Commodity Corner: Morning Comments

Good morning,


DXZ9  97.770  +0.006                 GCZ9  1485.8  -7.3                                            ESZ9  3087.75  +12.25                CLZ9  57.26  +0.91


Equity markets resume the trek higher this morning, as talk of the US rolling back some tariffs if a trade deal is reached with China adds another layer of hope to the trade prospects.  This following yesterday where doubts about a deal happening once again came into the market. 


The gold market, in response to the ongoing positive sentiment, is coming off again today, but basically holding (so far) at the same levels it was trading at early yesterday, before it popped higher in the trade.  Again the key level to watch in gold is around $1465, an old low.  At the moment, today’s low lines up with the 100 day Moving Average for GCZ9 (1482.0 = low;  1481.8 = 100 day MA).  If we take this level out, I would be looking to retest that old low area.   


Oil has been the most interesting trade of late.   It traded up to the $58 area early in the week, on the trade optimism, only to leak lower on Tuesday and get hit fairly hard yesterday.  Yesterday’s pressure came from a couple of sources.  First, OPEC+ put some doubt in the market about lower production quotas being discussed at the meeting next month.  This hit prices, as most expected this to be a primary topic, with oil having traded in the lower 50’s for a good portion of the past few months.  The second hit came from the DOE, which announced an inventory build much larger than what the market was looking for.  All this being said, oil finds itself higher today, primarily being supported by operations beginning by a US led coalition to secure sea lines vital to oil shipping (the thought being this could heighten tensions) and the same positive trade talk mentioned above. 


The grain markets are a touch higher today, having been hit yesterday on the trade concerns, but revived by the new positive tones on trade.  In addition, tomorrow brings the latest WASDE report from the USDA, where cuts to domestic production and inventories are expected.  Position squaring ahead of the report can be expected today.  In addition, a premature and untimely cold front will be sweeping across the Midwest and Plains, beginning today and thru next week.  This may pose a problem to the farmers still trying to complete harvest and may pose a risk to the unharvested crops.


Lean hogs, which were limit bid at one point on Tuesday, on the thought that a trade deal would increase the level of Chinese hog buying, were hit hard yesterday on the news that China has struck a deal to buy hogs from Denmark.  The assumption was, following the ASF epidemic, China would be more aggressive in its US hog purchases.  The Denmark news certainly dampens that fire.  Cotton faced similar price action as the grain, getting hit yesterday on concerns about trade, and bid today from the overnight talk.  Tomorrow’s WASDE report is also expected to show decreases to domestic production and inventories in cotton.  Coffee futures had a strong rally yesterday, trading up over 2%.  Weather related supply concerns, stepped in to the market, after being under pressure early from producers selling on a weak Brazilian real.  On the bounce, as key resistance points were being taken out, buy stops from the funds’ short positioning were triggered.        


Technical Moving Averages:

Product               50 day                100 day               200 day

SF0                       918.50                   914.00                   920.50

CZ9                      379.25                   399.75                   400.50

WZ9                     494.75                   501.00                   501.25

KWZ9                  411.00                   430.25                   457.00

MWZ9                 526.50                   533.00                   552.00

SMZ9                   301.7                     306.1                     311.7

BOZ9                   29.86                     29.30                     29.51

CLZ9                     55.35                     55.73                     57.40

GCZ9                    1508.3                   1481.8                   1402.7

LHZ9                    66.850                   68.125                   71.520

LCZ9                    110.065                 110.250                 113.695

KCZ9                    98.95                     101.90                   103.35

CCZ9                    2415                       2408                       2377

CTZ9                    61.94                     62.29                     67.47

SBH0                    12.34                     12.68                     13.22

JOF0                    102.55                   104.75                   112.45

HGZ9                   261.85                   263.95                   273.80






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC