Commodity Corner: Morning Comments

Good morning,


DXZ9  98.225  +0.298                     GCZ9  1537.4  -2.8                   ESZ9  2965.25  -5.00                      CLX9  56.46  -0.83


Nancy Pelosi brings a little excitement to an otherwise benign session yesterday, announcing formal impeachment proceedings against President Trump.  In a normal reactionary move, equities traded lower and gold went bid.  Fixed income markets, which already were having a decent day higher, remained bid throughout.  In a light economic calendar week, where trading had been somewhat lethargic, this created some volatility for prices. 


Oil prices are lower today, as a couple of reports late yesterday applied pressure to the trade.  It was reported that the repairs for the Saudi Aramco production plant are ahead of schedule, suggesting production can get back online sooner than what was previously thought.  The API reported crude inventories rose by 1.38m barrels last week, where an increase of only 450k barrels was expected.  Oil prices have now come off around $7 since the spike on the Saudi Aramco drone attacks 10 days ago, taking out a couple of decent moving average support areas along the way.  The next target is 55.96 for CLX9 (50 day MA).  Many believe the new floor for a trading range post attacks is $55.00. The DOE brings more data of production and inventories from last week later this morning.    


Grain prices are lower today, as the market goes back to sinking lower as harvest progresses for corn and soybeans, following the pop on the news of China allowing for more purchases of US beans.  Soybeans led the complex higher over the past couple of sessions, but came to the realization that there have been numerous reports of increased Chinese buying during the trade discussions, with little actually materializing.  The next round of trade talks appears to be scheduled for the week of Oct 7.  Wheat is being supported by the weather in Canada, which has seen rain and cooler temperatures, impacting spring wheat harvest.  There is talk that some early snow could set in as well, which will pose a risk to the crop that has yet to be harvested.  The next set of data for the grain markets will be the quarterly stocks report and wheat production numbers on Sept 30.  


Other soft commodities are lower today, being led down by the overnight strength in the dollar, as producers from other countries can more aggressively price their products, denominated in dollars.  Aside from the supply an demand issues that have been discussed here over the past couple of weeks for these markets, any headlines on trade, positive or negative, will have a big impact on prices.  As the softs are chopping around, keep any eye on the moving average levels listed below to serve as support and resistance points for the markets.


The metals markets are lower today.  Gold is coming off from the late rally observed on the impeachment news yesterday, as the market digests the story and is determining what real impacts may come from all of this.  Copper is trading down, following equities, also being led by the same story.  Given the global landscape, it is pretty safe to assume gold is going to remain supported, as it is viewed as the safety net for investors facing markets that have tremendous uncertainty at the moment.  Copper prices should be tied to global economic news, as a gauge of future demand for industrial metals.     


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      882.00                   887.00                   913.00

CZ9                      389.50                   409.25                   402.75

WZ9                     485.50                   500.25                   508.75

KWZ9                   419.25                   447.00                   478.25

MWZ9                 520.75                   541.25                   561.75

SMZ9                   301.7                     309.3                     315.0

BOZ9                   28.94                     28.60                     29.41

CLX9                    55.96                     56.92                     57.12

GCZ9                    1496.6                   1425.8                   1372.5

LHZ9                    67.100                   71.755                   70.760

LCZ9                     107.640                 109.525                 114.220

KCZ9                    100.70                   102.60                   105.90

CCZ9                    2333                       2391                       2362                      

CTZ9                    60.51                     63.74                     69.29

SBH0                    12.51                     12.93                     13.41

JOX9                    102.80                   104.70                   115.10

HGZ9                   262.75                   266.60                   275.00






Michael Clifford


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