Commodity Corner: Morning Comments

Good morning,


DXZ9  97.845  -0.289                     GCZ9  1507.1  -8.7                         ESU9  3005.50  -0.75                    CLV9  59.32  +1.21


The Federal Reserve lowered short term interest rates by the expected 25 basis points yesterday afternoon, and left the door wide open for what policy may be going forward.  As Chairman Powell stated in the press conference, they are looking at everything, and leaving all possibilities on the table.  Equities are a touch lower this morning, as the BOE leaves rates unchanged, as expected.  The dollar firmed yesterday after the cut, as an aggressive monetary policy game plan wasn’t revealed at this time.  Gold did dip below the $1500 level in the overnight trade, but has bounced back above. 


Oil is the story again today, as futures are over $1 higher at the moment, rallying on the news that Saudi Arabia is importing 20 m barrels of oil from Iraq.  The move allows Saudi Arabia to remain whole to its export customers, while getting Saudi Aramco back online.  In yesterday’s trade, oil futures continued to trade into the gap left between Friday to Sunday, as the DOE reported an increase in inventories last week.  Positioning in the oil market is still working itself back to some type of balance, following the bullish news event last Saturday, into an options expiration.  Certainly some in the trade were caught offsides, or unhedged for the rally that took place Sunday night into Monday.      


Grain futures are mixed this morning, with corn and soybeans a touch lower and wheat a touch higher.  Wheat futures had a decent bid yesterday, as some rains in the Plains slow spring wheat harvest.  The rains also could cause some damage to what has yet to be harvested.  Egypt purchased 180k tons of Russian wheat yesterday, at prices a touch lower than the last tender.  There is some rain in the forecast for the Midwest next week, which could slow corn and soybean harvest.  While many question what the size of the corn and soybean harvests will be, given all of the issues throughout this season, a delay to harvest can also have some consequences as we move through September.  The risk of colder temperatures moving in, and causing damage to unharvested crops can impact the supply as well. 


Cotton futures traded lower yesterday, again on concerns about how much demand will be out there for this season’s crop.  Cocoa futures have had an orderly rally now for 7 straight days, as weather concerns in the Ivory Coast has the short community questioning just how big this season’s crop will be.  Coffee was relatively steady yesterday, as the Brazilian real declined into and after the Fed decision.  This gives the farmers less incentive to sell.  Sugar futures are a touch higher this morning, as the output gets revised down for Brazil’s center-south region.  This following the lower projections from CONAB yesterday continues to have the very large short positioning looking to cover and book some profits.  Also causing concern for the shorts is the increased talk of available sugar supplies moving to a deficit in 2019-20, from a surplus in 2018-19. 


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      884.25                 886.25                914.25

CZ9                     395.50                  409.75                403.25

WZ9                    488.75                 499.25                 510.00

KWZ9                 425.75                  448.00                 481.25

MWZ9                522.00                  541.25                 563.25

SMZ9                  303.4                    309.6                    315.6

BOZ9                  28.87                    28.56                    29.41

CLV9                   56.24                    57.24                    57.11

GCZ9                  1488.6                  1416.8                 1367.5

LHZ9                   67.310                  72.375                 70.655

LCZ9                   108.225               109.895               114.395

KCZ9                  101.70                  102.55                 106.30

CCZ9                  2338                      2388                    2357

CTZ9                  60.74                    64.33                    69.64

SBH0                 12.60                    12.99                    13.44

JOX9                 103.30                  104.90                 116.00

HGZ9                263.50                  267.65                 275.35





Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

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