The U.S. Dollar Index (NYBOT:DXZ13), which is based on a basket of currencies, closed at 79.25 on Friday, up 5 ticks with little change in many of the other currencies. The U.S. is struggling with the "exposure" of the spying on its foreign "friends," not the least of which was Germany’s Chancellor Merkel who is demanding progress on the "no-spy" deal between the U.S. and Europe. The embarrassing information provided by Edward Snowden, the former NSA employee now "hiding" in Russia continues to solicit the media attention to the detriment of the U.S. Foreign policy administration. For now the administration is applying "damage control" and offering "sincere apologies" to the countries affected, i.e. Spain, Germany, Great Britain et al. Other currency action on Friday was in the Euro gaining 4 ticks to $1.3808, the Swiss Franc losing 4 ticks to $1.1211, the Japanese yen 0.010269, down 6, the British Pound $1.6174, down 24, the Canadian dollar 95.53c down 27 points and the Australian dollar 9554c down 26 points. The ongoing concern over the financial condition of some of the Eurozone countries "failed" to make the headlines given the other media attention mentioned in my Overview. The dollar posted a 0.6% weekly decline and we are on the sidelines for now.
December crude (NYMEX:CLZ13) closed at $97.85 per barrel, up 74c tied to reports that Saudi Arabia would cut shipments due to a "probably surplus" and better than expected Chinese economic data. Early pressure was provided by the U.S. gain in crude stockpiles. We continue to view crude as over extended in price based on our assessment of reduced economic activity in the U.S. and concerns over the financial crisis in Europe.
December copper closed at $3.2685, up half a cent per pound tied to the "improved" economic situation for China but concern over the credit tightening policy for metals by China kept prices from gaining further. We remain overall bearish for copper.
December gold (COMEX:GCZ13) closed at $1,350.30, up $16.30 tied to the U.S. Federal Reserve maintaining its monetary stimulus program following Thursday’s disappointing U.S. jobless claims and the data showing the core U.S. GDP declining by 0.2% after taking out jet liner purchases which showed GDP up 3.7%. While gold hit a one month high trading over $1,350 for the first time in a month, we remain sidelined. December silver closed at $22.55 per ounce, down 27.2c. January platinum closed at $1,455.20, down $10 while December palladium lost $4.30 to close at $743.50. We are on the sidelines in precious metals.
Grains and Oilseeds:
December corn (CBOT:CZ13) closed at $40 per bushel, down 1/4c on Friday and remains under pressure even as ethanol production rises to a 16 month high and strong Chinese demand for feed by-products. We are on the sidelines. December wheat closed Friday at $6.91 ½ per bushel, down 5c on profittaking after recent strength from reports by the Commonwealth Bank of Australia cutting 1.6 Million tonnes to 23.6 Million tonnes in its forecast for the Australian wheat crop. We prefer the sidelines. November soybeans closed at $13 per bushel, down 9 3/4c trading sideways after recent lows around $11 and highs around 14$. We had liked soybeans but with Brazilian export expectations to be much larger than expected for 2013-14, we prefer the sidelines here as well.
December cattle (CME:LCZ13) closed at $1.33175 on Friday, up 30 points tied to prices for wholesale beef and reduced readily available supplies. We like cattle from here but raise those trailing stops. December hogs closed at 90.625c per pound, up 1.025c on shortcovering and reduced kill numbers tied to ongoing concerns over PEDy diahorrea virus. We remain on the sidelines pending further information.
Coffee, Cocoa and Sugar:
December coffee (NYBOT:KCZ13) closed at $1.0910, down another 1.2c for the longest losing streak in over 11 years. Heavy rains in Brazil, the world’s largest producer of coffee expected to result in another good harvest in 2014 according to a Citigroup analyst. Prices for coffee have declined for over two and a half years leaving us on the sidelines except for some corrective shortcovering. Otherwise stay out. December cocoa (NYBOT:CCZ13) closed at $2,719 per tonne, up $33 on shortcovering but reports of beneficial weather conditions in West Africa and ongoing harvest could pressure prices from here. We are on the sidelines after having been slightly bullish near term. March sugar (NYBOT:SBH14) closed at 19.05c per pound, up 8 ticks but with adequate supplies we remain on the sidelines.
December cotton (NYBOT:CTZ13) closed at 78.91c per pound, down 30 points and remains near lows tied once again to weakening USDA export sales and increased cotton stocks. We favor the sidelines for now.