Commodity Corner: Morning Comments

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







Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC