Booy’s #Commodities #60SecUpdate #40

   

METALS

 Strong job report on Friday lifted the US Dollar on the news but lacked followed through.  The lack of strength continued at the open on Sunday, which in turn is supporting precious metals.  The corrective action in USD may continue, given the rally we saw in May.  A calmer (on the surface) situation in Italy supports the Euro against the USD.

The positive economic data on Friday can also be considered a small catalyst for industrial metals, which are showing signs of strength especially in the case of copper and palladium.  After all, if wages continue to rise, where will Americans spend their money?  Houses and cars indeed…

 

ENERGY

 

Oil and RBOB have broken the uptrend on what might just be a temporary correction on US oversupplies, but more importantly, on the prospect of the end of OPEC production cuts.  We are 18 days away from OPEC’s meeting.  Expectations for a decision will dominate the conversation, with various OPEC countries leaders chirping their two cents and swinging the prices here and there a little more than two pennies.

Natural Gas appears to be poised to break the $3.00 mark in the July contract and potentially break out to new highs for 2018 ($3.01) which were set in January.  A warming trend is in the forecast, which will tax energy demand.

 

 

GRAINS

Trade war fears resurfaced over the weekend, thanks to the ever-chirping President Trump.  This is a negative, especially for soybeans.  However, the above-mentioned warming front can reverse the move in a hurry if the market sees early signs of stress.

June is the month with the most calendar year highs for grains and oilseeds.  This is because the crop outlook is the most uncertain and the market tends to add a premium to compensate for that uncertainty.

Crop Progress Report will be this afternoon and should show very good ratings.

  

SOFTS

 

All softs are starting the week on a… softer tone.  Cotton, coffee, and sugar are down, giving back some of last week’s gains.  Cocoa continues its reversal, now back down to the lowest prices since the beginning of March.

Cotton is “selling the news” now that tropical storm Alberto has passed over the Southeastern portion of the crop.  In the Southwest, however, drought concerns persist and will have to be monitored as the crop develops in the area.

Coffee and Sugar weakness can be attributed to the Brazilian trucker strikes coming to an end and starting to see the flow of good beginning to return to normal.

 

LIVESTOCK

 

Weather is starting to be an issue for cattle, similar to the issues we have already seen for wheat and cotton.  Excessive dryness may impact weights and feeding for a large part of the heard located in the Plains.

Trade war (mostly with NAFTA partners, Canada and Mexico) will continue to affect pork.  Over the weekend, the rhetoric was negative and Hogs farmers will suffer the consequences.

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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.