U.S. corn futures dropped to the lowest in levels in six weeks yesterday as forecasts for favorable climatic conditions across the U.S. Midwest enhanced optimism among grain traders for bumper crops this year thereby facilitating grain glut in an already saturated corn market.
Chicago Board of Trade (CBOT) July corn lost about 7 cents to $3.17-1/4 a bushel in the steepest drop since early May.
In addition, economic worries over the rising novel, COVID-19 infections in the western world, and parts of Africa weakened demand for this vital crop.
Quick fact; Corn futures are designed as standardized, contracts traded on an exchange in which the buyer of the contract agrees to take delivery, from the seller of the contract, at a predetermined price on a future delivery date agreed upon.
Most parts of the western world use corn as an energy substrate for livestock feed. In Nigeria and most parts of the world, corn is also is consumed by humans either by cooking, roasting, its industrial uses include producing industrial alcohol, fuel ethanol, sweeteners, starch, and beverage.
This year America remains the largest producer of corn while China and Brazil come in second and third respectively.
“Weather models got wetter overnight,” said Mike Zuzolo, president of Global Commodity Analytics. “The ethanol correction from the energies is adding to some liquidation pressure as well.”
Grain traders also placed their bets ahead of next week’s U.S. Department of Agriculture (USDA) quarterly grain stocks and the U.S. planted acres reports.
Adding strains on the price of corn futures the International Grains Council yesterday raised its forecast for global corn and wheat production.
Gold prices suffer worst W/W decline since March
Gold futures prices settled at $1.866.30/ounce, showing a loss of 0.56% at the last trading session of the week.
Gold futures declined on Friday, to post a loss of nearly 5% for the week—the largest weekly percentage loss since mid-March. Gold traders have had significant losses on the precious metal to the strength in the U.S. dollar this week.
What we know: Gold futures prices settled at $1.866.30/ounce, showing a loss of 0.56% at the last trading session of the week.
Rising COVID-19 caseloads in emerged markets have distorted investment strategies of global investors, as the world’s economic recovery seems to be fragile, driving investors into dollars, which has weighed on the bullion-asset.
On top of that, gold traders have also unwound some of their gold holdings as a part of this week’s equity-market sell-offs, which added to the pressures around precious metals.
Other precious metals such as palladium, platinum are also headed for their worst week since the COVID-19 pandemic began to impact financial markets.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, highlighted the key macros dampening the optimism of gold bull.
“Gold investors remain less than flattered by the procession of Fed speakers since the FOMC less dovish than expected retort on September 16.
“Most of the focus was still falling on the US Fed’s Charles Evans’ uncomplimentary for gold comments when he suggested that US interest rates go up before the 2% inflation target is hit.”
That said, the outlook remains positive for gold in the long term, on growing COVID-19 cases; also, high geopolitical uncertainty could keep the yellow metal above $1,700/ounce price level in the midterm.
Oil prices propel above $40/barrel but bulls prospect remains weak
Brent crude (LCOc1) was up 0.41% to trade at $42.11 a barrel by 0706am GMT.
Crude oil prices rallied higher on Friday at the opening of London’s trading session.
The black liquid is on track for a weekly decline because of rising concerns about the global resurgence of COVID-19 infections and its effects on fuel demand, while additional supplies from Libya continue to weaken oil bulls’ prospect.
Brent crude is heading for a price decline of around 2.5% this week with WTI also on track for a price fall of about 1.5%. Both benchmarks are also heading for a monthly decline, which would be the first for Brent in six months.
What we know; Brent crude (LCOc1) was up 0.41% to trade at $42.11 a barrel by 0706am GMT, while U.S. West Texas Intermediate (WTI) crude (CLc1) gained 0.42% to trade at $40.48.
Stephen Innes, Chief Global Market Strategist at AxiCorp in a note to Nairametrics spoke on the price movement of crude oil with prevailing macros affecting the price.
Saying, “Oil prices bounced overnight as investors turned optimistic that the US Congress may resume stimulus discussions that have been stuck in the swap. Lawmakers were all ears after a chorus of US Federal Reserve committee members were again at pain to point out the need for additional fiscal support. And cries from the world’s top central banker Jerome Powell struck a chord during this week’s testimony to Congress and the Senate. Lawmakers in contentious election battles can ill afford the negative press around Congress’ dithering during the next 6-week election run-up. A US stimulus package pre-November election is very much underpriced and could be a significant catalyst for oil’s demand function and could punch prices higher.”
However, supply-side dynamics are quite more encouraging than before and should get reflected in a strong downtrend in inventories over the next few months
Crude oil prices fall on fears of global energy demand
In Thursday’s trading session, Crude oil prices fell
Crude oil prices dropped at Thursday’s trading session. This slide is attributed to recent poor E.U. economic data, and a lower-than-expected U.S. gasoline demand. Fears of a second wave of COVID-19 in emerged economies also weakened investors’ enthusiasm.
What we know: Brent oil futures fell 0.57% to $41.53 by (6:40 AM GMT) and WTI futures slid 0.78% to $39.62.
The E.U. released purchasing manager index data that heightened fears about the region’s economic recovery hopes, with the services index dropping by 50-mark, separating growth from contraction.
The U.S. Energy Information Administration (EIA) released figures on Wednesday showing a lower-than-expected draw of 1.639 million barrels for the week to Sep. 18, against a forecast 2.325 million-barrel draw. U.S. demand for gasoline was down 9% at this time last year.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in an explanatory note to Nairametrics, gave detailed insights on the bearish run prevailing in the oil market.
“Crude oil prices initially reversed their decline overnight after the Energy Information Administration reported that commercial oil stocks trended down due to a large draw in products with gasoline stocks back down to their 5-year average.
“Yet it was all for naught after US Federal Reserve Chair Jay Powell pancaked global markets with a discordant economic warning and a penetrating call out for more stimulus to congress,” Innes stated.
Oil traders are bringing crude oil price recovery to a screeching halt with nervous investors seeking out the US dollar’s safety.