Commodity Corner: Morning Comments

Good morning,


DXZ9  98.600  -0.059                     GCZ9  1511.6  -0.7                   ESZ9  2992.25  +6.00                    CLX9  56.20  -0.29


As the impeachment noise continues, the markets appear to have resumed to focusing on their own fundamentals.  Equities are higher, continuing with the bounce observed yesterday after the impeachment dip.  Oil was down sharply yesterday, as the news of Saudi Aramco repairs appearing to be ahead of schedule and the production and inventory data from the DOE showing increases.  The ramped up production may have been in response to the drone attacks in Saudi Arabia, in an effort to ensure no disruptions for global supplies.  The gap on the oil charts from the Friday to Sunday on the weekend of the attacks was filled on the break yesterday.  Prices are a touch below settle this morning, but have bounced almost $1 from yesterday’s low. 


Gold prices were also down sharply yesterday, as the market digested all of the news surrounding the impeachment inquiry.  Also pressuring gold, and giving a bid to the dollar, were comments from Fed President Evans, discussing the need for any additional lowering of short term interest rates.  The market interpreted the comments as the Fed trying to maintain a relatively neutral view on policy moving forward, and fixed income markets repriced lower accordingly.  As mentioned, this gave the dollar a boost, as overall higher short term interest rates, from what was expected, strengthens the dollar.


Grain prices were lower for the most part yesterday, even with the news of the trade agreement with Japan, where increased US agricultural purchases will take place.  Wheat prices were down the most in yesterday’s trade, as the Egyptian purchase tender drew bids from Russia and France, with nothing from the US.  This once again highlights US wheat being too expensive compared to its global competitors.  This is especially a problem as wheat harvest draws to a close.  Wheat has a bid this morning, primarily from a report out of China, suggesting a climate change could impact half of the world’s wheat fields.  Soybean futures are slightly higher today, as continued optimism on increase sales to China give support.  Yesterday morning, as sale of 581k tons of beans to China was announced.  As much as 2 to 3 million bushels of beans are thought to possibly be purchased from the move by the Chinese government to waive sanctions on some China production plants.  There is rain in extended forecast for next week, which could bring some delays to the corn and soybean harvests.  This becomes a concern as the cooler temperatures of October set in, with a large portion of the crop still to be harvested.    


Supply concerns drove some other soft commodities higher yesterday.  Sugar continues to have a short covering rally, as production in India is now thought to be less than what was originally anticipated.  Brazil supply could be lower, as cane producers opt to make ethanol over sugar.   Cocoa prices ended higher yesterday, as there was a reported decline in inventories held at warehouse ports.  Coffee was also higher yesterday, as numerous production fields are reporting crop sizes could be less than originally expected, due to recent colder than normal temperatures, followed by a dry spell.  Any moisture that comes to the growing areas has been inconsistent, and followed by extended dry periods, causing stress to the flowering crops.  Orange juice prices were lower yesterday, as lower consumer demand, due to a shift in consumption habits.  There is less demand for sugar products, creating concerns for an expected strong crop.  Hurricane season is moving through, and there has been minimal impact to this point.      


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      881.50                   887.25                   912.75

CZ9                      388.25                   409.25                   402.50

WZ9                     484.50                   500.25                   508.25

KWZ9                   418.00                   446.75                   477.50

MWZ9                 520.75                   541.25                   561.50

SMZ9                   310.3                     309.2                     314.9

BOZ9                   28.95                     28.61                     29.40

CLX9                    55.93                     56.87                     57.13

GCZ9                    1498.4                   1427.9                   1373.7

LHZ9                    67.060                   71.635                   70.800

LCZ9                     107.535                 109.475                 114.185

KCZ9                    100.55                   102.65                   105.80

CCZ9                    2333                       2392                       2363

CTZ9                    60.46                     63.60                     69.20

SBH0                    12.50                     12.93                     13.40

JOX9                    102.60                   104.65                   114.85

HGZ9                   262.55                   266.40                   274.90






Michael Clifford


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