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The week is starting quietly on the political front, which leads the markets to care about economic fundamentals for once. There is even talk of Mnuchin going to fraternize with China. The 10-year yield back up near the 3% level, not seen since early 2014. A break of the important psychological level would further strengthen the USD and weaken precious metals. It’s quieter on the Russian front, for now. This means weaker Palladium.
* Oil: 5 more rigs added last week. Quieter Russian spat, stronger USD, and milder temps are today’s headwinds. Specs still super-long. * NatGas: an indecisive end of the week, leaves room for doubt either way. Weather is bearish; storage is bullish.
Weather continues to delay planting due to rain, snow, and muddy conditions. Should be a little better this week in the corn belt. Wheat’s condition should have improved due to some rain hitting parched areas of the Plains. Potential easing of trade tension with China will be supportive for beans. Crop Progress Report will be out after the close.
Cotton: rains in W. Texas improve soil conditions. The story remains on the demand side, which is strong. * Coffee: Back to record short position by speculators. Vulnerable to short-covering and technical short-term reversal. * Cocoa: closed the week on a negative note. Demand is strong in Europe and Asia, but weaker in the US. * Sugar: ED&F Man projects large production increase for Thailand in 18/19, adding to global glut.
Cattle-On-Feed (CoF) Report on Friday was neutral/positive with supply big, but slightly below exp. Future discount to cash price is bullish for futures. The reverse is true for Hogs.