A Weekly Recap of All Things Resources to Friday, June 10th

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 ‘That’s a Wrap’

By Rod Blake

The first full trading week of June began with brokers, traders, portfolio managers and investors alike, somewhat uneasy in that last month’s late market rally lasted only one week before the major North American markets went negative once again. Indeed – this week’s market action might prove pivotal for the near-term direction of the equity markets.

Natural gas prices continued to defy analysts’ expectations and rose on Monday by $0.84 to a new 14-year high of US$9.39/MMBtu.

The way I see it – As a broker I experienced the wrath of clients over a missed or poorly executed trade, so I read with great interest that fund manager Elliot Associates was suing the London Metal Exchange (LME) for the loss of US$450-million in nickel trades after the LME suspended trading and later cancelled completed trades due to high market volatility.

In its effort of becoming a nature positive company by 2030 – Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ announced the multi-mineral miner was protecting 14,000 hectacres, or about 40% of its current mining footprint, of wildlife habitat and ecosystems in Canada and Chile.

Barrick Gold Corp. ‘ABX-T & N’ firmed up its cash position by $21.72-million after the gold mining giant sold its entire non-core stake of 5.38-million shares of Idaho based gold and antimony developer Perpetua Rsources Corp. ‘PPTA-Q’.

Uranium stock surged higher on word that the Biden administration was endorsing a U.S Department Energy Department (DOE) initiative to buy US$4.3-billion of enriched uranium from domestic sources. This in an effort to wean the country off of Russian imports that currently account for 23% of the uranium used to power American reactors.

The ongoing buoyancy of lumber prices is reflected by West Fraser Timber Co. Ltd. ‘WFG-T&N’ as North America’s largest forestry company raised its quarterly dividend by $0.05 or 20% to $0.30 per share.

The share price of Major Drilling International ‘MDI-T’ soared up by $1.36 or 12.85% to $11.94 after sighting increased mineral drilling demand that enabled the company to achieve 9-year high annual revenues of $650-million.

Stating – “The challenge of feeding a growing world has never been clearer…” and sighting uncertainty of supply from Eastern Europe – fertilizer giant Nutrien Ltd. ‘NTR-T&N’ announced plans to increase annual potash production by 5-million tonnes or 40% to 18-million tonnes per year by 2025.

Concerns over continued supply line tightening in the global energy sector encouraged traders to bid up the price of crude oil by $2.43 or 2.45% to a new 14-year high of US$122.38.

The benchmark Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 6 rigs to 733, an increase of 272 over the year. Across the line – the number of active Canadian rigs increased by 24 to 141 for an increase of 67 in the past year.

The American equity markets cratered going into the weekend after the U.S Bureau of Labor Statistics reported their rate of inflation rose by another 0.3% in May to an annualized 40-year high of 8.6%.

For the Week – The DJI fell by 4.58% to 31,393 as the S&P 500 dropped 5.06% to 3,901 and the NASDAQ lost 5.60% to 11,340. In Canada – the TSX was off by 2.48% to 20,275 and the TSX Venture lost 2.08% to 705.

Gold bullion gained 1.14% to US$1,871, while silver fell by 0.14% to US$21.88 and copper lost 4.03% to US$4.29. Elsewhere – crude oil  gained 0.11% to US$120.53  while natural gas improved by 2.22% to US$8.73. The Canadian dollar lost 1.46% to US$0.7824. Overall – the CRB Commodities Index gained 0.87% to a new 11-year high of 347.

And Finally – The good news from The Bank of Canada was that the average Canadian saved an extra $8,300 during the pandemic, and the Bank was counting on these extra funds to re-enter the economy post pandemic to help fuel the recovery. The bad news is that the Bank didn’t calculate the current 7% inflation rate that is instead encouraging Canadians to pay down debt rather than spending the money elsewhere.

Good luck in the week ahead….

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