Weaker reaction by precious metals to the truce, while Copper and Palladium were stronger. Stronger equities and a general “risk-on” market will support industrial sector. The exception is Platinum, which in our estimate will trade more and more like a precious metal, as its demand for industrial use tied to diesel cars will continue to diminish.
* Oil: reversed early gains. The Venezuela situation is still negative, but less uncertain.
* NatGas: continues its choppy climb upwards, supported by rising temps and much lower stocks than last year. However, plenty of rigs out there ready to frack.
A truce is good enough to shoot soybeans up by 20 cents at the open. The rest are following. Today’s market will work on digesting the news. This may be a window for Chinese importers to speed up purchases and front-load their needs ahead of future challenges to the truce. Especially relevant in light of cuts to its own soybean production for the first time in over a decade. This afternoon’s Crop Progress report expected to show around 80% done in corn and 50% done in beans.
* Cotton: benefits from the truce. Rain expected this week, but not much after that. It’s at the highest level in four years!
* Coffee: big crops (add Mexico and Colombia) are being priced in, while risky weather hasn’t yet. June-July could get interesting.
* Cocoa: weaker tone continues overnight, yet tech support levels are nearby.
* Sugar: the rebound continues, helped by a weaker BRL, for the first time in the last seven sessions.
Traders will position for Cold Storage Report out today, after market close. Cattle on Feed report this Friday at 11:00AM due to Memorial Day Holiday.
Abbreviations: bbl = barrels; BRL = Brazilian Real; CoT = Commitment of Traders report; K = 1,000; MoM = Month-over-Month; Px = price; USD = US Dollar; YoY = Year-over-Year; YTD = Year-to-Date.
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