Commodity Corner: Morning Comments

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






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC