Commodity Corner: Morning Comments

Good morning,


DXM9  97.875  +0.020                    GCM9  1280.8  +1.4                         ESM9  2924.75 -6.00                       CLM9  65.78 -0.11


My apologies here.  I have been tied up all morning, so I am just going to throw a few brief comments out today.


The US equity market is dancing around unchanged levels this morning, as oil finds support from yesterday afternoon’s correction down, and is marginally higher.  Oil took a breather from the daily race to new highs, as crude stocks were reported higher than what was expected.  Overnight, oil firmed, led by Brent crude which traded above $75, as a story that some Russian oil distribution to Europe was halted due to contamination. 


The grains had another down day yesterday, as the funds apparently continued to add to the very large short positions.  Corn futures saw open interest increase by 9k, soybeans by 7k and wheat by over 2k.  The wheat market was hit on the report out of Canada, showing an increase in planting acreage in wheat, at the expense of canola.  Soybeans were hit as China reported soybean imports were down in March, and on continued concerns about swine fever and diminished feed demand from the hog community.  There was talk that China’s feed consumption could be down as much as 30% this year.  Corn moved lower as well, as funds continue the press to new lows.  Today’s export sales were a bit disappointing in corn, still on the softer side for soybeans, and pretty good for wheat.    


The live cattle market was hit yesterday, as profit taking drove prices down.  The funds continue to maintain a large long position, but last Friday’s bearish cattle on feed report continues to encourage taking some chips off the table.  Also pressure the cattle market was good weather, which is viewed as beneficial for weight gains.  The lean hog market was back and forth yesterday, as funds carry a very large long position there as well.  Hogs ultimately finished a bit higher, as the data, primarily out of China, continues to emphasize the severity of the swine flu epidemic. 


Gold was higher yesterday, bouncing off 4 month lows as the stock rally took a breather.  An inversion of the yield curve in Canada, as the central bank removed its hawkish bias, was also supporting gold.  The dollar continuing to trade firm capped the bounce in gold.  Copper also rebounded yesterday, as increased demand in the face of diminishing inventories outweighed the slowing economic growth  concerns, which had been putting pressure of copper and industrial metals prices of late.


On  the US weather front, there could be some planting delays occurring over the next couple of weeks, as a few rain systems work there way across the Midwest.  The next couple of days should be relatively dry, but then cooler temperatures and rain (potential snow for the Plains and upper Midwest) moves in this weekend.  The weather pictured dries out again during the first full week of May. 


Again, apologies for the brief comments today. 


Have a good day,



Michael Clifford


141 W Jackson Boulevard                             

Ste 1201A                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              


312-896-2012  (fax)