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Commodity Priority Report: Direction and momentum point downward in “risk-on” commodities.
Report Summary
Back Story: China is struggling to land softly despite TV pundits statements, the U.S. is taking steps towards energy independence despite government obstacles, the BRICS are weakening as a strong source of Gold buying, and the impotency that is European’s politicians will do nothing until something more major occurs. For now only Gold holds hope of strengthening if perception changes from commodity to competing currency.
Summary
June Gold settled at $1568.90 per troy ounce, a gain of $11.40 for the day.
Market Recap:
Gold futures advanced on Friday, adding to yesterday’s gains as the Euro continues to deteriorate, and as bonds continue to rally. In addition to rampant tensions from Greek political uncertainty, the Spanish banking sector is also facing severe difficulties, with several banks recently downgraded to speculative (junk) credit ratings. Read more
This morning’s opening in precious metals was showing gold prices marginally higher, spot silver bids somewhat lower, and some mild gains in platinum and palladium. Rhodium fell $25 to $1,275 per ounce. Pre-long-weekend book-squaring –and not just in precious metals- was beginning to become manifest as participants began tallying up the week that was.
Stock index futures, crude oil, and even the US dollar were mainly flat-lining ahead of the US holiday period. As our good friend George Gero of RBC Capital puts it, this morning the “path of least resistance is wait-and-see.” Still, the greenback was above 82.35 on the index and the euro was mired around $1.252 against it.
Gold is now headed for an approximately 2% loss on the week after four sessions of price declines. BNP analysts said that (and you have heard it here before) “Market sentiment on gold is fragile at the moment. There have been tentative rebounds, but so far bullish momentum has yet to materialize. A shift to a more accommodative monetary policy stance may be needed to sustain a gold bull rally.” Perhaps pinning hopes on more QE is not the most desirable thing for the bulls to be doing at the moment, but they appear to have painted themselves into this “Fed-dependent” corner.
Opening Calls
Corn: Up 5 to 10
Soybeans: Up 3 to 5
Wheat: Up 8 to 12
Futures are trading higher this morning, with markets trying to calm down into Memorial Day following another week of chaotic activity.
Corn is bouncing back in early trade Friday, but it’s a long way out of the hole dug on Thursday.
Weak Export Sales helped flush the market lower, with the total coming in at just 19 million bushels. Traders apparently were looking for a larger total, but forgot that sales reported earlier under USDA’s daily reporting system for large purchases were switched from deals previously tallied as going to unknown destinations. Old crop sales of just 6.1 million bushels appeared to confirm the government’s forecasts for extreme price rationing this summer. CIF basis at the Gulf fell another seven cents a bushel yesterday, and is down 13 cents for the week.
http://www.farmfutures.com/story.aspx/morning/call/by/bryce/knorr/22/30780
CME announced a five-for-one common stock split which will take the form of a 400% stock dividend to be paid on July 20 to shareholders of record on July 10, Reuters reported. CME Chairman Terrence Duffy believes that “splitting CME Group stock will appeal to a broader, more diverse mix of investor portfolios” and “by making our shares more attractive to more people, we have potential to further expand the base of ownership.”
LSE: Turquoise has added EMCF to its interoperability clearing services, which also include EuroCCP, LCH.Clearnet and SIX x-clear, Finextra reported.
Options Clearing Corporation (OCC) has been designated by US regulators as systematically important to the financial system, according to Bloomberg.
ICE reported record daily trading volumes of Brent oil options of 78,508 contracts on May 24, surpassing the previous peak of 63,494 contracts on May 2. Read more
JUL WHEAT Resist: 673.98-681.44 ST Trend: Up Swing Target: 782.25
(663.00) Supprt: 653.94-647.00 Swing Point: 659.91 Range Reversal: 28.65
1* The upside target zone for this pattern is from 782.25 to 791.50 with a close under 634.27 needed to negate a bull
trading stance.
cxxc
JUL CORN Resist: 586.73-589.56 ST Trend: Neutral Swing Target: none
(578.50) Supprt: 567.66-551.75 Swing Point: 572.72 Range Reversal: 32.25
1* Market is challenging a previous daily swing low and may attempt a breakout. Closing beyond 572.25 calls for
continuation selloffs. A failure around 572.25 cautions for a reactionary rebound. 2* Market is within proximity of this
week’s projected resistance range of 611.75-587.50, which may provide a likely zone for topping action or setbacks.
cxxc
JUL SOYBEANS Resist: 1389.24-1401.25 ST Trend: Down Swing Target: 1315.75
(1376.00) Supprt: 1360.00-1353.08 Swing Point: 1364.97 Range Reversal: 34.38
1* The downside objectives for this formation range from 1315.75 to 1314.25 with a close over 1401.80 needed to
negate a bear trading stance. 2* Market is within proximity of this week’s projected resistance range of 1407.00-
1394.00, which may provide a likely zone for topping action or setbacks. 3* Yesterday’s penetration of resistance
range levels gives a statistical bias for rallies today-tomorrow