Commodities Briefing: Hard and Soft

Commodities Briefing: Hard and Soft

Commodities Briefing: Hard and Soft

$GLD, $SLV, $CU, $OIL, $CORN, $WEAT, $SOY

Commentary: Again, Crude Oil prices have risen on indication that the Iran sanctions could limit supply globally without possibly hurting the demand from China. But the prices face rejection from resistance at these marks this week.  PE

Crude Oil and Metals

NYMEX WTI Crude Oil at 70.06 seeing 1st resistance at 70-71. While it holds, see a dip to 68, or the longer term charts look Bullish with a clear break above 71 and a rise to 74 medium term. We wait, We watch.

ICE Brent Crude Oil at 78.07 is trading at resistance on the daily, and these marks are very important. A clear break above this could drive the price to 80 near term. Or a rejection here, bring on a fall to 76-75 this week.

Gold at 1206.70 could trade within the 1200-1230 with a possible extension to 1190. Overall ranged action is on the cards in here.

Copper at 2.6610 could come to 2.60-2.55 near to medium term. My immediate view is Bearish.

 

Agriculture Commodities

Chicago Board of Trade (CBOT) agriculture commodities closed mixed during the week ended 31 August, with Wheat futures rising over 1% on concerns about major Wheat exporter Russia’s production and global weather worries.

The most active Corn contract for December delivery rose 2.25c weekly, or 0.62%, to 3.65 bu.

December Wheat delivery added 9c, or 1.68%, to 5.455 bu.

November Soybean dropped 11.75c, or 1.37%, to 8.435 bu.

CBOT Corn futures ended the week a bit higher, and like last year rallied sharply ahead of the first notice day against September contracts expiration.

Since Y 2016 there’s been a strong seasonal trend for lasting bottoms to be scored on the final day of August. Excess on-farm supplies have been liquidated ahead of harvest and recall that the old crop US Corn balance sheet remains somewhat loose.

Agriculture analysts maintain a Bullish outlook, with a strong demand-driven recovery to unfold in the next 90 days. There is evidence that final US Corn yield will be below 178 BPA.

Weakness in Argentina’s Peso has produced better near-term farmer selling, but the Argentine producer will now shut off sales as a hedge against incredible inflation.

And otherwise, the US Gulf market will have a near monopoly on corn exports during the Fall months.

Wheat futures rallied modestly on the week, and analysts suggest that a seasonal bottom has formed. Rallies failed in August, but intermediate lows tend to be posted by early September.

The trade will be on high alert for Russian government interference following news this week, and a planned meeting with exporters there on Monday. Whether Russia moves to legislate a cap on exports in the near term is unknown but recall this is just one symptom of a very tight world Wheat balance sheet.

Seasonal trends in both futures and cash markets move higher into late year. US Wheat export demand, while lacking currently, will be robust in late 2018/19.

Soybean fell back to test the July lows and closed the week lower. US Soybean cash markets remain exceptionally weak with Midwest cash basis bids falling to historic levels as winding down of old crop marketing programs have put large supplies on the market.

Additionally, several private crop estimates put the US Soybean yield at more than 53 BPA, and the US Department of Agriculture (USDA) is expected to follow through with a similar yield in the September Crop Report, to be released in 2 weeks.

Have a terrific week.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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