Commodity Corner: Morning Comments

Good morning,


DXH0  97.020  -0.074               GCG0  1551.0  +6.4                                      ESH0  3287.50  -0.50                CLG0  58.20  -0.03


A relatively calm beginning to “Hump Day”, as the markets’ wait for the official signing of Phase 1 of the trade deal.  The 2020 US Presidential election continues to slide closer to center stage, with another Democrat debate last night and the Iowa caucuses now 3 weeks away.  US equities are slightly lower at the moment, recovering from lower levels observed earlier in the evening session.  Some dovish comments from a central banker in the UK has helped lift fixed income prices this morning.  Gold prices are bouncing, possibly due to a slight shift to a more dovish global view of monetary policy and possibly just firming in front of the trade deal.  Oil prices are slightly higher today, following the API projecting US crude inventories rose by 1.1m barrels last week, which is exactly what the market is expecting.  The DOE brings data on production and inventories later today.


Grain prices are steady to slightly higher, again with wheat being the strongest across the “ags” complex.  Yesterday’s purchase tender by Egypt, where 240k tons of wheat from the Black Sea was sold, at higher prices than the previous tenders, puts a bid into all wheat prices globally.  In addition, continued talk about the Russian Ag Ministry placing a temporary limit on the amount of wheat that will be available for export also pushes global prices higher.  Soybeans, which should be a primary benefactor from positive trade news, are sitting in a narrow range today.  Corn also has been in a tight range, since the printing of the WASDE last Friday. 


Coffee prices took a breather from the steep sell-off over the past few sessions, and closed modestly higher.   Brazil is receiving plentiful rain, which creates good conditions for the development of the 2020-21 crop.  CONAB will release its first projection of forward production tomorrow.  Sugar prices were up sharply again yesterday, trading at a 2 year high, as rain in producing countries such as the US, China and India delays harvest.  This is of particular concern for a market that is already concerned about a supply shortfall.  Cocoa also surmounted a strong rally, pushing prices towards a 3 year high, as continued strong demand keeps supplies tight.  The market continues to anticipate a supply deficit for 2019-20, and reports such as Malaysia processing rising 23% in Q4.  Other commodities also traded higher yesterday, ahead of today’s trade deal.  The exception is cotton, which is in a bit of a corrective mode, following its recent strong rally on increased demand prospects and dwindling production/supply.


Data in the US today is the other key inflation figure, with the December PPI.  Yesterday’s CPI came in softer than expected.  The market is expecting an uptick in the data at the producer level, with m/m being +0.2% vs 0.0% and y/y being +1.3% vs +1.1%.  At the core level, m/m is expected +0.2% vs -0.2% and y/y is expected to be steady at +1.3%.         


Technical Moving Averages:

Product               50 day                100 day               200 day

SH0                      928.75                   927.25                   921.50

CH0                      384.00                   386.75                   405.50

WH0                    534.25                   516.00                   514.50

KWH0                  451.50                   437.25                   458.25

MWH0                532.50                   536.00                   550.25

SMH0                  304.0                     305.4                     310.9

BOH0                   32.64                     31.38                     30.30

CLG0                    58.78                     56.69                     57.22

GCG0                   1495.6                   1506.6                   1444.0

LHJ0                     76.465                   78.245                   80.130

LCJ0                     126.465                 121.910                 120.310

KCH0                   120.95                   111.40                   108.95

CCH0                   2551                       2482                       2446

CTH0                   67.01                     64.62                     66.48

SBH0                    13.15                     12.74                     13.04

JOH0                    100.80                   103.10                   108.45

HGH0                   273.95                   267.90                   271.40






Michael Clifford


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