Commodity Corner: Morning Comments

Good morning,


DXZ9  97.250  +0.014               GCZ9  1495.2  -0.5                                                      ESZ9  3011.25  +5.50                CLX9  55.85  -0.12


Oil futures have had the most interesting story over the past few sessions.   First, rallying on thoughts of production cuts, or at least adherence to lower production levels from OPEC+.  Then, getting hit on a report suggesting the US had another build in inventories last week, only to rally sharply yesterday, after the data from the DOE showed a draw on supplies.  Oil finds itself a touch softer this morning, as some weak employment data from Germany and continued Brexit debates keep uncertainties abound in the global economic outlook.  Economic conditions, along with the available supply scenario, should dictate the price action of oil in the short run.


The grain markets were slightly higher this morning, and then the following headline hit the tape:  “China willing to buy $20 billion of US farm goods in year one.”  There was a very small uptick in prices, and then they reverted back to where they were (up slightly) before the news.  Grains remain in a trading range, relying on trade and weather developments to dictate prices.  Soybeans, which have seen funds move to spec long positioning over the past few weeks, had a decline of 15k in open interest yesterday.  Some of that could be position unwinds, but more likely November positions being closed out ahead of first notice day next week.  The wheat market remains well supported, as stronger global demand and weather related questions about global supplies helps keep prices firm. 


Sugar prices are firmer today, moving up from a one month low, on signs of increased import demand from China.  In the bigger picture, the market remains fixated on what production out of India will look like, as lower production has the market thinking the supply side of the equation could turn to a deficit.  Cotton futures also continue to trade higher on growing optimism for trade with China.  The headline about the US farm goods purchase from China is helping push prices up.  The cotton market had already been in an uptrend, and this story keeps the push going.  Coffee futures were lower yesterday, in a correction down.  The recent strength in the Brazilian real (from the approved pension reform plan) and rain levels in Brazil below the averages keep an underlying bid to coffee.           


Gold prices are down slightly this morning, as global equities are up a touch.  Volumes have been subdued today, in part ahead of this morning’s ECB meeting.  Gold is probably range bound for the time being, ahead of key events next week such as Brexit and the US Federal Reserve meeting.  Copper prices have been undertaking a decent rally of late, driven by increased demand prospects derived from the notion that a trade deal improves the global economy. 


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      894.25                   899.00                   910.00

CZ9                      376.50                   405.75                   401.25

WZ9                     487.00                   503.25                   503.25

KWZ9                  407.25                   437.75                   463.50

MWZ9                  524.00                   538.50                   555.75              

SMZ9                   300.8                     308.5                     312.9

BOZ9                   29.42                     29.01                     29.44

CLZ9                    55.04                     55.43                     57.33

GCZ9                    1513.4                   1466.7                   1393.6

LHZ9                    66.310                   69.295                   71.420

LCZ9                    107.455                 109.540                 113.690

KCZ9                    97.95                     102.25                   104.10

CCZ9                    2366                       2411                       2374

CTZ9                    60.86                     62.46                     67.96

SBH0                    12.36                     12.80                     13.30

JOF0                    103.10                   106.05                   113.95

HGZ9                   259.95                   263.75                   273.90






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC