollar and digital currencies

The dollar index continues to sit around the 100 level, as governments are likely managing the foreign exchange market to provide stability. Meanwhile, in the world of Cryptocurrencies, Bitcoin moved higher and to the $10,000 level and then failed. Legendary trader Paul Tudor Jones told the market that he purchased Bitcoin as a hedge against inflation, which validated the asset for some market participants.

The June dollar index future contract was at 100.291 on May 13, up 0.15% from the level on May 6. The dollar index has been trading on either side of the 100 level since late March. In an unstable world, the US and other leading governments around the globe are likely coordinating efforts to provide stability to the foreign exchange market. Open interest in the dollar index futures contract moved 1.37% lower as market participants in the foreign exchange market exited risk positions in the index. The dollar index had been trending higher since 2018, but the 100 level could prove an area where the index spends lots of time consolidating. Daily historical volatility in the dollar index rose to over 21.5% in late March but returned to the 5.44% on Wednesday as the trading range has declined in the greenback.

The euro currency was 0.09% higher against the dollar. Europe’s economy limped into the crisis. Coronavirus has been more than a challenge for the EU and ECB, which are likely following the Fed policy these days as well as cooperating with the US Treasury. The pound moved 1.02% lower against the dollar since last week. The euro accounts for almost 58% of the dollar index, so the European currency is the most significant factor when it comes to the path of least resistance of the index. Both the dollar and euro have gone nowhere fast over the recent weeks as Europe and the US remain the regions of the world most impacted by Coronavirus. However, the data on the number of infections and the mortality rates could be misleading as the US and Europe are likely the most forthcoming with accurate reporting.

The pandemic is likely exacting a significant toll on other lesser-developed nations in the world that are not prepared to handle the rising number of infections and deaths from the virus. The data from those countries is probably many times the levels reported over the past weeks. International borders do not stop the spread of Coronavirus. I expect we will learn of far higher mortality numbers from areas like Africa, South America, and others in the months and years ahead. Medical technology in those areas of the world is not at the standards in the US and Europe. Brazil was reporting over 12,700 deaths, the highest in South America, but the actual number is likely far higher. The Brazilian real versus the US dollar currency relationship continued to make new lows.


Bitcoin and the digital currency asset class moved higher and lower over the past week. Bitcoin was trading at the $9,071.77 level as of May 13, after failing at the $10,000 level. Bitcoin fell 2.51% since last week. Ethereum posted a 6.22% loss since May 6. Ethereum was at $196.01 per token on Wednesday. The market cap of the entire asset class moved 3.27% lower over the past week. Bitcoin outperformed the whole asset class since the previous report. The number of tokens increased by 35 to 5464 tokens since May 6. 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 $247.798 billion, down 3.27% since the prior report. Open interest in the CME Bitcoin futures rose 21.68% since last week, after an over 20% increase last week. As I wrote over the past three weeks, “I continue to believe that Bitcoin will attract buying during periods of price weakness but would only dip a toe into the market on the long side with a very tight stop. I would rather trade from long than short in the digital currencies. In a germophobic world, the attraction of digital currencies is likely to rise. Other factors that could support digital currencies are a rise of germaphobia, the stops people from holding cash, and the falling value of all foreign exchange instruments on the back of massive stimulus measures from central banks.” I continue to favor the long side of the leading cryptocurrencies. I would only approach the digital currencies with tight and trailing stops because of the potential for massive volatility in these assets. The risk of a correction rises with the price of the digital currency. Bitcoin rose to my first target at the $10,000 level. The next level on the upside stands at $11,005. The increase in open interest over the past weeks is a sign of speculative buying and is bullish for the price of the cryptocurrency and many of the others in the asset class. The trend is your friend in Bitcoin, and it remains higher. Bitcoin’s role as a hedge against inflation received a considerable boost of support from Paul Tudor Jones over the past week as many market participants are likely to follow his lead. However, risk-off conditions could cause a rocky ride in the digital currency.

The Canadian dollar moved 0.11% higher since May 6. Open interest in C$ futures fell by 0.97% 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. Keep an eye on the oil futures market for clues about the Canadian dollar as it often acts as a proxy for the price of the energy commodity. Weakness in grain prices is another factor that could be weighing on the value of the Canadian currency.

The Australian dollar is also a commodity-based currency with a high degree of sensitivity to China’s economy. The A$ moved 0.36% higher since last week. The geographical proximity to China makes the Australian dollar sensitive to events in China. Australia has experienced an outbreak of the virus, but the government has sealed the nation and instituted some of the most severe social distancing regulations in the world. Over the past week, the government has eased some of the social distancing guidelines in the land down under. The A$ is a proxy for both China and raw material prices. I would be cautious with any positions on the long or short side of the A$ given the potential for volatility in the current conditions. Economic strength or weakness in China will determine the path of the Australian economy. Any retribution over the spread of Coronavirus could cause retaliatory measures by both sides, which would weigh on Australia’s economy. In the long-term, the stimulus is bullish for commodities prices and both the Australian and Canadian currencies.

The British pound fell1.02% after a wild ride to the downside in mid-March. The UK faces challenges after its divorce from the EU, but the move may have insulated the nation from the massive price tag for Coronavirus in Europe. The UK has also experienced more than its fair share of cases, but members of the EU will be sharing the costs of the toll the virus has taken on Spain, Italy, and France while the UK is on its own after Brexit. The pound remains at a depressed level against the US dollar, and there is room for a recovery if the pandemic continues to ease over the coming weeks.

Over the past week, the Brazilian real fell 4.04% and moved below the $0.1700 level against the US dollar. The June Brazilian currency was trading at the $0.16850 level and fell to a new and lower low at $0.16775 on May 7. The real 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 could move higher or lower with any significant changes in the direction of the Brazilian real over the coming weeks. The falling real had been a factor that weighed on sugar and coffee prices as Brazil is the world’s leading producer and exporter of the soft commodities and output costs are in local currency terms. However, as we have seen in other markets, low prices may not stop shortages of supplies as the virus impacts parts of the supply chain when it comes to processing or transporting the commodities. The weather conditions in critical growing regions, as well as the spread of the virus, could also cause price volatility in the agricultural products.

Expect widespread government management of the currency markets to continue into the foreseeable future. Central bank stimulus is only part of the plan to provide stability to markets across all asset classes during this challenging period in history. I expect the dollar index to remain around the 100 level, which will provide for stable conditions in all of the leading foreign exchange instruments. When it comes to currencies from lesser developed nations like Brazil and others, the declines are likely a barometer of the spread of the virus, and the lack of government leadership or ability to control the economic fallout from the pandemic.


Precious metals price moved mostly higher over the past week with silver and rhodium leading the way on the upside. The optimism that took stocks and industrial commodity prices higher led to gains in the precious metals that are also requirements for industrial purposes. On Tuesday and Wednesday, the optimism evaporated. Meanwhile, gold also moved to the upside as the price continues to consolidate around the $1700 per ounce level.


Precious Metals

Gold and silver moved higher over the past week, with silver leading the way on the upside. Platinum and palladium prices recovered a bit. Gold was sitting just over the $1715 level with silver at just below $15.70 on the July contract. Platinum was just south of $770, and palladium was over the $1790 per ounce level. The illiquid rhodium market was higher since May 6

I see many similarities developing between 2008 and 2020 in the gold and silver markets. The initial risk-off period in 2008 took the price of gold to a low of $681 and silver to $8.40 per ounce. In mid-March, gold dropped to the $1450 level, and silver fell its lowest price since 2009 at $11.74. By 2011, the prices reached $1920.70 and $49.82, respectively. The stimulus, moves in open interest, and trading patterns over the past weeks could be highly bullish signs for the gold and silver markets over the coming months and years if history from twelve years ago repeats.

Gold rose by 1.65% over the past week. Silver was 4.37% lower since May 13. June gold futures were at $1716.40 per ounce level on Wednesday. July silver was at $15.671 per ounce on May 13. I maintain a bullish opinion on the gold and silver markets as the odds favor that the price action that followed the 2008 global financial crisis is a blueprint for the coming months and years.

Technical resistance for June gold stands at $1788.80 per ounce, the recent high. Support is now at $1666.20. In silver, support is at $14.715, with resistance at $16.505 on the July contract. If the price action from 2008 through 2011 is a guide, gold will head for the $2000 to $3000 per ounce level over the coming months, and silver will follow the yellow metal to the upside. Gold and silver have been consolidating over the past weeks.

Gold mining shares moved higher over the past week with the GDX and GDXJ, both posting 1.16% and 2.57%, respective gains, which is supportive of the price of the precious metal. The SIL and SILJ silver mining ETF products that hold portfolios of producing companies moved 1.29% higher and 0.96% lower since May 6, which underperformed the bullish price action in the silver futures market.

Gold underperformed silver over the past week, which tends to be a bullish sign for both metals. The silver-gold ratio reached a new modern-day high as risk-off selling hit the silver market, taking the price below the $12 per ounce level. I will continue to add to long physical positions in gold, silver, and platinum, during periods of price weakness. I will continue to trade leveraged derivatives and mining stocks on a short-term basis with tight stops. While gold mining stocks and derivatives follow the price of gold, they are not the metal and could experience significant periods of price deviation if risk-off conditions return to markets.

July platinum rose 0.56% since the previous report.  Platinum had been a laggard in the precious metals sector in 2020. July futures moved to the $769.80 per ounce level on May 13. The level of technical resistance is at $838.20 on the July futures contract. Support in platinum is currently at $716.80 per ounce, the most recent low in the nearby futures contract. Rhodium is a byproduct of platinum, and the price of the metal had been in a bull market since early 2016. The price of rhodium was at a midpoint price of $6,000 per ounce on May 13, up $1000 per ounce over the past week. Palladium rose 1.81% since last week. The price traded to a new peak at $2815.50 on February 27 on the nearby futures contract. June palladium settled at the $1790.70 per ounce level on Wednesday.

Open interest in the gold futures market moved 1.30% higher over the past week. The metric moved 0.77% lower in platinum after significant declines in recent weeks as longs exited positions. The total number of open long and short positions decreased by 5.31% in the palladium futures market after substantial declines. Silver open interest increased by 2.51% over the period after significant decreases since March. Precious metals prices did not move outside their technical ranges over the past week. The price action was stable across all the four metals.

The silver-gold ratio moved lower over the past week.

Source: CQG

The daily chart of the price of June gold divided by July silver futures shows that the ratio was at 109.35 on Wednesday, down 3.51 from the level on May 6. The ratio traded to over the 124:4 level on the high on March 18. The long-term average for the price relationship is around the 55:1 level. The ratio rose to the highest level since futures began trading in 1974 as the price of silver tanked recently. The move lower since mid-March could be a bullish sign for the two metals. In 2008, the ratio peaked during the risk-off selling and then fell steadily until 2011.

Platinum and palladium prices edged higher over the past week. June Palladium was trading at a premium over July platinum with the differential at the $1020.90 per ounce level on Wednesday, which widened since the last report. July platinum was trading at a $946.60 discount to June gold at the settlement prices on April 22, which also widened since the previous report. The spread is $176.80 above the nominal price of platinum, which is incredible considering platinum traded at over an $1100 premium to gold in 2008.

The price of rhodium, which does not trade on the futures market, was at the $6,000 per ounce level on Wednesday, up $1000 or 20% on the week. Rhodium is a byproduct of platinum production. The low price of platinum caused a decline in output in South African mines, creating a shortage in the rhodium market that lifted the price to the $13,000 level before risk-off conditions caused the price to evaporate to $2,000. Rhodium has been highly volatile over the past weeks after reaching its peak. The price moved higher from a low at $575 per ounce in 2016. The bid-offer spread in Rhodium remains at the $3000 per ounce level, unchanged from previous weeks. Illiquid markets can become untradeable. The price action in rhodium is somewhat like what has been going on with some illiquid issues in the bond market these days. The Fed is providing a backstop to eliminate the lack of liquidity, but in rhodium, there is no backstop. Rhodium is an untradeable commodity, but it can provide clues about the price path of the other PGMs. There was no change in rhodium since last week.

I continue to favor buying physical platinum as well as gold and silver during corrective periods. In gold and silver, the GLD, IAU, BAR, and SLV ETF products hold physical bullion and are acceptable proxies for the coins and bars. In platinum, PPLT and PLTM are the proxies. Since a NYMEX platinum futures contract contains 50 ounces of metal, purchasing a nearby futures contract on NYMEX and standing for delivery is a way to avoid significant premiums for the metal. At $769.80 per ounce, a contract on NYMEX has a value of $38,490, after falling to the lowest level just under two decades in March.

Stimulus is bullish fuel for the gold and silver markets. I continue to favor buying on price weakness and expect the prices of both metals to move appreciably higher. The price action between 2008 and 2011 could turn out to be a valuable map that leads to a golden road higher. The level of stimulus necessary to combat the impact of Coronavirus on the US and global economies is far higher than in 2008 and beyond, suggesting that the potential for higher gold and silver prices could be even greater on a percentage basis. Platinum group metals have vast applications for industrial use. Therefore, as the global economy begins to open, the potential for higher prices could rise. I remain bullish for the prospects of the sector. The GLTR ETF product holds a portfolio of gold, silver, platinum, and palladium, and could serve as a diversified tool for investors and traders looking for sector-wide exposure.


Energy Commodities

Energy has made a significant comeback, but the path of least resistance for prices will depend on the global economy awakening from its self-induced coma. At the same time, the demand for energy could be experiencing a seasonal boost as the driving season in the US is upon us at a time when the governments are easing social distancing guidelines. Over the past week, NYMEX June crude oil futures moved higher, Brent futures in July edged to the downside. Gasoline and heating oil futures underperformed crude oil, causing crack spreads to decline. Natural gas traded to a new short-term high on May 5, and a new low on May 13 as the price failed and probed below the $1.60 per MMBtu level. Ethanol was higher, and coal prices moved lower wince May 6.

June NYMEX crude oil futures rose 5.42% since May 6 after an almost 60% gain last week. June futures are rolling to July. The June contract settled at $25.29 per barrel on May 13 after trading to a low of $6.50 on April 21. The market is nervous going into the June expiration after the May contract traded to a low of negative $40.32 per barrel on April 20. I do not expect the same selling to hit the market during the expiration period. However, if the price action last month taught us anything, it is never to say never. Late Wednesday, the US Energy Department said it would be purchasing one million barrels of sweet crude oil for the SPR from small and medium-sized producers. The move was likely timed to avoid repeat of the action seen on April 20 when May expired.

July Brent futures underperformed June NYMEX WTI futures as they moved 2.02% lower since May 6. June gasoline fell 2.76%, and the processing spread in June posted a 21.32% loss since last week. The June gasoline crack spread was at $10.22 per barrel. The price path of gasoline depends on reopening the US economy so that people begin commuting to work and venture out in automobiles again. Wild swings in energy prices have caused wide price ranges in the crack spreads the reflect refining margins. Gasoline underperformed the price action in crude oil since last week.

June heating oil futures moved 0.90% higher from the last report. The heating oil crack spread was 10.30% lower since May 6 after an almost 39% decline last week. Heating oil is a proxy for other distillates such as jet and diesel fuels. The price action in the processing spreads has been highly volatile, given the timing differences between moves in crude oil and products.

Technical resistance in the June NYMEX crude oil futures contract is at $26.74 per barrel level with support at the $10.07 level on the June contract. The price range narrowed over the past week. The measure of daily historical volatility was at 149.60% on May 13, down from over the 228% level on May 6.  Demand remains a critical factor when it comes to the price direction of the energy commodity. However, falling production should eventually balance the market and could create a deficit at some point in the future. The course of the pandemic is crucial for the oil market over the coming weeks and months. If we have seen the peak, we could see prices rise. However, further outbreaks that prompt a return to closing parts of the economy again would be a highly bearish factor for energy demand.

The Middle East continues to stand as a region that could cause sudden rallies. When crude oil moved to its high for 2020 at $65.65 on WTI and $71.99 per barrel on Brent futures in early January because of hostilities between the US and Iran, the prices moved to the upside from far higher levels. WTI is currently below $26 and is Brent under $30 per barrel. Any shocks to the system from the region of the world that is home to more than half the world’s reserves could cause a far more significant percentage move to the upside in the price of the energy commodity. April 20 taught us never to say never, and that goes for the downside as well as the upside in the crude oil market.

Crude oil open interest increased by 0190% over the period. As I wrote last week, “The shares of companies in the crude oil business outperformed the price of the energy commodity in April. The XLE posted an over 30% gain for the month, but it moved higher from the lowest level in many years. Oil-related shares had been significant laggards when it comes to both the price of oil and the overall level of the stock market in 2019 and the early months of 2020. They may have played a little catchup last month but have a long way to go to recoup the losses over the past year and one-half.” The trend did not continue over the past week as the XLE fell 1.16%, with NYMEX futures 5.42% higher compared to the prices on May 6. The selling in the stock market weighed on the XLE.

I continue to be cautious when it comes to any investments in debt-laden oil companies. I would only consider those with the most robust balance sheets like XOM and CVX in the US. Exxon and Chevron could stand to pick up lots of production assets at bargain-basement prices over the coming months as the number of bankruptcies rises in the oil and gas sectors.

The spread between Brent and WTI crude oil futures in July fell to the $3.48 per barrel level for Brent, which was $0.66 below the level on May 6. The July spread moved to a high of $5.60 on April 30. The continuous contract peak was at $11.52 on April 20 as all hell broke loose in the crude oil futures market. The high in the spread between the two benchmark crude oil prices was the highest level since May 2019. On April 21, the spread moved briefly to an 89 cents per barrel premium for Brent. The Brent premium tends to move higher during bullish periods in the oil market and vice versa. However, this time, it was the carnage in the price of WTI futures that drove the spread to higher levels. Brent crude can travel by ocean vessel to consumers around the globe, while WTI is a landlocked crude oil. The lack of storage capacity was responsible for the recent price action in the spread and outright prices for the energy commodity. The potential for lots of volatility in the July Brent-WTI spread will rise as June futures on NYMEX expire.

A decline in US production over the coming months could cause significant volatility in the Brent-WTI spread. Before 2010, WTI often traded at a $2 to $4 premium to Brent. The WTI grade has a lower sulfur content making it the preferable crude oil for processing into gasoline, the world’s most ubiquitous fuel. If US output continues to decline significantly and demand returns to the market, we could see it impact the Brent-WTI differential and cause periods where WTI returns to a premium to the Brent, which is better suited for refining into distillate products. The USO and BNO ETF products replicate the short-term price action in WTI and Brent futures, respectively. While both do an adequate job tracking the futures in the short-term, neither are particularly effective for medium or long-term positions because of the volatility of the forward curves in both crude oil benchmarks.

Term structure in the oil market experienced a significant shift as the price of crude oil tanked. The flip from backwardation to contango in the spread reflects the flood of supplies in the crude oil market. Oil traders have filled tanks and storage all over the world to take advantage of the wide contango with financing rates at historic lows. Cash and carry trades in the oil market became one of the only profitable areas of the market as demand evaporated. The cash and carry trade put upward pressure on freight and storage rates. The forward curve in crude oil highlights the current state of the widest contango in years. The US is filling its strategic petroleum reserve to the brim at the current low price levels. And, the contango caused the price of May futures to plunge to an incredible low of negative $40.32 per barrel.

Over the past week, June 2021, minus June 2020, moved from a contango of $8.83 to $7.17, a fall of $1.66 per barrel. In early January, the spread traded to a backwardation of $6.03, $13.20 per barrel tighter than the level on May 13. The spread hit a high of $18.78 per barrel on April 21, the day that June futures reached a low of $6.50 per barrel. Rising contango is a sign of a glut in the oil market while falling contango signifies tighter supplies. The capacity for crude oil storage around the globe fell dramatically as well-capitalized traders purchased nearby crude oil, put it in storage, and sold it for futures delivery. A decline in the spread could lead to profit-taking and more capacity on the storage front.  The spread between the June 2021 and June 2020 contracts on NYMWX over halved since April 21. Crude oil was in a backwardation of a condition where deferred crude oil futures traded at lower prices than contracts for nearby delivery in January and early February. The backwardation in the June one year spread reached a high for 2020 at over $6 per barrel in January. We could see an unwind of the spreads if they gravitate back towards flat as production declines and inventories begin to fall over the coming months, which would result in significant products for well-capitalized crude oil traders. The number of rigs operating in the US continued to decline significantly over the past week, and production has been moving lower in response to the lowest price levels in years and demand problems over the past months.

US daily production fell to 11.60 million barrels per day of output as of May 8, according to the Energy Information Administration. The level of production fell 300,000 barrels from the previous week. Meanwhile, inventory levels continued to climb. As of May 1, the API reported an increase of 8.44 million barrels of crude oil stockpiles, while the EIA said they rose by 4.60 million barrels for the same week. The API reported a decline of 2.237 million barrels of gasoline stocks and said distillate inventories rose by 6.143 million barrels as of May 1. The EIA reported a decrease in gasoline stocks of 3.20 million barrels and an increase in distillates of 9.50 million barrels. Rig counts, as published by Baker Hughes, fell by 33 for the week ending on May 8, which is 513 below the level operating last year at this time. The decline in the rig count has been significant and should lead to falling output in the US. The number of rigs operating stood at 292 as of May 8. The inventory data from both the API and EIA has been consistently bearish for the price of crude oil and products over the past weeks, but the price has moved higher as it reached an unsustainable level on the downside. The inventory should cap the potential for rallies until it begins to decline to levels that lead to more of a fundamental supply and demand balance to the oil market.

OIH and VLO shares moved in opposite directions since May 6, OIH rose by 1.90%, while VLO moved 3.05% to the downside over the past week. The decline in the gasoline and distillate cracks was not a supportive factor for VLO. OIH was trading at $99.39 per share level on Wednesday. I am holding a small position in OIH. I will hold the ETF as a long-term position and will look to double it or more if the conditions warrant.

We are short the May $80 put option on VLO at $3.65 per share.



If the shares are below the $80 level, this Friday, on May 15, we will assume a long position in VLO shares at $76.35.

We are short the May $70 put option for the same expiration at $6.28. A link to the option is below:



If the price of VLO shares is below $70 this Friday, on May 15, we will be long the stock at $63.72 per share on this position, and an average of $70.04 per share on the two positions. VLO was trading at $59.05 per share on Wednesday. As I wrote over the past weeks, “If you are not comfortable assuming this level of risk, please do not follow this recommendation.” VLO shares have been highly volatile. The options will expire this Friday, May 15. The puts are in-the-money, which will result in a long position in the refining stock after May 15. If the stock rises above the put strike prices, which is highly unlikely, we will just pocket the premium from the two transactions. Otherwise, we will be long two units of VLO at a base price of $70.04 per share.


The June natural gas contract settled at $1.616 on May 13, which was 16.87% lower than on May 13. The June futures contract traded to a high of $2.162 on May 5, where it failed miserably. Support in June stands at $1.519 per MMBtu. After making lower highs and lower lows from November 2019 until early April, natural gas shifted to the opposite pattern over the past month, but the price action over the past sessions failed. A move above $2.25 on June futures is necessary to validate the end of the bearish price pattern and keep the bullish party going. Be cautious in natural gas as it suffers from the same demand problems as crude oil, as we have seen over the recent sessions. The price needed to remain above the $1.765 per MMBtu level to keep the short-term bullish trend intact, but it fell through that level as a hot knife goes through butter and traded below the $1.60 level on Wednesday.

Last Thursday, natural gas stockpiles posted its first triple-digit increase of the injection season, according to the EIA.

Source: EIA

The EIA reported an injection of 109 bcf, bringing the total inventories to 2.319 tcf as of May 1. Stocks were 52.3% above last year’s level and 20.5% 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, this year the low was at 1.986, 879 bcf higher. This week the consensus expectations are that the EIA will report a 102 bcf injection into storage for the week ending on May 8. The EIA will release its next report on Thursday, May 7, 2020.  Over the past seven weeks, the percentage above last year’s level has been declining when it comes to natural gas stockpiles. The steady decline from 79.5% above the one-year level as of March 20 to 52.3% last week could have provided some fundamental support to the natural gas market that took the price to a high of $2.162 per MMBtu on May 5. The trend could reflect higher demand or lower production. Given the events since March, it is likely that output is causing a slower rate of injections into storage. However, the price action over the past days was a sign of very weak demand.

Open interest rose by 3.47% in natural gas over the past week. Short-term technical resistance is at $2.162 per MMBtu level on the June futures contract with support now at $1.519 per MMBtu, the continuous futures contract low. On the upside, $2.255 is the next level of resistance on the weekly chart, but the price moved far away from that level since May 5. Price momentum and relative strength on the daily chart were falling towards oversold conditions as of Wednesday because of the recent price failure that took the price back to the $1.60 level. The price put in a bullish reversal on April 16 and followed through on the upside. The low from that day was at $1.705, which stood as technical support in the June futures contract that gave way on May 12.

June ethanol prices moved 3.32% higher over the past week on the back of gains in gasoline. Open interest in the thinly traded ethanol futures market moved 19.93% lower over the past week. With only 426 contracts of long and short positions, the biofuel market is untradeable. The KOL ETF product rose by 1.68% compared to its price on May 6. The price of July coal futures in Rotterdam moved 2.26% lower over the past week.

On Tuesday, May 12, the API reported a 7.580-million-barrel rise in crude oil inventories for the week ending on May 8. Gasoline stocks fell by 1.911 million barrels, while distillate stockpiles increased 4.712 million barrels over the period. On May 13, the EIA said crude oil stocks fell 700,000 barrels for the previous week, the first decline since January. Gasoline inventories were 3.50 million barrels lower, while distillate stocks rose 3.50 million barrels. The API and EIA inventory reports were mostly bearish for the price of the energy commodities. As I wrote last week, “Demand remains the critical issue facing the oil market. At the current price levels, all the bad news is already in the market. Goldman Sachs said they were bullish on the price of crude oil at the end of last week, and so far, they have been correct.” Goldman continued to be correct in the projection. Demand remains a significant factor, but optimism over reopening parts of the economy has lifted prices. At the same time, output is declining fast with the number of operating rigs plunging and the daily production data from the EIA trending lower. The oil market could be heading towards a balance, which could continue to lift the price of the energy commodity towards the $30 per barrel level on nearby NYMEX futures, or higher. Iran and the Middle East remain factors that could cause periods of upside mayhem in the futures market over the coming weeks and months, so be careful with risk positions. Meanwhile, a spike in the number of cases of the virus would not support gains in crude oil and could send prices lower. Expect volatility to continue.

In natural gas, the forward curve continues to be wide, with January 2021 futures trading at a significant premium over natural gas for June 2020 delivery.


As the forward curve over the coming months shows, at $1.616 in June on the settlement price on May 6, it was 32.80 cents per MMBtu lower than on May 6.

The price is in contango where deferred prices are higher than levels for nearby delivery, reflecting the condition of oversupply and high level of inventories compared to past years as we are in the 2020 injection season. Natural gas stockpiles started the 2020 injection season at a level where a build to over four trillion billion cubic feet and a new record high is possible in November, which could keep the price from running away on the upside in the leadup to the winter of 2020/2021. However, production could grind lower given the lack of workers during the shutdown period in many states and because of the low level of prices that make output uneconomic. The trend in stocks since March 20 compared to last year is a sign of declining output. The debt-laden oil and gas businesses in the US could receive support from the government to keep energy output flowing, but demand destruction is a critical factor. The US government is likely to support the energy sector as a matter of national security.  Meanwhile, the differential between nearby June futures and natural gas for delivery in January was $1.32 per MMBtu or 81.7% higher than the nearby price, reflecting both seasonality and substantial inventory levels. The spread widened by 20.3 cents over the past week.

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 attract lots of volume and are excellent short-term proxies for natural gas futures. I will not take positions in leveraged products overnight and will only day trade, given the volatility in the markets.

We are holding a long position in PBR, Petroleo Brasileiro SA. PBR shares tanked with oil and the Brazilian real. At $6.12 per share, PBR was 3.32% lower than on May 6. The shares of the company remain too low to sell at the current price. I have a small position that I will hold as a long-term investment and look to double up or more when the market conditions warrant. PBR fell on the back of the falling value of the Brazilian currency.

Expect lots of price action in the energy patch throughout the rest of 2020. The global pandemic will determine if demand begins to slowly return to the market as the output declines in both oil and gas markets. So far, over the past weeks, the trends seem to signal a rebound in demand and falling supplies. However, any outbreaks that cause new shutdowns could quickly reverse the short-term recoveries and return price carnage to the energy sector. At the same time, the November election in the US is likely to stand as a referendum on the future of energy production as the Democrat’s platform will include the “Green New Deal” or some version of the initiative that would reduce the amount of oil and gas production. For the coming week, the trend in both the oil and gas futures have shifted lower. Natural gas could be back in the buy zone and between $1.50 and $1.60 per MMBtu. Be careful in crude oil as the market could go either way in the current environment.


The US Department of Agriculture released its May World Agricultural Supply and Demand Estimates report on Tuesday, May 12. The monthly WASDE report is the gold standard when it comes to the fundamentals of the grain markets. In a typical year, the May WASDE is crucial as it contains valuable planting, export, consumption, and inventory data. However, 2020 is far from an ordinary year because of the impact of Coronavirus on the US and global economies. At the same time, the spread of the virus could affect farming, logistics, and the supply chain over the coming weeks and months. We could see a continuation of price distortions in food prices. The WASDE was not bullish for the grain sector.

Meanwhile, grains prices have been under pressure throughout the planting season in the US. As we head into the growing season over the coming months, it will be the weather conditions across the fertile plains of the US and the growing regions in the northern hemisphere that dictate the path of least resistance of prices of the leading grain products. The one certainty is that the growth in population in the world that adds approximately 80 million more mouths to feed each year requires increased grain production each growing season.

The full May WASDE report is available via this link:



Sal Gilberte, the founder of the Teucrium ETF agricultural ETF products told me:

The May 12, 2020 WASDE report, by using the trend line yield estimate of 178.5 bushels per acre and the full 97 million acres of projected corn plantings from the March 31, 2020 Planting Intentions Report, has painted the most optimistic corn production picture possible. This leaves little room for error on the production side of the corn ledger, which could become an issue given the simultaneous projection of record global corn demand for the 20/21 crop year. Global demand for soybeans and wheat are projected at record levels for 20/21 as well. It is worth noting that this report changed the usual trend of global use outpacing global production across the grain complex to one of global production outpacing global use. There are plenty of grains available right now to feed the world, but the USDA is putting all its chips on the production side of the table in making these projections. Time and weather will guide prices from this point onward.”

The report confirmed bearish price action in the grains, but as Sal says, it’s all about the weather over the coming months.

July soybean futures rose by 0.84% over the past week and was at $8.3950 per bushel on May 13. Open interest in the soybean futures market moved 5.84% higher since last week. Price momentum and relative strength indicators were below neutral readings on Wednesday.

The July synthetic soybean crush spread moved marginally higher over the past week and was at the 84.75 cents per bushel level on May 13, down only 0.75 cents since May 6. The crush spread is a real-time indicator of demand for soybean meal and oil. Price trends in the crush spreads can signal changes in the path of the price of the raw oilseed futures at times.

In the latest WASDE report, the USDA told the soybean market:

The 2020/21 outlook for U.S. soybeans is for higher supplies, crush, exports, and lower ending stocks compared to 2019/20. The soybean crop is projected at 4.125 billion bushels, up 568 million from last year on increased harvested area and trend yields. Despite lower beginning stocks, soybean supplies are projected up 5 percent from 2019/20 to 4.720 billion bushels. Total U.S. oilseed production for 2020/21 is forecast at 123.2 million tons, up 16.1 million from 2019/20 mainly on higher soybean production. Production forecasts are also higher for sunflowerseed, peanuts, and cottonseed. Canola production is forecast lower on a reduced yield. The U.S. soybean crush for 2020/21 is projected at 2.130 billion bushels, up slightly from the 2019/20 forecast with higher soybean meal disappearance partly offset by lower soybean meal exports. U.S. soybean exports are forecast at 2.050 billion bushels, up 375 million from the revised forecast for 2019/20. With higher global soybean import demand for 2020/21 led by expected gains for China, U.S. export share is expected to rise to 34 percent from the 2019/20 record low of 30 percent. U.S. ending stocks for 2020/21 are projected at 405 million bushels, down 175 million from the revised 2019/20 forecast. The 2020/21 U.S. season-average soybean price is projected at $8.20 per bushel, down 30 cents from 2019/20. Soybean meal prices are forecast at $290 per short ton, down $10.00 from 2019/20. Soybean oil prices are forecast at 29.0 cents per pound, up 0.5 cents from 2019/20. The global oilseed outlook for 2020/21 includes larger supplies with lower beginning stocks offset by record production; however, ending stocks are expected to decline modestly with rising use. Global oilseed production for 2020/21 is projected at a record 605.9 million tons, up 30.7 million from 2019/20 mainly on higher soybean production. Global soybean production is forecast up 26.6 million tons to 362.8 million, with Brazil’s crop rising 7.0 million tons to 131.0 million, Argentina’s crop is up 2.5 million tons to 53.5 million, and U.S. production rising from last year’s decline. Partly offsetting are smaller soybean crops projected for China and Ukraine. Global production of high-oil content seeds is projected up 3 percent from 2019/20 on increased canola production for Canada, Australia, and Ukraine, and higher sunflowerseed production for Argentina and Ukraine. Partly offsetting is lower sunflowerseed production for Turkey. Global protein meal consumption outside of China is projected to increase 2 percent in 2020/21, down from the prior 5-year average of 3 percent due to the slowing global economy. Protein meal consumption in China at 6 percent is stronger than the prior few years, however, as China recovers from the August 2018 outbreak of African Swine Fever. With higher protein meal demand, soybean exports are expected to increase 8.0 million tons to 161.9 million. China accounts for most of the increase in shipments with imports rising 4 million tons to 96 million. Global soybean ending stocks are projected at 98.4 million tons, down 1.9 million from 2019/20. Lower year-over-year U.S. stocks offset higher stocks in China, Brazil, and Argentina.

Source: USDA

The May WASDE was slightly bearish for the soybean futures market. While US production was higher, global stocks fell.

I continue to believe soybean futures are in the buy-zone at prices below $9 per bushel, but risk-off has pushed the price lower. Coronavirus will not lower the demand for food as over 7.6 billion people all over the planet require daily nutrition. I would use tight stops on any long positions. If the price falls, I will look to reestablish at lower levels on the long side of the market.

July corn was trading at $3.1825 per bushel on May 13, which was 1.27% higher on the week. Open interest in the corn futures market rose by 1.70% since May 5. Technical metrics were on either side of neutral readings in the corn futures market on the daily chart as of Wednesday. The double bottom on the continuous contract at $3.01 gave way to a slightly lower low of $3.0025, but corn held the $3 level, so far. Long positions should have stops below the $3 per bushel level. Corn will continue to be highly sensitive to the price path of gasoline. Ethanol production in the US accounts for approximately 30% of the annual corn crop.

The price of June ethanol futures rose by 3.32% since the previous report. June ethanol futures were at $1.090 per gallon on May 13. The spread between July gasoline and July ethanol futures was at 19.82 cents per gallon on May 13 with ethanol at a premium to gasoline. The spread was 3.14 cents wider since last week as gasoline underperformed the biofuel in July.

The May WASDE for corn reported:

The U.S. feed-grain outlook for 2020/21 is for record high production and domestic use, greater exports, and larger ending stocks. The corn crop is projected at a record 16.0 billion bushels, up from last year on increased area and a return to trend yield. The yield projection of 178.5 bushels per acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather, estimated using the 1988-2019 time period. Despite beginning stocks that are down slightly from a year ago, total corn supplies are forecast record high at 18.1 billion bushels. Total U.S. corn use in 2020/21 is forecast to rise relative to a year ago with increases for domestic use and exports. Food, seed, and industrial (FSI) use is projected to rise 245 million bushels to 6.6 billion. Corn used for ethanol is projected to increase from the 2019/20 COVID-19 reduced levels, based on expectations of a rebound in U.S. motor gasoline consumption. Sorghum FSI for 2020/21 is lower as expectations of increased sorghum import demand from China reduce available domestic supplies. Corn feed and residual use is projected higher mostly reflecting a larger crop and lower expected prices. U.S. 2020/21 corn exports are forecast to rise 375 million bushels to 2,150 million, driven by growth in world corn trade. U.S. market share is expected to increase from the 2019/20 multi-year low, but remains below the average level seen during 2015/16 to 2019/20 with expected competition from Argentina, Brazil, and Ukraine. With total U.S. corn supply rising more than use, 2020/21 U.S. ending stocks are up 1.2 billion bushels from last year and if realized would be the highest since 1987/88. Stocks relative to use at 22.4 percent would be the highest since 1992/93. With larger stocks relative to use, the season average farm price is projected at $3.20 per bushel, down 40 cents from 2019/20 and the lowest since 2006/07. The global coarse grain outlook for 2020/21 is for record production and use and larger ending stocks. World corn production is forecast record-high, with the largest increases for the United States, Brazil, Ukraine, Mexico, and Canada. Global corn use is expected to grow 4 percent, with foreign consumption up 3 percent. Global corn imports are projected to increase 4 percent. Notable forecast increases in corn imports include the EU, Egypt, Mexico, Iran, Morocco, and Vietnam. Global corn ending stocks are up from a year ago, as a decline in foreign stocks is more than offset by an increase for the United States. Excluding China and the United States, ending stocks are up 4 percent relative to a year ago. For China, total coarse grain imports are forecast at 18.3 million tons, up 1.3 million from 2019/20 but below the 2014/15 record of 25.7 million tons. Since 2001/02, China’s largest individual coarse grain import total occurred during 2014/15 with 10.2 million tons of sorghum. Over that same time period realized corn imports reached a high of 5.5 million tons. Expectations are for robust demand from China in 2020/21, with 7.0 million tons of corn, 6.0 million of barley, and 5.0 million of sorghum imports from all sources.

Source: USDA

The WASDE remained bearish for the corn futures market on the prospects for record high US supplies, which push global stockpiles higher.

July CBOT wheat futures were down 3.04% since last week. The July futures were trading $5.0175 level on May 13. Open interest rose by 1.39% over the past week in CBOT wheat futures. The support and resistance levels in July CBOT wheat futures were at $4.9425 and $5.2800 per bushel. Price momentum and relative strength were at oversold readings on Wednesday on the daily chart.

As of Wednesday, the KCBT-CBOT spread in July was trading at a 47.50 cents per bushel discount with KCBT lower than CBOT wheat futures in the May contracts. The spread widened by 7.50 cents since May 6. 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.” 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. The spread moved away from the long-term average over the past week.

The USDA told the wheat market:

The initial outlook for 2020/21 U.S. wheat is for smaller supplies, decreased domestic use, lower exports, and reduced stocks. Supplies are decreased by 121 million bushels from 2019/20 on lower carry-in stocks and smaller production. The 2020/21 U.S. wheat crop is projected at 1,866 million bushels, down 3 percent from last year on lower yields offsetting higher harvested acreage. The all-wheat yield is projected at 49.5 bushels per acre, down 2.2 bushels from last year. The first 2020 NASS survey-based winter wheat production forecast of 1,255 million bushels is down 4 percent from 2019, on lower Hard Red Winter and White Winter production. Total 2020/21 domestic use is projected down nearly 3 percent on reduced feed and residual use as record-large 2020/21 corn supplies are expected to displace wheat for feeding. Higher food use is partially offsetting as 2020/21 is projected up 2 million bushels to 964 million, up from a revised 2019/20 estimate of 962 million, which was raised 7 million this month. The NASS Flour Milling Products report, issued on May 1, indicated an unusually large volume of wheat was ground for flour in the first quarter of 2020. Exports for 2020/21 are projected at 950 million bushels, down 20 million from the revised 2019/20 exports. Greater global 2020/21 export competition is expected for the United States with several major exporters projected having larger supplies. Projected 2020/21 ending stocks are 69 million bushels lower than last year at 909 million. The projected season-average farm price is $4.60 per bushel, unchanged from last year as the outlook for low U.S. corn prices is expected to restrain 2020/21 U.S. wheat prices. The initial outlook for 2020/21 international wheat is for larger supplies, increased trade, greater consumption, and higher ending stocks. Foreign supplies are projected to increase 23.2 million tons to 982.4 million as several major exporters (Argentina, Australia, Canada, and Russia) are projected to have higher production for 2020/21. Australia is projected with the largest increase from last year to 24.0 million tons, up 8.8 million as it recovers from a multi-year drought. Conversely, the EU is projected to decline nearly 12 million tons to 143 0 million on lower harvested area and yields. Ukraine production is also projected lower at 28.0 million tons, but this would still be the secondlargest production on record. Projected 2020/21 global trade is 4.6 million tons, or more than 2 percent higher, at a record-high 188.0 million on greater exportable supplies. Imports are projected to rise, primarily on increased demand by China, Algeria, Morocco, the EU, Iraq, and Uzbekistan. Russia is projected as the 2020/21 leading world wheat exporter at 35.0 million tons with Argentina, Australia, and Canada also projected higher while the EU, Ukraine, and United States are lower. Projected 2020/21 world consumption is increased 4.9 million tons to a record-large 753.5 million as higher food, seed, and industrial use more than offsets reduced feed use on greater global corn supplies. Projected 2020/21 world ending stocks increased 5 percent to a record-large 310.1 million tons with China accounting for 52 percent of the total.

Source: USDA

With global inventories at record levels, the fundamental picture for wheat remained slightly bearish in the May WASDE report.

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.

We are at the time of the year when uncertainty over the 2020 crop tends to peak. I believe grains still have upside potential over the coming weeks and months as the growing world demand for food limits the downside. I will take profits on rallies in the current environment and raise stop levels on long core positions to protect capital. Mother Nature and the weather will be the critical factor for the path of least resistance of all grain prices over the coming weeks and months. I continue to believe we will see at least one significant rally during the coming weeks and months that will present an opportunity to take profits and lower the size of risk positions.

Despite the recent price action and bearish data from the May WASDE report, I continue to favor the long side of the three leading grain futures market because of seasonality and the uncertainty of the weather conditions over the coming weeks and months.


Copper, Metals, and Minerals

The Baltic Dry Index, uranium, and COMEX copper prices moved lower over the past week, but all of the other members of the industrial complex posted gains. Copper on the LME moved higher, along with aluminum, lead, nickel, and zinc. The LME suddenly changed its policy on posting stock data to a two-day delay. A Chinese entity owns the LME. The delay of inventory data could be providing those with inside knowledge of inventory movements with an advantage in the market. Shame on the LME for putting this change in place quietly over the past week. An exchange should never delay price or inventory data, nor should it charge for the latest figures. Transparency creates a level playing field for trade.

Copper fell only 0.04% on COMEX over the past week. The red metal posted a 2.35% gain as of May 12 on the LME since the last report. Open interest in the COMEX futures market moved 3.42% higher since May 5. July copper was trading at $2.3460 per pound level on Wednesday. Copper is a leading barometer for the overall health and wellbeing of the Chinese and global economies. Over the past week, LME and COMEX stockpiles moved in opposite directions, but the two-day delay on the LME is unfair and annoying. Some mine closures in the US and South America could be providing some support to copper and other base metals prices as Coronavirus has impacted countries all over the world.

Support for the copper markets below the most recent low is at the early 2016 low of $1.9355 per pound. From a short-term perspective, the first level on the downside stands at $2.2170 per pound on July futures. Chinese demand will continue to be the most significant factor when it comes to the path of the price of copper and other base metals and industrial commodities over the coming weeks and months. Keep in mind that during the 2008 financial crisis, copper fell to a bottom of $1.2475 per pound. The decline came from over $4 per pound in early 2008. However, the price of the red metal only briefly probed below the $2 level and has been steadily moving away from the level on the downside. Technical resistance is at the recent high of $2.4300 per barrel on the July futures contract on COMEX. The markets are not yet out of the woods when it comes to Coronavirus. Any outbreaks that cause the economy to shut down again or take a significant step back in social distancing easing could cause selling to return to all markets, and industrial commodities could fall sharply. Therefore, caution is available as the prices crawl higher.

The LME lead price moved higher by 1.59% since May 5. The rise in demand for electric automobiles around the world had been supportive of lead in the long term as the metal is a requirement for batteries, but Coronavirus weighed on the price of lead because of falling fuel prices. The price of nickel moved 4.03% higher 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 so far this year. Tin rose by 0.18% since the previous report. Aluminum was 0.17% higher since the last report. The price of zinc posted a 5.73% gain since May 5. Zinc was at just below the $2020 level on May 12. Nonferrous metals mostly crawled higher over the past week.

July lumber futures were at the $348.50 level, up 2.05% since the previous report. Interest rates in the US will eventually influence the price of lumber. Lumber can be a leading economic indicator, at times. The price of uranium for June delivery moved 1.32% lower after recent gains and was at $33.70 per pound. The world’s leading producer, Kazakhstan, suspended production nationwide for three months to slow the spread of COVID-19. The volatile Baltic Dry Index plunged 24.70% since May 6 to the 433 level in a sign of weakness for the global economy at this time of the year. June iron ore futures were 8.66% higher compared to the price on May 6. Open interest in the thinly traded lumber futures market fell by 3.13% since the previous report.

LME copper inventories moved 1.50% lower to 241,675 since the last report. COMEX copper stocks rose by 4.20% from May 5 to 45,042 tons. Lead stockpiles on the LME were up 0.20%, while aluminum stocks were 0.59% lower. Aluminum stocks rose to the 1,347,100-ton level on May 11. Zinc stocks decreased by 0.55% since May 5. Tin inventories fell 6.96% since May 5 to 4,745 tons. Nickel inventories were 0.11% lower compared to the level on May 8. The stock data on the LME is now two days stale. I am hopeful that the LME will rethink its decision to keep the market in the blind.

We own the January 2021 $15 call on X shares at $3.30 per share, and it was trading at 18 cents on May 13, down seven cents since the previous report. The details for the call option are here:



US Steel shares were at $7.23 per share and moved 9.51% lower since last week.

FXC was trading at $8.40 on Wednesday, $0.19 lower since the previous report. I continue to maintain a small long position in FCX shares. I will not sell the stock at this level, but I am on the sidelines when it comes to adding to the position.

Continue to exercise caution in the current environment, and only trade on a short-term basis with very tight stop levels. Any positions on the long side in the base metals or industrial commodities are a wager that the Chinese economy experiences growth, and the global pandemic’s impact on the world declines over the coming weeks. Selling in the stock market in the US could lead to lower prices. Low interest rates and stimulus provide support for industrial commodity prices, and mine closures could lead to shortages. The first sign of any market deficits will be if stockpiles of the nonferrous metals on the LME begin to decline. Unfortunately, the exchange has made a move that will cause transparency to decline.

I remain extremely cautious on the sector and have limited any activity to very short-term risk positions.


Animal Proteins

Live and feeder cattle prices moved higher since last week. Lean hog prices turned lower after the recent recovery that took the price if June futures from 41.5 to 66.95 cents in a little less than one month. The USDA WASDE report on May 12 told the animal protein markets:

Total U.S. red meat and poultry production for 2021 is projected to be above 2020 as the sector continues to recover from the impacts of COVID-19 in 2020. Beef production is forecast higher as cattle placements in 2020 are expected to shift toward the latter part of the year and be marketed and slaughtered in 2021. Heavier carcass weights are also expected to support higher production. Pork production is expected to increase as the sector recovers from the slaughter adjustments of 2020.

For 2020, the total red meat and poultry production forecast is reduced from last month as the sector adjusts to COVID-19 and economic uncertainty. Beef production is reduced as lower expected cattle slaughter more than offsets heavier carcass weights. Pork production is forecast lower on a slower expected pace of slaughter. However, heavier hog carcass weights are expected to partially offset lower production

Red meat and poultry exports are expected to increase in 2021 on expanding production and an expected increase in global demand. For 2020, export forecasts for beef and pork are reduced on slower expected export growth due to economic weakness and reduced supplies.

For 2021, fed cattle, hog, and broiler prices are forecast higher on stronger expected demand, despite larger production.

For 2020, fed cattle prices are forecast lower on current prices and weak demand. Hog prices are raised from last month on current prices and improved demand expectations as the year progresses.

Source: USDA

The USDA report was modestly bullish for the meats as prices had been at multiyear lows over the past week. However, the prices fell sharply on Wednesday.

June live cattle futures were at 93.875 cents per pound level up 4.92% from May 6. Technical resistance is at 99.775 cents per pound. Technical support stands at around 80.30 cents per pound level. Price momentum and relative strength indicators were rising towards overbought readings on Wednesday. Open interest in the live cattle futures market moved 4.58% lower since the last report.

August feeder cattle futures underperformed live cattle as they rose by 0.25% since last week. August feeder cattle futures were trading at the $1.33075 per pound level with support at $1.10025 and resistance at $1.3900 per pound level. Open interest in feeder cattle futures fell by 5.30% 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. The WASDE report was modestly bullish for the beef markets, given the low price levels going into the grilling season and because of the prospects for lower future production.

Lean hog futures turned lower since the previous report. The active month June lean hogs were at 57.875 cents on May 13, which was 11.74% below last week’s level. Price momentum and the relative strength index crossed lower in overbought territory on the daily chart on Wednesday as were below neutral readings. Support is at 50.00 cents with technical resistance on the June futures contract at the 66.95 cents per pound level.

The forward curve in live cattle is in contango from June 2020 through April 2021. There is backwardation from April 2021 until August 2021 when contango returns until October 2021. The Feeder cattle forward curve is in contango from May through November 2020 before it becomes backwardated and flattens until April 2021. The forward curves did not experience any significant changes over the past week in the cattle futures market.

In the lean hog futures arena, there is mostly backwardation from May 2020 until December 2020. Contango returns from December 2020 through June 2021. The curve flattens from June through August 2021. Futures prices have moved to reflect the potential for shortages for consumers. Some supermarkets are limiting beef, pork, and chicken purchases to prevent hoarding. The forward curve in the hog market tightened over the past week as the price of pork continued to rise.

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 June futures contracts bounced higher as the price of live cattle outperformed lean hogs on a percentage basis.

 Source: CQG

Based on settlement prices, the spread was at 1.62200:1 compared to 1.36450:1 in the previous report. The spread rose by 25.75 cents as live cattle rose, and lean hog futures declined over the past week. The spread moved back above the historical norm on the June futures contracts. The differential had narrowed dramatically over the past weeks. The spread was at its highest level since 2015 in mid-April, but it turned lower as hogs recovered from multiyear lows pushing the differential to the long-term average. Beef returned to a level that is slightly expensive compared to pork on a historical basis.

The peak season for demand is now only two weeks away. Beef and pork prices have made dramatic recoveries over the past weeks from multiyear lows. The WASDE was mildly bullish for the meats as we head into the peak season for demand. Even if consumers are purchasing more proteins, restaurant activity has declined to the lowest level in many years, which could continue to prevent any significant price recoveries. However, in the world of commodities, the cure for low prices is always low prices. As production falls, we could see shortages develop over the coming months and years, leading to a period of significant price appreciation.


Soft Commodities

Three of the five soft commodities posted losses over the past week with coffee leading the way on the downside. FCOJ was down over 1.7%, while sugar edged lower. Cocoa and cotton prices posted gains over the past week.

July sugar futures fell 0.10% since May 6, with the price settling at 10.26 on May 13. The price of the sweet commodity fell to a new multiyear low at 9.05 cents per pound on the May contract on April 28. Technical resistance on July futures remains at 11.01 cents with support at the most recent low of 9.21 cents on July futures. Sugar made a new high at 15.90 cents on February 12 on the continuous contract, but the price collapsed on the back of risk-off conditions. The decline in the price of crude oil and ethanol in April weighed on sugar as the primary ingredient in ethanol in Brazil is sugarcane. The recovery in the oil market provided some support for the price of sugar. Weakness in the Brazilian currency reduces production costs and has been a bearish factor for the sugar market.

The value of the January Brazilian real against the US dollar was at the $0.16850 level against the US dollar on the June contract on Wednesday, 4.04% lower over the period after trading to a new low of $0.16775 on May 7. The Brazilian currency has been making lower lows as Coronavirus weighed heavily on all emerging markets. Anyone with a risk position in sugar should keep an eye on the price action in the Brazilian real. Over the past week, sugar followed the Brazilian currency instead of the energy commodity. Price momentum and relative strength on the daily sugar chart were near neutral territory as of May 13. The metrics on the monthly chart was at an oversold reading, as was the quarterly chart. Sugar made a new high above its 2019 peak in February before correcting to the downside. The low at 9.05 was the lowest price for sugar since way back in 2007.

Risk-off conditions stopped the rally. Sugar found at least a temporary bottom at a lower low of 9.05 cents per pound. Open interest in sugar futures was 3.17% higher since last week. Sugar had rallied to new highs as drought conditions in Thailand created the supply concerns that lifted the price of sugar futures. The correction in sympathy with the risk-off conditions in markets across all asset classes chased any speculative longs from the market. The long-term support level for the sweet commodity is now at 9.05 and 8.36 cents per pound. Without any specific fundamental input, sugar is likely to follow moves in the energy sector as well as the currency market when it comes to the exchange rate between the US dollar and the Brazilian real.

July coffee futures moved 5.02% lower since May 6. July futures were trading at the $1.0505 per pound level. The technical level on the downside is $1.0380, the late April low. Below there, support is at around 97.40 cents on the continuous futures contract. Resistance is at $1.2260 on the July contract. I continue to favor coffee on the long side, but coffee can be a highly volatile commodity in the futures market, as we have witnessed over the past weeks and months. Our stop on the long position in JO is at $27.99, but in the current conditions, I would increase the stop and exercise extreme caution. JO was trading at $33.01 on Wednesday. Open interest in the coffee futures market was 0.96% higher since last week. I continue to hold a small core long position in coffee after taking profits during the rally in March.

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. However, those fears subsided, causing the price of the soft commodity to decline to a level where buying returned to the market. Coffee had made higher lows since reaching 86.35 cents in mid-April. The price of coffee has remained firm despite the risk-off conditions. The ultimate upside target is the November 2016, high at $1.76 per pound. Price momentum and relative strength were below neutral readings on Wednesday. On the monthly chart, the price action was below neutral. The quarterly picture was below a neutral condition. As I wrote in previous reports, “The risk rises with the price in the volatile coffee futures market. We should expect wide intraday trading ranges in the coffee futures market.”  Coffee can be a wild bucking bronco when it comes to the price volatility of the soft commodity. Bottlenecks on South American ports could prove highly supportive of coffee prices as they could create a shortage of the beans. I expect volatility in coffee to continue, and I will look to trade on a short-term basis with a bias to the upside. I increased the long position slightly over the past week but will keep a tight stop at just below the $1 per pound level on futures and ETN products.

The price of cocoa futures moved higher over the past week. On Wednesday, July cocoa futures were at the $2456 per ton level, 3.94% higher than on May 13. Open interest rose by 2.59%. Relative strength and price momentum were rising above neutral readings on May 13. The price of cocoa futures rose to a new peak and the highest price since September 2016 at $2998 per ton on the March contract on February 13. Risk-off conditions pushed the price of cocoa beans lower, but they bounced after reaching a low that was $7 above the technical support level. We are long the NIB ETN product. NIB closed at $28.60 on Wednesday, May 13. 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. The level to watch on the upside is now at the mid-March high of $2631 per ton on the July contract. On the downside, technical support now stands at $2215 per ton. The potential for Coronavirus to disrupt production in West Africa is high, which could lead to shortages of beans over the coming months. The health systems in producing countries like the Ivory Coast, Ghana, Nigeria, and others are not sufficient to treat patients or prevent the spread of the virus. Africa could suffer tragic consequences over the coming weeks and months. The flow of cocoa beans to the world could suffer as bottlenecks at ports could reduce exports. I continue to favor the long side in cocoa but will be cautious in the deflationary environment in markets.

July cotton futures rose 5.41% over the past week. The recent declines have been on the back of continued concerns about the Chinese and global economies. July cotton was trading at 57.46 cents on May 13, after falling to the lowest price since 2009 in early April. On the downside, support is at the recent low of 52.01 cents and then at 48.15 cents per pound. Resistance stands at 58.59 cents per pound, the April 30 high. Open interest in the cotton futures market fell by 0.03% since May 5. Daily price momentum and relative strength metrics were above neutral territory on Wednesday.

I remain slightly bullish on the prospects for the price of cotton at above the 50 cents per pound level but would use tight stops on any long positions. The May 12 WASDE report told the cotton market:

The U.S. cotton forecasts for 2020/21 include larger beginning stocks, consumption, exports, and ending stocks compared with the year before. Production is forecast at 19.5 million bales—400,000 bales less than the year before, based on 13.7 million planted acres as indicated in the NASS March Prospective Plantings report. Planted area is expected to be virtually unchanged from 2019/20, but harvested area is projected 2 percent lower, as abandonment rises from 2019/20. The yield is projected only slightly higher, using 10-year regional averages. Domestic mill use and exports are expected to rebound as the world economy begins to recover. Mill use is expected to rise 200,000 bales, and exports by 1 million; but ending stocks are expected to rise 600,000 bales to 7.7 million, equivalent to 41 percent of use. This would be marginally higher than in 2019/20 and the highest since 2007/08’s 55 percent. The price received by upland producers is forecast at 57 cents per pound, slightly below 2019/20. For 2019/20, U.S. cotton production is raised slightly from last month. The export forecast is unchanged, but expected consumption is 200,000 bales lower, and ending stocks 400,000 bales higher. World ending stocks in 2020/21 are projected to rise for a second consecutive year, but at a much slower pace. With harvested area down globally, production is expected to decline 3.7 million bales, while consumption is expected to rise 11.5 million bales as the global economy begins recovering. Global ending stocks are expected to rise 2.3 million bales, but fall as a share of consumption, from 93 percent in 2019/20 to 85 percent. For 2019/20, the world consumption forecast is reduced to 105.0 million bales, down 5.6 million from the previous forecast and 12.7 percent below the previous year. This would be the largest annual decline in world consumption since the 19th century. World production is raised 1 million bales from the previous month, and 2019/20 ending stocks are 5.9 million higher. The revised year-to-year increase in global ending stocks is 16.9 million bales.

Source: USDA

The WASDE was not bullish for the price of cotton, as US and global stocks are rising on the back of weak demand for the fiber. However, the price is at a low level.

July FCOJ futures moved to the downside since the last report. On Wednesday, the price of July futures was trading around $1.1730 per pound, 1.72% lower than on May 6. Support is at the $1.1000 level. Technical resistance is at $1.2100 per pound, the high from March 31. Open interest rose 0.45% since May 5. The Brazilian currency is weighing on the FCOJ futures, but bottlenecks at the ports could work in the opposite direction. $1.1000 per pound is the first level of minor support for the soft commodity.

Most of the soft commodities remained within their recent trading ranges over the past week. Only cocoa futures moved outside the band, as the price rose in a continuation of bullish price action since late 2017. Sugar remains near the bottom end of its pricing cycle, coffee is consolidating above the $1 per pound level, and cotton is attempting to drift higher in a market where demand has been problematic. FCOJ is above the $1 level, which has been technical support. There have been no significant moves, but soft commodities always have the potential to display lots of price variance and explosive and implosive moves. The current environment and level of the Brazilian currency is bearish, as is the deflationary impact of the pandemic. However, at current price levels in most of the members of the soft commodities sector, price are likely to drift lower, while any moves on the upside would be surprising and could cause much more significant percentage moves.


A final note

The effect of the stimulus on the dollar and all currencies is a factor we will need to keep our eyes on over the coming weeks, months, and years. In 2008, the stimulus that followed the global financial crisis eventually drove commodity prices to multiyear, and in some cases, all-time highs in 2011. In 2020, the levels of central bank and government stimulus programs are far higher than twelve years ago. The vast increase in the global money supply has significant inflationary ramifications. Inflation eats away at the value of fiat currencies, which is bullish for commodity prices.

Now is an excellent time to begin to cherry-pick medium to long-term positions in commodities that are closer to the low end of their respective pricing cycles. I expect that the price for the stimulus will be a period of inflationary pressure that will lift raw material prices across all sectors of the commodities asset class much higher than levels seen in 2011. I would only buy on price weakness in the current environment.


As I wrote over the past weeks, I plan to increase the price of The Hecht Commodity Report in the coming months. However, all of my current loyal subscribers will never experience an increase in their monthly or annual subscription rates. I will grandfather all subscribers at their current rates for as long as they maintain their subscriptions. Thank you for your support.


Please keep safe and healthy in this environment.




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.