Commodity Corner: Morning Comments

Good morning,


DXH0  96.965  +0.002               GCG0  1478.9  +0.2                     ESH0  3196.75  -2.50                CLG0  60.78  -0.07


The House voted to impeach President Trump last evening, and the US equity market is hanging around unchanged levels this morning.  The overnight range was relatively small, and volumes modest.  The BOE in the UK left short term interest rates unchanged this morning, in a 7-2 vote.  Gold prices are hovering around unchanged, also observing a fairly narrow range and lighter volumes.  The oil market is trading just shy of $61 today, up a hair and about 20 cents off of yesterday’s highs, made when the DOE reported inventories fell last week, after the API reported otherwise the night before.  The $60 area for CLG0 has formed a nice short term base for the market, and a continued push higher could occur.  Some analysts are calling for a move up to $65.  


The coffee market, which has been one of the more exciting trades out there of late, finished slightly lower yesterday, following Tuesday’s major decline, in what is clearly a profit taking trade.  Monday, the multi week rally appeared to have reached an exhaustive top for the time being.  Prices find themselves lower again today, in a continuation of the same liquidating theme.  The sugar market is resuming it’s move higher, as Brazil’s CONAB projects coffee output to be 30.1m tons, vs a projected 31.8m tons in August.  Production was 29.0m tons in 2018-19.  This coupled with the India sugar mills association projecting India’s sugar production will be down 35% in the 4Q.  Even with Brazil producing more in the 2019-20 year vs last, it will not make up for the shortfall.  In addition, ethanol production is expected to remain strong, so the supply deficit concerns for sugar next year remain. 


Grain prices are mixed today, with corn and soybeans lower, while wheat is back up after yesterday’s sell-off.  Wheat prices have been trading very well of late, and yesterday’s move down is considered profit taking as well.  Soybeans ended a touch lower yesterday, and are down just over 5 cents today, even with reports that China has bought 5 cargoes of beans since Monday.  As Brazilian beans are getting set to hit the market, in what is being viewed as a healthy crop, there will be pricing pressure on the US bean market.  Corn prices are sluggish, as exports continue to lag the UJSDA projections.  Similar to beans, as a fresh supply of corn from South America is just around the corner, US corn will face another obstacle in the trade.   


In a quick look at some of the other commodity markets, copper prices were lower yesterday, as Chinese producers reported a record production month in November.  In addition, copper and the other industrial metals have had a huge rally of late, and some profit taking was in order there.  In the US milk market, it was reported yesterday afternoon that November production was much lower than expected.  October’s production numbe3r was also lowered, giving support to milk prices.  Looking ahead to 2020, some analysts are projecting cow growth, which improves the prospects for milk production.  Cocoa prices have been drifting downwards over the past few sessions, also in a profit taking move following the similar large rally driven by supply shortfalls next year.  Cotton prices have resumed its rally, as improved prospects for trade with China and lower production and inventory data from the USDA lead prices up. 


With the markets quickly moving into holiday mode, this will be the last morning comment for 2019.  Stay tuned for trade headlines, as that appears to be the biggest risk to the trade for the remainder of the year.  Keep in mind, with less liquidity in the markets, moves can be exacerbated.  I will also point remind all that January options at the CBOT expire on Friday, December 27.  First Notice Day for January futures contracts is Tuesday, December 31.  Any open long positions are eligible to receive a delivery notice.  To avoid any risk of being stopped for delivery, all LONG January positions should be rolled or liquidated to another contract by the close of business on Monday, December 30.


Thank you all for your continued support this year!  I hope everyone has a safe and enjoyable holiday season with family and friends!!  Best of luck to all in the new decade!!        


Technical Moving Averages:

Product               50 day                100 day               200 day

SF0                       918.75                   907.25                   911.75

CH0                       388.50                   390.25                   407.00             

WH0                    522.50                   505.75                   509.75

KWH0                  436.75                   430.50                   459.75

MWH0                533.75                   534.25                   553.75

SMF0                   303.8                     302.5                     310.1

BOF0                   31.16                     30.25                     29.70

CLF0                     56.70                     55.78                     57.35

GCG0                   1486.4                   1501.6                   1427.1

LHG0                   71.965                   72.065                   76.085

LCG0                    123.450                 117.955                 118.250

KCH0                   112.70                   107.70                   107.60

CCH0                   2548                       2446                       2425

CTH0                   65.48                     63.14                     66.99

SBH0                    12.72                     12.60                     13.06

JOF0                    99.25                     101.70                   108.35

HGH0                  268.15                   264.50                   272.20






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC