Commodity Corner

Good afternoon,


6 AM:  DXU0  91.810  -0.321             GCZ0  1997.5  +18.9                       ESU0  3505.50  +6.50                   CLV0  43.13  +0.52


3 PM:  DXU0  92.345  +0.214             GCZ0  1976.7  -1.9                        ESU0  3526.00  +27.00                  CLV0  42.89  +0.28



The dollar index is the driver in most of the commodity markets today, as the calendar flips to September.  The dollar index traded at a 28 month low this morning, taking out a couple of major support areas on the charts.  The better than expected ISM report today allowed the dollar to reverse course, and work off some of its oversold condition.  New month often brings fresh money into the fold, and the price action in some of the markets would tend to verify that.  The softer dollar led many markets up, only to have these markets come off the highs when the dollar index recovered. 


Gold prices shot up above $2000 in the overnight trade, in part of the lower dollar and on the continued expectations of easy monetary policy on a global level.  Getting the global economy reignited is at the forefront of every central banker’s mind, and keeping policy accommodative to enable this appears to be the game plan.  Gold did close slightly higher to  begin the new month, after August actually posted a lower month, in spite of trading at an all-time high for the contract in mid-August.


Oil prices spent a majority of the trading session above $43, before falling back below in the afternoon.  The 2 catalysts driving oil were the softer dollar and positive manufacturing data out of both China and the US.  OPEC’s monthly crude production report for August came out today, showing the member nations did taper the production curbs that had been in place, but not by as much as they could have.  The report did show that Iraq and Nigeria, the biggest violators of the production cut agreement over the spring, were making good progress on the additional cuts they agreed to, as a penalty for overproducing during the curbs.  The fact that this report showed that OPEC is cleared to produce even more oil than what it had done in August, coupled with some strong manufacturing data, may have caused prices to set back a bit, as more production could be in the pipeline down the road. 


The grain markets had a few inputs pushing and pulling it in the trad today.  Yesterday afternoon’s crop conditions data showed declines from the prior week, but not as bad as the market had feared.  Thus, corn and wheat prices traded lower overnight.  Soybeans managed to remain bid, as they remain in the development phase and there is very little precipitation in the extended forecast.  The softer dollar did help support all the grain prices.  Corn did find some support this morning with another large purchase announcement  from China.  This put the total of purchase commitments from China at 9.138mmt since Aug 21, which is an all-time high.  Whether this be phase 1 fulfillments or may be necessary replacements of reserves, it is helping the corn balance sheet, where an expected large crop (although yield projections continue to be downsized) is now being offset with this large Chinese demand.  Wheat prices traded at a 4 month high, led on a belief that there will be strong demand here as well.  China keeps being rumored to be looking to buy wheat, which is more believable as China has been fairly open about its desire to hoard commodities in case of a second outbreak of the virus.  Strong global demand for wheat has also been reflected recently by Egypt grabbing record amounts of Russian wheat.  The lower dollar and the perceived strong demand was enough to give prices a boost.  Keep in mind that as US wheat prices keep rallying, it makes itself less competitive in the export arena.  So, the rally could be short lived.  As mentioned, beans ended higher, but rotated off the highs when the dollar reversed higher mid-day.  China has been a very good buyer of beans of late, and with the dry extended forecast, most soybean yield estimates will be reduced, supporting prices. 


Coffee prices trade at an 8 month high today, taking out a very important resistance point at 130.00.  Funds have been piling into long positions, aided by the continued decline in warehouse stocks.  These stocks, which are used to support the futures contracts , have dwindled to a 20 year low.  Coffee demand has seen a strong increase, as global economies get back to re-opening.  Coffee importers have cited a large increase in the speed of which coffee is moving, adding to the increased demand argument.  However, even with this technical breach of some key resistance points in the coffee market, the potential for a sharp rally from here could be capped by a large crop still expected to come out of Brazil.                   


Technical Moving Averages:

Product               50 day                100 day               200 day

SX0                       896.25                   877.25                   900.25

CZ0                      339.00                   338.50                   362.50

WZ0                     523.25                   526.00                   542.75

KWZ0                  451.75                   468.25                   481.75

MWZ0                 526.00                   533.50                   550.75

SMZ0                     297.5                     296.5                     303.6                  

BOZ0                   30.49                     29.17                     30.42

CLV0                    41.51                     37.36                     43.03

GCZ0                    1912.4                   1827.2                   1703.1

LHV0                    51.030                   52.170                   60.690

LCV0                    105.620                 102.185                 106.330

KCZ0                    112.05                   110.25                   116.55

CCZ0                      2340                       2328                       2419                  

CTZ0                    62.92                     60.46                     63.12

SBV0                    12.29                     11.67                     12.49

JOX0                    123.10                   121.95                   116.35

HGZ0                   289.40                   267.30                   264.35

HOV0                   125.53                   117.57                   141.52

XBV0                    116.75                   104.69                   120.66

NGV0                   2.152                     2.161                     2.188





Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

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