Good morning,
DXH0 96.955 +0.178 GCG0 1478.0 -2.6 ESH0 3196.50 +1.00 CLF0 60.55 -0.39
Another relatively quiet overnight trade, with very little on the economic docket today. The biggest story will most likely be the impeachment vote in the House today. Equity markets remain within a stone’s throw of the highs. Oil prices briefly took a peek above $61 in yesterday’s trade, only to come off a bit overnight as the API projected crude inventories rose by 4.7m barrels last week, where the market was expected to see a draw of 2m barrels. The DOE releases its data on production and inventories later this morning. Gold prices are trading right around unchanged levels, having traded in a $4 range overnight.
Once again, coffee was one of the primary stories yesterday, only this time seeing prices move sharply lower. A couple of inputs helped this extremely overbought market correct lower. Brazil’s CONAB made some slight increases to the expected 2019 coffee production figures. In addition, the ICE exchange raised margin requirements for coffee, effective yesterday, in an effort to make it more expensive for speculators to trade the product. Given the dramatic rally observed in coffee over the past few weeks, yesterday’s over $5 decline, while a big move, it isn’t that big of a correction compared to the rally. Prices are continuing to correct lower today.
Grain futures find themselves lower today, following a trade higher yesterday, driven by ongoing momentum form the trade deals and aided by Argentina implementing an export tax on its agricultural products. It is thought this tax could make US products more attractive in the export arena. Wheat prices are leading the leg down today, but that makes sense since they have been the leaders on the run higher as well. The latest coating of snow across the Midwest and Plains, coupled with some warmer temperatures in the forecast for next week, should lead to a decent moisture build for the winter wheat crops.
In what could become a relevant story, African Swine Fever has been reported in Indonesia. Following last year’s epidemic, where approximately 50% of China’s hog herd was effected by ASF, concerns about this remaining across Asia remain prevalent. It is a story worth paying attention to.
Copper prices are a touch lower today, also in a corrective trade, following the recent move up that saw prices trade at a 7 month high. Other soft commodities are also correcting lower today, also getting some slight pressure from the dollar index firming up overnight. Many of these commodities also find themselves near the highs, on moves stemming from concerns about supply deficits into next year and from the trade sentiment.
As the market winds down into the end of the year, today’s trade will be prone to news headlines. There is some data coming tomorrow and Friday, but none of it is really thought to bring a big jolt to the market. The biggest shock for the market would come from any negative news on trade.
Technical Moving Averages:
Product 50 day 100 day 200 day
SF0 919.00 907.25 911.75
CH0 388.75 390.75 407.00
WH0 521.75 505.50 509.50
KWH0 435.75 430.75 460.00
MWH0 534.25 534.50 554.00
SMF0 304.0 302.6 310.2
BOF0 31.09 30.21 29.69
CLF0 56.53 55.74 57.33
GCG0 1487.0 1501.2 1426.3
LHG0 72.040 72.165 76.075
LCG0 123.260 117.870 118.220
KCH0 112.00 107.45 107.50
CCH0 2547 2445 2424
CTH0 65.38 63.12 67.02
SBH0 12.70 12.59 13.06
JOF0 99.40 101.80 108.50
HGH0 267.65 264.40 272.30
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404