SPEAKER_01 0:00

Welcome to the deep dive. I mean, silver just broke $90 an ounce and copper is sitting at an all-time high.

SPEAKER_00 0:06

Yeah, but the crazy part is uh the reason copper is surging on the Chicago Exchange right now has everything to do with missing sulfuric acid in the Middle East.

SPEAKER_01 0:14

Right, which is wild. So today's mission is deciphering the May 14, 2026 pre-market briefing, which was authored by Eli Livy at Canon Trading Company.

SPEAKER_00 0:25

Exactly. We are unpacking how sticky inflation and you know the Iran Hormuz shock are rapidly rewiring global commodities for you.

SPEAKER_01 0:35

Okay, let's unpack this.

SPEAKER_00 0:36

But uh before we map out where these markets are heading, a mandatory reminder for your own portfolio.

SPEAKER_01 0:40

Disclaimer Trading futures, options on futures, and retail off-exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

SPEAKER_00 1:07

So setting the baseline here, we really have to look at the macro picture. The US dollar is absolutely dominating right now.

SPEAKER_01 1:13

It is. It feels like the market has been, you know, walking through a desert for months, just staring at this shimmering oasis of Federal Reserve rate cuts.

SPEAKER_00 1:24

Right. And the latest data just proved that OASIS was entirely a mirage. Like April CPI, the consumer inflation, hit 3.8% year over year. Wow.

SPEAKER_01 1:33

3.8?

SPEAKER_00 1:34

Yeah. But the real shocker was the PPI, the producer price index. That tracks what businesses are actually paying.

SPEAKER_01 1:41

Aaron Powell Right, the wholesale side of things.

SPEAKER_00 1:42

Exactly. It saw its largest annual print since December 2022. So rate cut hopes are basically dead at this point.

SPEAKER_01 1:49

Which completely shifts the reality on the ground. I mean, we went from expecting imminent cuts to Bank of America pushing their first cut prediction all the way out to 2027.

SPEAKER_00 1:58

Yeah, 2027. And get this, the market is even pricing in a 30% chance of a rate hike by December.

SPEAKER_01 2:03

Aaron Powell A hike. That's incredible. And we just saw the 30-year Treasury hit a 5% yield at auction for the first time since 2007.

SPEAKER_00 2:10

Aaron Powell Right. And normally, you know, the bond market and the commodities market act like connected gears. When interest rates go up and the dollar strengthens, commodity prices gear down.

SPEAKER_01 2:20

Aaron Powell But right now we're seeing those gears completely shear their teeth. Which brings us to the split in the metals market.

SPEAKER_00 2:27

Aaron Powell Definitely. Gold is dragging. Which makes sense since high rates make non-yielding assets less attractive. Trevor Burrus, Jr.

SPEAKER_01 2:33

Right. There's no yield on gold.

SPEAKER_00 2:34

Exactly. But then you have industrial metals defying gravity. Silver broke $90 and copper hit an all-time high of $6.60 a pound.

SPEAKER_01 2:44

Wait, $660? But isn't that just the AI and EV boom? Like, I thought data center demand was the whole story right now.

SPEAKER_00 2:52

Aaron Ross Powell Well, that is the demand baseline, sure. But the briefing points to a severe supply shock driving this specific spike.

SPEAKER_01 2:59

Oh, really? What kind of shock?

SPEAKER_00 3:00

So the Iran-Hormuz conflict choked off Middle Eastern exports of sulfuric acid.

SPEAKER_01 3:05

Sulfuric acid.

SPEAKER_00 3:06

Yeah. That acid is a critical chemical used in the copper refining process. Without it, Chilean refiners literally had to throttle their capacity.

SPEAKER_01 3:15

No way. So it created a genuine physical supply squeeze.

SPEAKER_00 3:18

Exactly, a total bottleneck.

SPEAKER_01 3:20

Aaron Ross Powell That is wild. I mean, we think of copper coming out of a mine, but it's entirely dependent on a chemical from halfway across the world.

SPEAKER_00 3:27

Yep. Everything is connected. And geopolitics isn't the only thing breaking the models right now.

SPEAKER_01 3:32

Right. Nature is taking a swing too. The USDA just dropped their WASDA report, basically the ultimate global supply and demand scorecard for agriculture.

SPEAKER_00 3:41

And it completely reset the board. It is a true tale of two harvests.

SPEAKER_01 3:46

How so?

SPEAKER_00 3:46

Well, for corn and soybeans, the USDA is projecting massive, near-record crops. I mean, they are in full supply rebuild mode.

SPEAKER_01 3:54

Okay, so corn and soy are looking great.

SPEAKER_00 3:56

Right. But wheat is the exact opposite. The USDA severely trimmed wheat production estimates.

SPEAKER_01 4:01

And that's in prices limit higher, right? Meaning they shot up so fast they hit the exchange's maximum daily limit and stopped trading entirely.

SPEAKER_00 4:08

Exactly. Boom, trading stops.

SPEAKER_01 4:11

But the briefing attributes that entirely to a persistent drought across the Western Plains. Like, why does a localized dry spell trigger a maximum market panic?

SPEAKER_00 4:21

Because well, global wheat reserves are already incredibly stretched from other disruptions over the past few years.

SPEAKER_01 4:26

Oh, I see. So there's no buffer left.

SPEAKER_00 4:28

Precisely. When the global margin for error is near zero, a regional dry spell suddenly dictates global pricing.

SPEAKER_01 4:35

It is just wild irony that in a modern market entirely obsessed with AI data centers and Federal Reserve dot plots, plain old weather in the plains still dictates massive market limit moves.

SPEAKER_00 4:47

It really does put things in perspective.

SPEAKER_01 4:49

Absolutely. Yeah. If you are holding a portfolio weighted heavily in tech or broad indices, you might think wheat droughts or chilean refinery issues don't affect you.

SPEAKER_00 4:58

But they do. This shows how physical choke points are completely overriding financial models.

SPEAKER_01 5:03

100%. We want to give massive credit for today's insights to Eli Levy at Canon Trading Company. You can reach him directly via email at Eli at Canon Trading.com to get these pre-market briefings yourself.

SPEAKER_00 5:15

A final required note before we wrap up today's analysis.

SPEAKER_01 5:18

Disclaimer Trading Futures, options on futures, and retail off exchange foreign currency transactions and other financial instruments involve substantial risk of loss and are not suitable for all investors. Past performance is not indicative of future results. Carefully consider if trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

SPEAKER_00 5:46

Leaving you with this to consider, if our global supply chains are so easily choked by a single regional conflict and localized dry weather, are we entering an era where overlapping supply shocks aren't anomalies but simply the permanent new normal for our economy?