Commodity Corner: Morning Comments

Good morning,


DXZ9  98.04  +0.193                     GCZ9  1508.0  +1.8                                ESZ9  3014.75  +6.75                    CLX9  58.74  +0.55


The market came into this week all amped up, being driven by the drone attack in Saudi Arabia, and ahead of numerous central bank monetary policy meetings, highlighted by the US and the UK.  The results there were as expected, US cutting rates 25 bps and UK leaving rates unchanged.  Following a very active trade early in the week, it feels like markets are trying to glide into the weekend.  Today is options expiration for October options contracts at the CBOT.  If the market does find itself in a stable, range bound trade, large open interest in options positions close to where the market is trading could have a magnet effect on the late price action. 


The equity market is a touch higher, experiencing lighter volumes in the trade.  Gold is a touch higher today and oil is up about 50 cents.  Part of the bid to oil is coming from the hurricane systems moving across the southern portion of the US, and having the potential to create production delays.  The US has been a good backstop, regarding keeping global supplies available, with all of the disruptions in the Middle East.    


Grain prices are mixed, having traded in narrow ranges.  Wheat has been supported of late by dryness concerns in Australia and Canada.  There are some rain systems in the extended forecast, which can cause some delays to harvest.  The risk there is, with the later developing crops, cold temperatures could set in and cause some stress to the unharvested crops. 


In other commodity news, sugar is poised to have its biggest weekly gain in 7 months, as concerns about a supply deficit in the future continues to convince short positions to book profits.  Coffee futures were lower yesterday, as the market continues this week’s correction from higher prices driven by weather concerns impacting the coffee crop.  Cocoa futures area also a touch lower today, following a decent rally this week, also from weather concerns in the Ivory Coast cutting in to a large expected crop.  The stronger dollar today is also applying some pressure to commodity prices here. 


So, the “neutral” stance Fed Chairman Powell took in the press conference on Wednesday afternoon, is being viewed as a hawkish tone by the marketplace, with the dollar rallying, and fixed income markets pulling back a bit of the additional easing of policy that was being priced into the market.  Since the Fed will be data dependent going forward, and with all factors that can influence policy remaining in full view, markets may find themselves confined to a range type trade, but vulnerable to any headline or twitter bombs.


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      884.00                   886.50                   914.00

CZ9                      394.25                   409.75                   403.25

WZ9                     488.25                   499.50                   509.75

KWZ9                   423.50                   447.75                   480.50

MWZ9                 521.75                   541.75                   562.75

SMZ9                   303.0                     309.5                     315.5

BOZ9                   28.90                     28.57                     29.42

CLX9                    56.07                     57.07                     57.06

GCZ9                    1490.3                   1418.9                   1368.7

LHZ9                    67.250                   72.215                   70.680

LCZ9                     108.075                 109.785                 114.355

KCZ9                    101.45                   102.55                   106.20

CCZ9                    2336                       2389                       2358

CTZ9                    60.67                     64.17                     69.55

SBH0                    12.57                     12.98                     13.43

JOX9                    103.15                   104.80                   115.80

HGZ9                   263.30                   267.35                   275.25






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC