Commodity Corner

Good afternoon,


AM:  DXU0  92.220  -0.159             GCZ0  1975.7  +0.8                           ESU0  3513.75  +9.25                    CLV0  43.48  +0.51


PM:  DXU0  92.200  -0.179             GCZ0  1975.4  +0.5                           ESU0  3497.50  -7.00                     CLV0  42.77  -0.20


Month end saw many commodities go out strong for the month.  Fed Chairman Powell stoked the flames last week, saying the central bank may allow inflation to run hotter at times, and the recent major correction lower in the dollar makes assets priced in dollars cheaper in the export arena.  Equities made another new high for the move today.  Gold futures remain within striking distance of $2000 to close the month.  Oil prices were under a slight correction, having pushed through the $43 level in part from Hurricane Laura concerns carrying over from last week.  


Grain prices have had a very strong month, even with a WASDE report mid-month projecting large production and inventory numbers.  Funds have aggressively been closing out short positions in corn and wheat post report, and have established a decent sized long position in soybeans.  China has been a very aggressive buyer of all the grains this month, in part honoring Phase 1 commitments, and also as part of an overall commodity grab China has been undertaking.  China is concerned about the ability to source essential products if the pandemic carries on longer, and is accumulating what it can.  They also have a shortfall of certain products, such as corn and hogs at the moment, and have been actively replenishing stocks.  Another large corn purchase was announced this morning, with China buying 596k tons, adding to some very large purchases over the past few weeks.  Corn prices, along with the other grains, were already firm this morning, ahead of this afternoon’s crop conditions report, where the continued hot and dry weather is expected to show further deterioration of the crops.  Corn was unable to sustain the higher prices today though, as this morning’s export inspections data was viewed as disappointing.  Soybeans were very strong this morning, but pulled back from the highs as well.  Bean prices rose to a 7 month high, driven by the same inputs of strong Chinese demand and poor growing conditions.  Wheat prices have also been moving up, but Russia still holds an advantage on price in the export arena, which gets worse as US wheat prices rally.


**This afternoon’s crop conditions report did  show declines as was expected, but the declines weren’t  not as bad as the market had feared, and  possibly priced in.  The progress report showed the crops ahead of  last year, but keep in mind the difficult season the crops endured last year.**


Cocoa futures have their biggest monthly gain since 2018, as inventories continue to dwindle away.  Deliveries to the ports in the Ivory Coast are up year over year, but the stocks continue to erode, having  dropped for 21 consecutive days.  The weather in West Africa has been drier than normal, also raising concerns on the production front.


Coffee prices posted a third monthly gain, and saw prices reach the highest point since the end of March.  The softer dollar, especially against the Brazilian real (has rallied 3%), helped push prices up.  The higher domestic currency dis-incentivizes producers from selling product.  Coffee also has inventory concerns, as levels are the lowest since January 2017.  Coffee is approaching a critical level on the charts, in 130.00.  If the price action can trade above here with some momentum, fresh buying could be initiated.


As already mentioned, Friday’s COT report from the CFTC confirmed the belief in the market of assets flocking towards the commodity space.  In addition to the short covering buying observed in corn and wheat, and the adding to longs in soybeans, other products saw noticeable changes.  Cotton futures positions increased by over 10k, to a long position over of over 40k.  It should be noted that all figures here are collected as of the prior Tuesday’s trade, so may not be spot on with accuracy, but certainly set the tone of the sentiment in the market.  Another big position shift came in live cattle.  Spec longs rose by over 40k, to now show a small core long  position.  Lean hogs, showed a similar position shift, just not of the same magnitude over the course of 1 week.  Coffee, cocoa and sugar all saw adding to spec long positions last week, with the sugar position being over 136k.  All 3 of these products face similar concerns of available future supply, coupled with weather impacting present growing conditions.             


Technical Moving Averages:

Product               50 day                100 day               200 day

SX0                       894.75                   876.25                   900.25

CZ0                      338.50                   338.50                   362.75

WZ0                     522.00                   526.00                   542.50

KWZ0                   451.00                   468.50                   481.75

MWZ0                 526.00                   533.75                   550.75

SMZ0                   297.2                     296.4                     303.7

BOZ0                   30.41                     29.12                     30.42

CLV0                    41.48                     37.27                     43.08

GCZ0                    1908.5                   1825.0                   1700.7

LHV0                    50.930                   52.140                   60.795

LCV0                    105.485                 102.100                 106.385

KCZ0                    111.45                   110.15                   116.50

CCZ0                    2332                       2324                       2419

CTZ0                    62.81                     60.36                     63.14

SBV0                    12.28                     11.65                     12.49

JOX0                    123.30                   121.95                   116.35                  

HGZ0                   288.70                   266.55                   164.15

HOV0                   125.60                   117.50                   141.84

XBV0                    116.67                   104.27                   120.83

NGV0                   2.139                     2.158                     2.187





Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC