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