Hecht Commodity Report

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  • Gold and silver higher- PGMs lower
  • The dollar index moves marginally lower- Stocks lost ground
  • Across the board losses in the energy sector with natural gas leading the way
  • Copper hangs not far below the recent high- Industrial commodity prices mostly firm
  • Weakness continues in agricultural commodity prices

 

As the number of coronavirus cases rose in the US over the past week, business interruption fears weighed on the stock market and many commodities prices. The end of the second quarter of 2020 is next week, and this year should continue to be turbulent. Aside from the pandemic, social issues facing the US, and relations with China, the Presidential election in early November will begin to take the center of the stage over the coming weeks and months. The election will determine the future of US policy that will impact the path of least resistance for many asset markets. Expect market volatility to continue.

 

Highlights in commodities:

 

  • August gold rose by 1.56% on the week, settling at $1780.30 per ounce
  • July silver rose 1.05% for the week as the precious metal settled at $18.035 per ounce on June 26
  • July platinum down 2.10% on the week. July platinum was at a $970.40 per ounce discount to August gold futures, which widened since last week
  • September palladium fell 0.73% and settled at $1,894.40 per ounce. Rhodium fell $200 per ounce to a midpoint of $6,800 over the past week
  • July copper was 1.84% higher to the $2.6590 level since June 19
  • July iron ore futures moved 0.20% higher over the past week
  • The BDI moved 12.48% gain higher since June 19 to the 1,749 level
  • July Rotterdam coal moved 7.62% higher since last week
  • July lumber was 2.16% higher since June 19 and was at the $430.50 per 1,000 board feet level
  • August NYMEX crude oil fell 3.36%. The August contract closed the week at $38.49 per barrel
  • August Brent crude oil moved 2.77% lower since last week to $41.02 per barrel
  • The premium for Brent over WTI in August closed Friday at the $2.53 level as the spread was up $0.07 per barrel since last week
  • July gasoline declined 9.02% while July heating oil futures posted a 5.01% loss over the past week
  • The gasoline crack spread in July was 28.64% lower since last week. July heating oil crack moved 12.65% to the downside since June 19 as gasoline and heating oil underperformed crude oil
  • Natural gas fell 11.67% on the August futures contract closing the week at $1.544 per MMBtu. The nearby contract made a new twenty-five-year low at $1.432 during the week. The EIA reported an injection of 120 bcf into storage on Thursday for the week ending on June 19
  • July ethanol fell 6.13% on the week on weakness in gasoline
  • July soybeans moved 1.31% lower since last week
  • July corn was 4.66% lower on the week on weakness in ethanol
  • CBOT July wheat fell 1.51% since last week to $4.74 per bushel level. July KCBT wheat trading at a 52.75 cents discount under July CBOT wheat as the discount moved towards the historical norm by only 0.25 cents per bushel since last week
  • October sugar fell 4.60% since June 19 and closed at 11.62 cents per pound on Friday
  • September coffee posted a 0.78% gain since last week as the price was at the 96.65 cents per pound level
  • September cocoa rose 1.11% since June 19
  • December cotton fell 0.52% since last week as the fiber futures were at the 59.50 cents per pound level
  • September FCOJ futures rose 3.52% since the previous report to $1.2630 per pound
  • August live cattle moved 0.66% higher since last week
  • August feeder cattle rose only 0.04% since June 19
  • August lean hog futures fell 8.85% over the past week and settled at just over 48 cents per pound
  • The June dollar index futures contract edged 0.18% lower on the week to 97.404
  • September Long-Bond futures were trading at 179-00 up 1-18 for the week
  • The Dow Jones Industrial Average closes at 25,016 on Friday, June 26 down 855 points from June 19. The S&P 500 fell 2.86% since last week. The VIX was trading at around 34.73 on Friday down 0.39 despite the decline in the stock market
  • Bitcoin was trading at $9,118.27 on Friday down $132.39 or 1.43% since June 19
  • Ethereum was trading at $228.82 on Friday, up only 0.03% since the last report

 

Price Changes for the week:

 

DBC closes at $12.05 per share, down 28 cents since June 19

 Source: Barchart

 

DBC is the Invesco DB Commodity Tracking product which represents a diversified basket of commodities futures contracts, has net assets of $818.32 million, and trades an average daily volume of 1,104,087 shares. The fund summary for DBC states that it holds a diversified group of commodities futures but is weighted towards energy. The average volume fell, net assets were steady over the past week, and the price of the ETF moved lower.

 

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.   

                                                         

 

 

 

 

 

 

 

 

 

Andy Hecht

Author

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