Good morning,
DXZ9 97.465 +0.099 GCZ9 1501.9 -9.2 ESZ9 3082.25 +6.50 CLZ9 57.02 +0.38
Equity markets continue the grind to the highs, getting pushed by favorable employment report from last Friday and the continued optimism that a trade deal, at least an initial phase, will be put in place soon. This same trade optimism is the catalyst behind rallies for numerous markets. Crude oil managed to push up to the $58 level before a late session pullback. The pullback came from the expectation that the weekly inventory data will show a build form last week. An increase of 2m barrels is expected.
Gold, which is lower today as safe haven bids evaporate, also had a decent bid yesterday. Commodities were firm, in a combination of some position short covering coupled with concerns about weather systems having an impact on the products, and thus available supply. While the inherent demand for gold appears to be abating, the overall geopolitical risks keep an underlying bid in gold prices.
Looking at the grains, prices are higher today, as another cold front is set to sweep across the Midwest and Plains. Yesterday afternoon’s crop progress report showed some improvement to the harvest rates, but still well behind the yearly averages, which is a concern with the aforementioned weather. The risk of damage to the remaining crops unharvested increases drastically with the weather. Wheat prices are also firm this morning, in spite of a good conditions reading yesterday afternoon. While there has been beneficial moisture for the newly planted winter wheat crops, this wave of cold temperatures could cause stress to the crops that have yet to enter dormancy. In addition, Egypt is coming with another purchase tender today, where the Black Sea and Europe again should dominate. As reports continue about reductions to the projections for available supply out of the Black Sea area, hope remains that the US can find a way to squeak out some more market share in the export arena. This Friday brings the latest supply and demand report from the USDA in the WASDE. Declines to domestic production and inventories are expected by the market.
Sugar prices traded higher again yesterday, following Friday afternoon’s COT report from the CFTC showing funds are carrying a spec short of approximately 200k. There has been much talk of a supply deficit in sugar next year, and the reported size of the short may have spooked some positions to cover. Cocoa prices also traded higher yesterday, as numerous bullish factors on the demand side, such as high coca grindings in Asia and large forward purchases by European chocolate producers are driving prices. Cotton opened firm yesterday, getting a bid from the trade optimism. It softened up over the course of yesterday’s session, as concerns about commercial demand brought some selling into the market. Cotton also gets a fresh look at supply and demand expectations from the WASDE on Friday. Coffee prices traded lower yesterday, as a correction lower in the Brazilian real opened the door for South American producers to make some sales, denominated in dollars. In spite of some reports of supply shortages in some areas, the size of the real’s correction was enticing enough.
Trade talks and the weather should remain the focal points for many markets over the next few sessions.
Technical Moving Averages:
Product 50 day 100 day 200 day
SF0 916.25 914.25 920.75
CZ9 378.75 401.50 400.75
WZ9 493.25 502.00 501.75
KWZ9 410.00 432.00 458.75
MWZ9 526.00 534.25 552.75
SMZ9 301.6 306.7 312.0
BOZ9 29.73 29.24 29.49
CLZ9 55.23 55.65 57.38
GCZ9 1510.5 1479.1 1401.0
LHZ9 66.730 68.300 71.500
LCZ9 109.510 110.070 113.675
KCZ9 98.60 101.80 103.45
CCZ9 2406 2409 2376
CTZ9 61.70 62.34 67.58
SBH0 12.33 12.70 13.24
JOF0 102.85 105.30 113.15
HGZ9 261.35 263.85 273.80
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404