To The Moon

The benchmark, CRB Commodity Index, ended the week 2,5% higher

The energy was once again the biggest winner of the week. Natgas touched the 9$ mark for the first time since 2008!

Metals were once again on the winning side, as Realyields slipped slightly. Grains and Softs were both mixed, but we have to talk about Oats and Coffee, as they both rallied hard over the week. The liquidity-driven asset crypto was also down.

Oats catch a bid (again)

I’m a big believer in a long-term oat bull market, simply because demand especially from younger generations just keeps growing and on the other side production stays limited, especially as Russia is also a big producer of oats. Nevertheless, the two most important exporters are Canada and Finland, accounting for as much as 60% of all export volume.

From a technical point of view, oats are trading in a range, in The Kuemmerle Report I discuss such setups and when/how to trade them. Range trading is quite “easy” to do, especially if the commodity is still in a backwardation like oats actually are. In such a case I’m only looking for buying opportunities.

My bull/bear case for gold - limited upside potential

My bull case for gold is IMO that it trades further in a sideways market between 1700 and 2000 USD.

The upside is IMO limited as long as the FED is practicing liquidity-reducing measures, as well as inflation expectations, come down substantially. Moreover, bonds watched a bid as well over the last two weeks. These two factors resulted in slightly lower Realyields. (usually bullish gold)

My bear case for gold is that we see another 2013-like scenario where gold is breaking substantially lower because Realyields become less negative, maybe positive again. This would imply that bond yields trade in a tight range while inflation expectations come back to a pre-covid level.

Elsewhere In The Macro World

On Saturday I got the following question after I shared a graphic by the USDA about how tight frozen orange juice concentrate inventories are, compared with recent years.

If we look at what percentage of the US citizens is consuming orange juice on a regular basis, we can see that

Moreover, according to Statista, the per capita consumption of orange juice in the US in 2021 was 1,81 gallons, down from 5,18 gallons back in 2020.

According to a study, by NCBI 15,9% consume orange juice at all but only 3,4% of Americans consume orange juice on a daily basis. (had one serving per day or more)

Therefore I would say that the price increase of orange juice in the US has only limited effects on the mood of the American consumer. More important remain the price of gasoline and also meat over the summer period.

This week look out for:

• ISM Manufacturing PMI on Wednesday
• OPEC meeting on Thursday
• Job Market Report on Friday