Good morning,

 

DXZ9  98.16  -0.061                     GCZ9  1528.5  -3.0                                                ESZ9  3005.50  +8.50                  CLX9  58.00  -0.64

 

Another relatively calm trading environment overnight, with equity markets inching higher.  The positive vibe on the trade front, with the Chinese government reportedly granting waivers to independent companies to purchase US soybeans.  It was thought that 2 to 3 million bushels of beans may be involved.  Gold futures are rotating lower today, after receiving a bid yesterday on the potential for heightened Middle East tension as Iran and the US were trading barbs at each other.  Oil prices are coming off as well, having moved past the rhetoric and ahead of the release of last week’s data on production and inventories.  Oil is also coming off as it received support yesterday from the thoughts that the Saudi Aramco production facility would not be back online as quickly as what was being suggested late last week. 

 

Grain prices traded higher yesterday, from a combination of the reported Chinese purchases and some short covering from the fund community, following Friday afternoon’s COT report showing teat spec funds have been doing some decent short covering in soybeans, while the spec short in corn continues to grow.  Yesterday afternoon’s crop progress reports still reminded the market that the later planting for corn and somewhat for soybeans presently leaves the crops well behind where they should be, as harvest should be getting underway.  As the calendar moves towards October, the potential for serious damage to the under developed crops grows as colder temperatures begin to set in. 

 

Sugar prices continue its slow bounce, as funds continue to book profits from the record short position being carried.  Part of the impetus to take some profits may be coming from several of the sugar producing areas revising lower production expectations for this season.  Cotton traded higher yesterday, as the optimistic tones on trade being felt in the soybean market was spilling over to cotton.  Prices are rotating back down today, but the market is keeping a watchful eye on the $60 level for good support for the market.   Coffee traded higher yesterday, even with a decline in both Brazil’s and Columbia’s currency, which allows producers in those countries to be more aggressive in pricing out inventory.  One thing giving support to the coffee market is the fact that coffee stocks, as reported by the ICE exchange are on pace to have a decline for the 6 month in a row.  Cocoa prices are lower today, following a decent rally last week driven by weather concerns in the Ivory Coast.  Soft economic data out of Europe yesterday and today may be influencing demand prospects. 

 

As mentioned, gold prices are rotating lower this morning, but remain well above the key $1500 level, that has been tested a handful of times and always manages to hold.  The geo-political landscape, concerns about the strength of the global economy (especially after the European data yesterday) and uncertainty about monetary policies all support gold prices.  Copper prices are once again taking clues from the equity markets, and economic prospects.  Copper traded lower yesterday, and is up a bit this morning.

 

Oil remains at the mercy of any new developments in the aftermath of last week’s attack on the Saudi production plant.  Any significant news on the trade front can also impact prices.  This afternoon, API releases its projection for crude inventories for last week.  An increase of 450k barrels is expected to have been added to the stockpile. 

 

It’s a relatively light economic data calendar week, so the market may be positioning itself ahead of month and quarter end next Monday, along with a big string of data on the manufacturing and employment front next week.            

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      882.50                   886.75                   913.50

CZ9                      391.00                   409.50                   402.75

WZ9                     486.25                   500.00                   509.00

KWZ9                   420.50                   447.25                   479.00

MWZ9                 520.75                   541.25                   562.00

SMZ9                   302.1                     309.3                     315.1

BOZ9                   28.93                     28.59                     29.41

CLX9                    56.00                     56.97                     57.10

GCZ9                    1494.3                   1423.3                   1371.2

LHZ9                    67.155                   71.895                   70.275

LCZ9                     107.770                 109.595                 114.260

KCZ9                    101.00                   102.55                   106.00

CCZ9                    2333                      2391                       2361                      

CTZ9                    60.58                     63.88                     69.37

SBH0                    12.53                     12.95                     13.41

JOX9                    102.90                   104.75                   115.30

HGZ9                   262.95                   266.80                   275.05

 

Thanks,

Mike

 

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404