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Global Commodities Research Newsletter – June 2020

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Market Outlook for US and South America Regions

Grains

In June, the USDA raised the world 2020/21 wheat crop to be near to 773 mmt. Most of the increase was in China, India and Australia. They did lower the European crop. The USDA increased the world 2020/21 wheat carryout to be near 316.0 mmt versus 310.1, which was bearish to prices. The USDA also increased the U.S. 2020 wheat crop 11 mil bu to 1,877. This was also bearish to prices. Funds increased their wheat shorts after Russia announced it will not extend wheat export quotas into July.

Livestock

As global economies saw massive unemployment, shoppers were not buying high end cuts such as steaks and roasts. Demand exponentially increased for low cost proteins such as ground meat products.

Pork processing facilities across the U.S. were hit hard with employee health issues and some slaughter facilities were shut down. Earlier this year daily slaughter levels were about to make a new record taking in 495,000 hogs to 499,000 hogs per day.

Financials

Stock index futures are substantially higher since the lows were made on March 23. The S&P 500 futures broke out above a six-week congestion pattern in late May. Also, NASDAQ futures were able to advance to a record high and above the psychological 10,000 level.

Currencies

The U.S. dollar broke out to the downside from a two-month trading range. There was some selling pressure when it was reported that the first quarter U.S. gross domestic product was down 5.0% when a decline of 4.8% was anticipated.

Energies

There were substantial gains in crude oil futures after prices collapsed last month to below $0 for the first time ever. Some of the recovery strength sending U.S. crude above $40 a barrel is due to traders becoming more hopeful that global fuel demand will rebound more quickly than anticipated.  In addition, the industry’s storage crisis easing.

Metals

Since the lows were made on March 16, gold has advanced $335 to as high as 1788.8. The safe haven metal is still near a 7 ½ year high as investors are anticipating ultralow interest rates may become even lower.

Market Outlook for China and Asia Regions

The key Chinese and Asian event over the last 30 days has been the Covid-19 situation in the region showing indications of improving and the economy beginning to open up. As a result, China’s PMI jumped and returned to the expansion area. However, exports data is poor across the region, especially for Japan and Korea, which are still suffering from poor overseas demand.

 

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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