SMM News: precious metals, in addition to palladium, London spot precious metals are up. The inflationary effect of the stimulus policy and the decline of the US index cannot fully explain the rise, and the more likely reasons are: 1, the expectation of economic recovery in Europe and the United States brought about by vaccine research and development may be too optimistic, once the expectation is revised, promote gold to recover some of its decline; 2, investors have some expectations for the FOMC meeting on December 15. With gold prices rising, gold ETF positions decreased significantly, while COMEX gold net long positions rebounded from the previous week, suggesting that New York gold futures trading may be an important buying force last week. If there is a change in market expectations for next week's FOMC policy, or if the meeting does not release more or more than expected easing, the current rally in gold prices may not be sustained for a long time, so be wary of the downside risks of gold prices. The current round of platinum rally is driven by investment and speculative buying, as well as the resurgence of problems at the Anglo-American platinum processing plant ACP. After a sharp rally in the previous period, platinum has limited room to continue to rise in the short term.
In terms of base metals, Lun Copper continued its rally and stood above the $7700 mark. The recent rebound in market risk appetite has contributed to the continued strength of copper, which is the most risk-sensitive base metal. The fundamentals of copper supply and demand did not change significantly last week, and although the number of cases in Chile and Peru stabilized with the arrival of spring in the southern hemisphere, the epidemic will continue to disrupt mine production before the vaccine is widely spread in South America; the accelerated penetration of new energy vehicles will provide a strong growth point for copper demand driven by new EU carbon emissions regulations and subsidies for new energy vehicles in various countries. In terms of market sentiment, investor bullish sentiment has continued to rise recently. Looking forward to the future, the rising trend of medium-and long-term copper prices remains unchanged, and the short-term rise may be suspended.
In terms of energy, international oil prices showed a trend of shock and surge, and both oil and oil recorded five Lianyang on the weekly line. On the one hand, OPEC+ strives to maintain production restrictions and provide upward momentum for oil prices on the supply side. OPEC+ has agreed to reduce production by 500000 b / d from January and will hold monthly meetings to decide on follow-up policies. On the other hand, the positive news of the vaccine and the optimistic progress of the US stimulus plan have raised the prospects of economic recovery and the prospect of crude oil demand. Putin ordered the start of widespread vaccination against novel coronavirus, Britain approved the novel coronavirus vaccine of Pfizer-BioNTech, and the US stock market repeatedly hit record highs to support oil prices. On the data side, EIA crude oil inventories fell less than expected, with U. S. crude oil rig data rising to a six-month high. As far as the current market is concerned, short-term oil prices will be in the range of $45 to $50.
In terms of agricultural products, the price of American beans fell to a high last week, recording the first weekly decline in more than a month. The improvement in precipitation in South America has enabled Brazil's soybean planting rate to catch up with the same period last year. As of December 2, sowing has accounted for 87% of the expected acreage, and the planting progress has increased by 6%, putting soybean prices under pressure. Weather speculation in South America has cooled down in the short term, but since Argentine crop growth is more vulnerable to La Nina, there is still room for weather speculation after entering a critical planting period in Argentina. On the demand side, China's imported soybean stocks are high and profits are low. Overall, after USDA exceeded expectations to adjust the end-of-period inventory, the short-term profit of US beans was fully realized, the theme of weather hype in South America was also insufficient, and the marginal upward power of US beans was insufficient, and it may enter a period of shock in the short term, with a range expected to be $11-12.
01 precious metal market
Last week, with the exception of palladium, spot precious metals prices rose in London, with platinum prices rising 9.59% weekly, ranking first among all precious metal varieties. Specifically, spot gold prices in London hit a five-month low of $1765 in the pullback on Monday before rebounding higher, reaching as high as $1848 in New York on Friday, while silver rebounded from a low of $22 to above $24. In terms of platinum group metals, spot platinum prices in London rose from a peak of $966 to $1082, the highest since the fourth quarter of 2016, while palladium was the only one of the four precious metals to fall from $2430 to $2350. We mentioned in our weekly report on November 16, 2020 that progress in vaccine research and development, the expected improvement in the US economy and the possibility that the Federal Reserve may be on hold will put downward pressure on gold prices. Spot gold prices in London are basically in line with our judgment, falling all the way from nearly $1900 in mid-November to as low as $1765 last Monday, with a correction of $135m. Most of the markets attributed the rebound in gold prices last week to the bipartisan push for a new fiscal stimulus package in Congress, which led to some re-inflationary transactions to stimulate gold prices, and the depreciation of the dollar index from 92 to below 91. However, I personally think that the above two points may not be the main reasons for the rebound of gold prices. On the one hand, as shown in figure 1, October inflation expectations in the United States have generally risen since the beginning of November and are now at 1.9%, a level that has exceeded the January level before the outbreak. With the rebound in inflation expectations, although nominal yields on 10-year US Treasuries are also rising over the same period, the increase is smaller than the change in inflation expectations, causing the 10-year real yield in the United States to fall all the way since November 10 and is now around-0.98%. But at the same time, the spot gold price in London fell in November. On the other hand, the current depreciation of the dollar index began at 94 in early November (see figure 2) and was at the 92 line at the end of November, during which time the spot gold price in London also fell below the two round marks of US $1900 and US $1800. Therefore, judging from the recent market trends, the changes in inflation expectations in the United States and the correlation between the dollar index and the gold price are not static, and the rise in the gold price can not be directly attributed to the re-inflationary factor and the decline of the US dollar index.
The possible reasons for the trend of gold prices last week are as follows: first, although vaccine research and development has improved economic expectations, the reality is that many economies are entering a situation of slowing recovery, and previous expectations for economic recovery in Europe and the United States may be too optimistic. once expectations are revised, gold recovers some of its losses. The fall in gold prices in mid-to-late November is based on economic optimism that has not yet been realised, with repeated outbreaks in Europe and the US, and vaccines still some time away from mass use, so this foundation is not solid. In fact, the economic data released last week showed that the momentum of the US economic recovery was being challenged. The US ISM manufacturing PMI index in November was lower than the previous value and expectations, while the ISM services index fell to 55.9 in November, the lowest level since the economic recovery began in May. The U.S. private sector ADP added 307000 jobs in November, lower than previous estimates and expectations, and hiring was slowing in almost all industries, while Friday night's official non-farm payrolls data for November also confirmed that the labor market was sluggish, with non-farm payrolls added at the lowest level in six months and the fifth consecutive monthly slowdown in job growth. The latest beige book released by the Federal Reserve also suggests that a second outbreak may trigger a winter economic slowdown.
Second, the Federal Reserve FOMC in December will be held on December 15, some market investors have some expectations for this interest rate resolution, gold may enter the FOMC market phase, which may also promote the recovery of gold prices. With more economic data suggesting that the epidemic has repeatedly affected jobs and broader economic activity, investors are betting that the Fed will do more to support the fragile economic recovery. At present, the prevailing view is that the Fed may revise the details of its bond purchase program this month to lengthen the average maturity of QE, so that it can hold down long-term interest rates by increasing its purchases of long-term bonds while keeping the total amount of bond purchases unchanged, considering that the Fed has suppressed short-term interest rates at very low levels through a range of federal funds rates close to zero. This policy arrangement is expected to provide the economy with long-term low interest rate funds to a greater extent.
In addition, another question worth analyzing in the gold market last week is where the buying forces driving gold prices come from at the meso-market level. Gold prices have risen since late March, and the main driver is the global gold ETF investment demand. ETF buying has replaced the previous physical gold consumption in Asia and speculation in the New York gold futures market, and has become the market force with the greatest impact on gold prices. The correction in gold prices, which began in mid-November, was also affected by the reduction in gold ETF positions, with global gold ETF positions falling from a near-record high of 3452 tons to 3349 tons between November 11 and November 30. However, since the beginning of last week, there have been differences between the changes in gold ETF positions and the trend of London spot gold prices. As shown in figure 3, while London spot gold prices rose, global gold ETF positions continued to decline last week, among which the world's largest gold ETF--SPDR gold ETF and other gold ETF have been reduced by investors. By contrast, according to CFTC data, (Managed Money) net long positions in COMEX gold futures and options stood at 107653 positions as of December 1, rebounding from the previous week, suggesting that gold futures trading in New York could be an important buying force for gold prices to rebound last week. Judging from the sectional trend of figure 4, gold prices in New York have been weaker than those in London since the beginning of October, and gold prices rebounded in both London and New York last week.
To sum up, I think that the current FOMC meeting of the Federal Reserve in December is approaching, and the spot gold price in London may have entered the stage of the FOMC meeting, affected by factors such as a slowdown in economic recovery and expectations for more policy support from the Federal Reserve. Speculators in the futures market may buy gold in the market for short-term trading purposes, while medium-and long-term ETF investment funds will proceed from the medium-and long-term perspective of economic bottom-out recovery next year. Continued outflow from the gold ETF market. If there is a change in market expectations for next week's FOMC policy, or if the Fed does not release more or more-than-expected easing at its actual meeting, the current rally in gold prices may not be sustained for a long time, so be wary of the downside risks of gold prices.
In the platinum group metals market, platinum performed exceptionally well last week, not only hitting a new high for the year, but also rising to its highest level since the fourth quarter of 2016. In our weekly report on November 16, 2020 and the outlook for 2021 released last week, we mentioned the following views: in the short term, platinum investment demand (such as ETF investment) will still play an important role in the trend of platinum price; In the medium term, with the development of new physical consumption demand of platinum and the promotion of the conversion of new and old kinetic energy on the demand side, the pricing logic of platinum is expected to return to the balance table of physical supply and consumption, and investment demand may become a secondary factor at that time. In real terms, spot platinum prices in London have moved strongly since mid-November, rising from $870 to more than $1000. The analysis of the current round of platinum rise may be the result of the superposition of many factors:
First, driven by investment and speculative buying, the annual trend of platinum prices in early November is the worst of the four precious metals. Gold, silver and palladium prices have all risen cumulatively since the beginning of the year, while platinum prices have fallen cumulatively at that time. The recent rise may be a supplementary factor, and platinum ETF positions have rebounded to the level of early November. Second, the reappearance of the ACP plant of the Anglo-American platinum processing plant has made it difficult to deal with mine platinum produced by the Anglo-American platinum industry and other related companies, which has recently deepened the forward discount in the London platinum market. The current half-year swap rate is about-1%.
However, after a sharp rally in the previous period, London platinum spot prices have limited room to continue to rise in the short term. From a technical analysis, on the London platinum spot daily chart (see figure 5), since the market has approached $1200 in August 2016, the market has repeatedly verified that the vicinity of $1027 is a strong resistance position and a key Fibona switch back to the withdrawal position, and RSI indicators show that it is currently overbought. In the short term, it is recommended to focus on whether London spot platinum can stand on the front line of $1027. In the absence of sustained investment buying, platinum prices may fall back below $1000.
02 basic metal market
The trend of basic metals diverged last week. Lun Copper continued its rally and stood above the US $7700 mark, up 3.48% from the previous week, recording five Lianyang on the weekly line; Lun Aluminum fell slightly after rising during the week, up 2.28% from the previous week; most of the other varieties fell back from the high level.
On the macro side, economic data at home and abroad were divided last week, the two parties in the United States made new progress on fiscal stimulus policies, risky assets strengthened as a whole, the Shanghai and Shenzhen 300 hit a new high for the year, and the three major US stock indexes all set new record highs, while the dollar index continued to weaken below 91. Specifically, last Monday, the people's Bank of China unexpectedly conducted a 200 billion MLF operation at the end of November. China's manufacturing PMI rose from 51.4 to 52.1 in November, higher than the expected value of 51.5. Copper prices continued to rise due to higher-than-expected liquidity and economic indicators. Overseas, the November PMI data of many European countries released last week were mixed, while the number of new non-farm workers in the United States in November was much lower than expected, reflecting the impact of the current epidemic situation in the United States with more than 200000 new cases per day on the job market, but on the other hand, it also increased the urgency of the fiscal stimulus. Biden said that the severe employment situation showed that there was no time for fiscal stimulus. Last week, both parties in the Senate introduced a $908 billion aid bill. New developments in the fiscal stimulus negotiations have boosted market confidence. Overall, the recent rebound in market risk appetite has contributed to the continued strength of copper, which is the most risk-sensitive base metal.
[copper]
The fundamentals of copper supply and demand did not change significantly last week. On the supply side, Chile's national copper industry reported a 3.5 per cent year-on-year increase in copper production in October to 159900 tonnes and said it would spend about $200m by the end of the year to ensure operational continuity in the event of the second wave of the outbreak. Although the number of cases in Chile and Peru stabilizes with the arrival of spring in the southern hemisphere, the epidemic will continue to disrupt mine-end production until the vaccine is widely available in South America; on the other hand, Lunding Mining, which has been disturbed by strikes, has reached a settlement with trade unions and is expected to gradually resume production, while Minmetals's Las Bambas copper mine operation is once again disrupted by local community protests. On the demand side, domestic terminal demand continued to recover. The cumulative investment in Electroweb announced last week continued to narrow to-1.3% compared with the same period last year. The China Automobile Association estimates that car sales in November will grow by 6.2% month-on-month and 11.1% over the same period last year. Domestic auto production and sales will continue to be repaired. On the other hand, sales of new energy vehicles in Europe continued to stand out in November. It is reported that sales in seven European countries increased sharply by 218% in November compared with the same period last year, driven by the new EU carbon emission regulations and subsidies for new energy vehicles in various countries. the accelerated penetration of new energy vehicles will bring a strong growth point to copper demand.
In terms of market sentiment, investor bullish sentiment has continued to rise recently. As copper prices continued to climb to a nearly seven-and-a-half-year high, last week COMEX copper non-commercial net long positions refreshed an all-time high of nearly 80,000 hands; bullish sentiment in the related stock market is also very strong, northward funds in November a large net purchase of non-ferrous sectors, the non-ferrous index led the rise of A shares in November, the stock market linkage effect is obvious. In terms of technical indicators, the Luntong Daily Line has been running near the two standard deviation Bollinger belts, while the 14-day RSI index has been in the overbought range since late November.
Looking forward to the future, the rising trend of medium-and long-term copper prices remains unchanged, and the short-term rise may be suspended. Considering that the positive factors since November have been digested and the supply and demand pattern has not changed significantly, the recent market performance is more likely to take into account the expectations of macroeconomic recovery and inflation next year, while continuing to strengthen after being chased by capital. Therefore, before the emergence of new bullish catalysts, short-term copper prices may enter a period of high consolidation, while we need to be vigilant against the background of high market sentiment and continued overbuying of technical indicators. the risk of a pullback brought about by poor macroeconomic recovery expectations or regenerative variables in stimulus policies.
03 energy market
In the past week, international oil prices showed a volatile trend, with WTI reaching as high as US $46.68 per barrel and Brent crude reaching US $49.92 per barrel, the highest since March 6. WTI closed at 46.09, up 1.25 per cent on the weekly basis, and cloth oil closed at US $49.03 per barrel, up 1.51 per cent on the weekly basis. Both oil and oil recorded five Lianyang on the weekly line. On the one hand, OPEC+ strives to maintain production restrictions and provide oil prices with upward momentum on the supply side; on the other hand, positive news of vaccines and optimistic progress on the US stimulus package have enhanced the prospects of economic recovery and crude oil demand, providing support for oil prices. OPEC+ agreed to cut production by 500000 barrels a day from January and will meet every month to decide on follow-up policies.
OPEC+ has reached an agreement to ease production cuts next year, and the group will increase production by 500000 barrels a day in January, before ministers hold monthly consultations to decide on follow-up measures. This is much shorter than the time frame in which OPEC+ normally operates, and before this week the group is expected to delay the release of more oil into fragile markets by another three months. However, this compromise agreement avoided the collapse of the OPEC+ United Front. Days of tense negotiations have exposed new differences between core members the United Arab Emirates and Saudi Arabia, raising the risk of the group falling apart. The OPEC+ meeting was postponed for two days, putting pressure on oil prices at one point this week. But OPEC+ finally reached an agreement to ease production cuts next year at a slower pace than originally planned. The revised agreement is likely to keep the oil market in short supply through the first quarter of next year, meaning the market can continue to consume high inventories. Crude oil prices continued to rise after the decision was announced, with Brent crude approaching the $50 round mark on Friday (December 4).
The OPEC+ must strike a delicate balance between pushing up oil prices to help balance the budget, but not raising prices high enough to drive a surge in US production. Us shale production tends to climb when oil prices rise above $50 a barrel. Monthly OPEC+ meetings will make oil prices more volatile and complicate hedging efforts by US oil producers.
Novel coronavirus vaccine repeatedly spread positive news, the US stock market set a new record.
Novel coronavirus vaccine also repeatedly reported positive news. Russian President Putin ordered the start of large-scale vaccination of novel coronavirus vaccine. Britain approved Pfizer-BioNTech novel coronavirus vaccine, boosting market confidence. The US stock market hit record highs many times, and also boosted the outlook for crude oil demand and provided support for oil prices.
Russian President Vladimir Putin said on Wednesday that the country should start vaccinating people against novel coronavirus next week. On the same day, Britain approved the use of Pfizer and BioNTech vaccines from next week, becoming the first Western country to approve the vaccine. The UK has previously signed an agreement to supply 40 million doses of vaccine for delivery in 2020 and 2021.
The combined production network of Pfizer and BioNTech has the potential to provide up to 50 million doses of vaccine worldwide in 2020 and up to 1.3 billion doses in 2021. The media tracks the world's nine most promising vaccines, from national procurement agreements to patient vaccinations. According to statistics, at least 7.85 billion doses of vaccine have been distributed. If distributed evenly, the above vaccines would be enough to cover half the world's population (most of the vaccines would be given two doses).
EIA crude oil inventories fell less than expected, with US crude oil rig data rising to a six-month high.
According to the data released by EIA, except for the strategic reserve, the commercial crude oil inventory of the United States fell less than expected, refined oil inventory exceeded expectations and gasoline inventory exceeded expectations in the week ending November 27th. Specific data show that the United States as of November 27, the week EIA crude oil inventory changes actually announced a reduction of 679000 barrels, is expected to decrease by 1.98 million barrels, the previous value decreased by 754000 barrels. EIA data released this week also showed that US crude oil production rose by 100000 b / d to 11.1 million b / d this week, the third consecutive week of increase.
The total number of oil rigs increased by 5 to 246 in the week ended December 4, the highest number of oil rigs since mid-May, according to the latest data released by Baker Hughes (Baker Hughes), a US oil service company. This means that US oil producers are returning to capacity at a time when oil prices are rising, which could limit the scope for oil prices to rise. And the impact of drilling rig data is generally fermented on the Monday of the week after the data are released.
As far as the current market is concerned, short-term oil prices will be in the range of $45 to $50.
If there are new developments in the US stimulus package and vaccines, oil distribution is expected to test the 50-round mark, but oil prices face a certain risk of correction in the short term. In the coming week, investors need to focus on news related to the Brexit negotiations in the UK, the stimulus package negotiations in the United States and the novel coronavirus vaccine.
04 agricultural product market
The price of beautiful beans fell back to a high last week, falling as low as $11.42 and, so far, trading at $11.7, a weekly drop of 1.9%. Recorded the first weekly decline in more than a month. Improved rainfall in South America has enabled Brazil's soybean planting rate to catch up with the same period last year, putting soybean prices under pressure.
The precipitation in South America has improved, and the progress of sowing has been accelerated.
The rise in soybeans in the past two weeks was mainly due to speculation about the weather of South American soybeans, which was delayed in most parts of Brazil due to irregular rainfall, and the planting progress was significantly slower than in the same period of history. However, since the weekend before last, the situation has improved, the precipitation situation has gradually improved, and the sowing progress has been gradually speeded up. As of December 2, sowing has accounted for 87% of the expected planting area, and the planting progress has increased by 6 percentage points, catching up with the level of the same period last year and slightly lower than the average progress of 88.2% over the past year. This also directly led to a drop in the price of beautiful beans. In the coming week, precipitation conditions in South America are expected to continue to improve, Mato Grosso, South Mato Grosso, Milas Gerais, Bahia and other places are expected to maintain precipitation above 100mm. In comparison, there is less precipitation in southern Brazil, with precipitation expected to be 35-55mm in places such as Rio Grande de Sul and Santa Cata.
In the short term, the season hype for sowing in Brazil is over, while Argentina is still in the early stages of planting. As of December 2, Argentina's soybeans in 2020 and 21 completed 48.2% of soybeans, 8.9% higher than a week ago and 1% lower than the same period last year. Therefore, in the short term, the weather hype across South America may not be as hot as it was in the previous two weeks. However, given that Argentine crop growth is more vulnerable to La Nina, there is still room for weather speculation after entering a key planting period in Argentina in January / February.
China has high inventories and low profits.
On the Chinese side, soyabean stocks at Chinese ports are hovering near record highs, with the latest figure of 7.9 million tonnes, an increase of 64 per cent over the same period last year. The stock of soybean meal is also close to 1 million tons. From the perspective of disk crushing profits, South American soybeans due to high water, crushing profits of-200 yuan / ton. In the past two weeks, the extraction profit of soybean noodles in the United States, West and Homei Bay has also changed from positive to negative. Demand-to-price support should also be limited.
The depressed Treasury-to-sales ratio in the United States provides support below.
Soybean before the breakthrough high of $12 resistance, but given that the United States inventory is still in a historical position, there is also a strong support below, the current carry-over inventory of 190 million bushels corresponds to an inventory-to-sales ratio of 4.2%. It was the lowest inventory-to-sales ratio since April 2014, when the price of the main contract was about $15. This year, Brazilian soybean stocks bottomed out early and could not even meet their own needs, and they needed to import soybeans from the United States, Central and South America and other places, so the CNF rising water of Brazilian soybeans to China rose sharply, and after October, it basically remained at the US $3 line, much higher than in the same period in history. Compared with Brazilian soybeans, American beans have a price advantage. You need to pay close attention to the final inventory adjustment in next week's USDA monthly report.
On the whole, after USADA adjusted the end-of-period inventory more than expected, the short-term profit of US beans was fully realized, the theme of weather hype in South America was also insufficient, and the marginal upward power of soybeans was insufficient. In the short term, it may enter a period of shock, and the range is expected to be in the range of US $11-12.
