Commodity Corner

Good morning,


DXZ0  92.275  +0.044                GCZ0  1947.8  -22.7                        ESZ0  3331.50  -48.00                   CLV0  39.86  -0.30


Equities and gold are lower today, and the dollar index is hovering around unchanged levels at the moment, after trading up after the Fed.  In yesterday’s Federal Reserve meeting, the Fed indicated it intended to keep accommodative policy in place into 2023, but mentioned it was willing to allow inflation to climb back to actual targeted levels, not just forecasted levels.  This put a bid into the dollar, and allowed for gold to come off a bit, which has carried into the overnight trade. 


Oil prices received some support, pushing prices back above $40, from a few inputs.  The effects of Hurricane Sally, yesterday’s US inventory data showing a decline in stocks (but not as much as was projected by API) and from the Fed’s stance on policy and inflation.  With prices just above $40 for WTI, the market’s attention quickly turns to today’s Joint Ministerial Meeting from OPEC+.  With oil demand showing signs of sliding, production levels are certain to be discussed.  No change to the present policy is expected, but the recent slide to prices certainly caught the members’ eyes.  The purpose of these monthly meetings is to give OPEC+ more flexibility towards its policies, so the  market will be on guard. 


The highlight in the grain market yesterday came from the soybean complex, where prices shot well through the $10 level.  Another large purchase of beans by China in the morning, coupled with the fund community adding to spec longs by buying over 20k contracts, received the credit for the rally.  It should be pointed out that this recent rally in US beans has removed to competitive price advantage the US held over Brazil.  Now, Brazil’s supply is limited now until the next crop, but looking forward, it may not bode well for US beans.  Offsetting that could be concerns that the current dry weather in Brazil could create some issues as the expected very big crop is getting planted.  Corn and wheat went along for the ride as well.  Corn has also been a large benefactor from major Chinese purchases of late, and given the issues facing the Chinese domestic corn market, there is no reason to think this wouldn’t continue.  Also aiding wheat prices was another purchase by Egypt, which again saw the business won by Russia and Poland.  Prices continue to keep climbing during these transactions, which keeps a bid in global wheat prices. 


Coffee prices again traded lower yesterday, driven by the same long liquidation trade from the funds.  The coffee growing region in Brazil continues to receive beneficial rains, which improves the outlook for the coming crop.  Industrial metals traded lower yesterday, and are getting hit more today, on the Fed’s cautious stance towards economic recovery.  Even with Chinese data showing signs of an economic recovery, the rest of the world is still struggling, as the pandemic and its effects are proving to be a hard thing to shake off.  Copper has had a significant rally, moving with the recent run up to the highs in equities, and has some room for a correction lower.      


Technical Moving Averages:

Product               50 day                100 day               200 day

SX0                       916.25                   890.00                   902.25

CZ0                       343.00                   340.75                   361.00

WZ0                     533.25                   525.25                   542.75

KWZ0                    456.00                   464.50                   482.00                 

MWZ0                 527.50                   532.50                   549.50    

SMZ0                   301.7                     298.5                     303.9

BOZ0                   31.46                     29.80                     30.50

CLV0                     41.29                     38.18                     42.26             

GCZ0                    1941.8                   1848.9                   1726.0

LHZ0                    54.555                   53.935                   58.295

LCZ0                     110.270                 106.995                 109.440

KCZ0                    117.40                   111.25                   116.85

CCZ0                     2414                       2358                       2421                    

CTZ0                    63.74                     61.36                     63.01

SBH1                    12.94                     12.47                     12.98

JOX0                    121.15                   122.50                   116.55

HGZ0                   295.50                   274.25                   266.05

HOV0                    123.18                   118.00                   137.78                

XBV0                     117.09                   108.44                   118.48            

NGV0                   2.257                     2.170                     2.187




Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC