Commodity Corner: Morning Comments

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





Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC