Gold, Silver, and Platinum jumped on the cancellation of the Singapore summit between US and N.Korea. They got additional support from a dovish Fed, which dropped the probability of four rate hikes to below 50%. Markets are swinging with each new political statement crossing the Pacific Ocean. Copper rising despite lower than expected home sales yesterday, but riding the resilience wave in equities.
Oil getting pushed lower ahead of the long weekend. Probably some profit taking, given the very large long position held by speculators. Rumors that OPEC may end its production curbs as early as June is the news du jour. If that were to take place (meeting is June 22), it would be a game changer, for sure.
NatGas continues to gain momentum, with storage data coming in line with expectations but below last week. Technicals are turning bullish, which may bring in more momentum buyers.
There is some spillover from the talk with N.Korea to the conversation with China. Oilseeds especially, reacted negatively to yesterday’s news and rebounded overnight after Kim’s response. Lots of planting will be done this week. Risk premium should diminish. We are looking to Argentina with concern for its stability. Then it will all be about the weather in June and especially July for Corn and August for Beans. And yes, trade talks… They won’t go away soon.
In the short term, Cotton is following the same “Pacific” telegrams as oilseeds, as trade with China is important for US farmers. Demand there from state reserves is strong.
Coffee’s showing signs of a long-term reversal, despite expectations of large crops not just from Brazil. Gut says that expectations may have been too optimistic and a little change in the weather may spark a significant short-covering rally, similar to what happened in Cocoa.
Speaking of which… Cocoa prices continue to back off from the 2018 highs reached at the end of April, as the worse production expectations haven’t materialized and supplies are sufficient, for now.
Sugar was supported also by news that sugarcane devoted to ethanol was above 60% in the first half of the month, instead of the typical 50-55%, making less stuff available for refined sugar.
Cattle-on-Feed report today at 11:00! Expectations are for feeding at 104.9%, Placements at 90.9%, and Marketings at 105.9%. Supplies are expected to be strong for the rest of the year. Rallies might be selling opportunities.
Hog exports yesterday were decent, the total still up over 4% YoY, yet below USDA’s expectations.
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.