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
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404