Good morning,
DXZ9 97.305 +0.049 GCZ9 1495.2 +7.7 ESZ9 2988.50 -6.00 CLX9 53.90 -0.58
Equity markets are taking a bit of a breather today, following the recent rally on optimism for US/China trade talks, Brexit and the overall global economy. The dollar index is higher today, having been hit yesterday, as the British pound drew most of the FX market attention with the Brexit deliberations and vote. Gold futures have a gap opening from yesterday’s settle and the overnight low, and have a corrective bounce in place today. With Brexit still working its way through the British parliament, the likely hiccups that will come with attempting to get the deal in place should be supportive for gold.
Oil futures are lower, following a decent pop yesterday in prices. There were headlines out that OPEC+ was discussing further production cuts, to help shore up prices. The consensus in the market is that the current production cuts in place would remain well into 2020. Prices are a touch softer this morning, as yesterday afternoon the API projected another increase to US crude stocks last week greater than what the market is thinking. API calls for crude inventories to rise by 4.5m barrels, where the market is looking for an increase of 3m barrels. This morning brings a fresh look at production and inventories from the DOE.
Grain prices are hovering around unchanged this morning, following a few sessions of higher prices. This rally has been driven by improved trade with talk that China is allowing more US agriculture purchases exempt from the tariffs. Not only in soybeans, but wheat has also been discussed. The continued lag in the harvest of corn and soybeans also has the market concerned, as the calendar approaches November, and colder temperatures have already begun setting in. Global weather conditions are also impacting wheat markets, and providing support for US wheat. Dry conditions have lowered the expected size of the wheat crops in Australia and parts of Russia. As wheat prices keep moving higher in the Black Sea and Europe, as seen from the Egyptian purchase tenders, the US could find an opportunity to become competitive. Trade progress and the harvest progress will remain in the main inputs for the trade at the moment.
Coffee futures trade higher yesterday, driven up by a stronger Brazilian real. The senate in Brazil approved a pension plan, and it is expected to be voted into law. Brazilian equities traded higher, as did the real. The Columbian peso also rallied yesterday, and the higher domestic currencies mitigated the selling from local producers. Cocoa futures continue to trade lower, as beneficial weather in West Africa increases the prospects for abundant supply. Funds had flipped to long positioning in cocoa over the past few weeks, and this decline could be an unwind of that positioning as well. Cotton prices remain elevated, as the announced purchase allowances in China for soybeans is hoped to spill into the cotton market as well.
Technical Moving Averages:
Product 50 day 100 day 200 day
SX9 893.25 898.25 910.25
CZ9 376.25 406.25 401.50
WZ9 486.00 503.50 503.25
KWZ9 407.00 438.75 464.00
MWZ9 523.50 539.00 556.00
SMZ9 300.7 308.7 313.0
BOZ9 29.40 28.98 29.43
CLZ9 55.05 55.40 57.32
GCZ9 1513.7 1465.1 1392.7
LHZ9 66.235 69.395 71.405
LCZ9 107.230 109.465 113.705
KCZ9 98.00 102.35 104.20
CCZ9 2361 2410 2374
CTZ9 60.75 62.49 68.00
SBH0 12.37 12.81 13.31
JOX9 100.55 103.40 111.50
HGZ9 259.95 263.70 273.90
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404