Good morning,

 

DXZ9  99.04  +0.279                     GCZ9  1489.9  -16.5                          ESZ9  2965.50  +1.75                   CLX9  55.06  -0.85

 

A potentially very busy week greets the markets this morning, as month and quarter end is upon us.  Talk about impeachment and trade, 11 different Fed officials speaking this week, important manufacturing data and the jobs report at the end of the week are some of the more notable items on the docket.  With today being month and quarter end, there should be continued profit taking and position squaring in the trade today.  Gold has moved sharply lower overnight, taking out with authority the $1500 level that as been serving as support for an extended amount of time.  Gold, along with numerous other commodities, had a very big move up for the quarter, and this could very well be profit taking occurring here.  In addition, as the markets rethink how aggressive central banks will be going forward, in terms of lowering short term interest rates to keep stimulating the economy, gold depreciates.

 

The oil market is trading lower today, having traded in over $1 range for the session.  US data last week showed an uptick to production and stocks numbers.  Talk of the production capabilities for Saudi Aramco being ahead of schedule also pressures oil.  Geopolitical tensions continue to hover over the oil market, along with the potential for more weather related issues, so, prices are likely to continue to hang in the general vicinity of the mid-50’s.  Some positive Chinese data has provided a little support to oil prices overnight, probably the push to the highs in the Asian part of the trade, but strong supply coupled with concerns about diminishing global demand weighs on prices. 

 

The grain markets are higher today, ahead of some fresh data of its own.  Quarterly stocks and wheat production numbers will be released today, along with updates on crop conditions and harvest progress.  As the calendar flips to October, the harvest progress figures will be watched closely, as the lag compared to prior years leaves the unharvested crops exposed to potential damage or stress as the temperatures begin turning colder.  In terms of month end and quarter end, this quarter marks the biggest decline in corn in 5 years, as the weather related planting delays this spring, leading to expectations of reduced size of the corn crop, led to a huge rally in Q2.  Only to be squashed by the USDA’s projections of a decent sized crop, in spite of the issues this spring.  Thus, the move back down in prices this quarter leads to this big decline.  Wheat prices have been rallying for the past few sessions, with the most recent pop driven by a hail storm in Canada thought to cause damage to the unharvested wheat. In supportive news for soybeans, China is allowing private firms to apply for import quotas that are allocated to state owned firms, taking advantage low tariff rate quotas. 

 

Sugar is poised to have its best quarter in 2 years, as funds continue to cover the record short positions accumulated.  Concerns about a global deficit next year has caused funds to book some profits on the short positions.  This has been confirmed in the COT report put out by the CFTC, showing funds covering over 25k contracts up to the last reporting date.  The spec position, as of this reporting date, remained over 200k, so there is more room to go, if more decide to get out.  Coffee futures are down today, as the stronger dollar allows producers to sell more aggressively with the declines to their domestic currencies. 

 

As mentioned, the markets have many inputs to watch this week that can influence the price action.  Asset re-allocation talk, as the markets head into Q4 could very well pop up, especially with some markets that have very good quarterly returns.               

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      881.00                   888.00                   912.00

CZ9                      385.75                   409.00                   402.25

WZ9                     483.50                   500.75                   507.50

KWZ9                   416.00                   446.00                   476.00

MWZ9                 521.25                   541.50                   560.75

SMZ9                   300.6                     309.1                     314.5

BOZ9                   288.99                   28.64                     29.39

CLX9                    55.93                     56.77                     57.17

GCZ9                    1501.3                   1432.1                   1376.0

LHZ9                    66.845                   71.415                   70.870

LCZ9                     107.395                 109.415                 114.120

KCZ9                    100.10                   102.75                   105.65

CCZ9                    2334                       2395                       2366

CTZ9                    60.40                     63.35                     69.03

SBH0                    12.50                     12.91                     13.39

JOX9                    102.35                   104.65                   114.40

HGZ9                   262.05                   265.90                   274.75

 

Thanks,

Mike

 

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404