Commodity Corner: Morning Comments

Good morning,


DXM0  99.680  +0.399                GCM0  1622.3  -20.9                                      ESM0  2582.00  -29.25                  CLK0  20.78  +0.69


Month end, quarter end.  Continued talk of asset re-allocation into equities (although that ship may have already passed).  Better than expected Chinese PMI data gives equities and oil a boost in the overnight trade.  Presidents Trump and Putin having a discussion about the eroding oil prices is also lending support.  WHO proclaims Europe has flattened the curve, and the worst of the virus may be behind for Europe.  Wuhan, where it all began, is re-open for business.  Grain markets get a look at the USDA acreage projections for the coming season.  Looking at the gold price action would tend to provide some evidence of assets shifting.


While the turbulent equity market is well known, as people have been lamenting about their 401k’s for over the past month, and the swoon in oil is also well known, as consumers still wonder when it will have a bigger impact at the pump, other commodity markets have also encountered very difficult times.  The softs, sugar, coffee and cotton, are slated to have the worst quarter on record since 1986.   Sugar futures are down 20% this year and cotton down 28%.  Coffee, has been the champion of this group, actually posting positive returns for the past 2 months, as the global spread of the virus provided support from demand for staples along with port disruptions raising concerns available supply.  Unfortunately, coffee was down 21% in January, so the more minimal increase in February and March were not enough to offset that.  Cotton heads for its biggest quarterly loss in 2011, drug down by dwindling demand.  In addition, textile mills are shutting in response to the pandemic and the decline in oil prices makes rival synthetic fibers cheaper.    


Corn prices are also heading for the worst quarter in 5 years, as the plunging price of oil directly impacted the price of ethanol, hence corn demand.  In addition, to be revealed later this morning, corn acres are expected to increase by the largest amount in the past 7 years.  The story is not quite the same for soybeans and wheat, where there is hope the US will successfully gain more market share in the export space.  Wheat is being supported by an increased demand for staples due to the pandemic, and other producing countries discussing/implementing export caps on its wheat, to insure enough supply domestically.   Soybeans, and soymeal have been the benefactors of a big demand push out of China, and transportation disruptions at the South American ports, in a protective measure against the spread of the virus. An example is Argentina’s soy crushing supplies have been cut in half and dwindling more due to transportation roadblocks.  As mentioned, the USDA releases the March 1 Quarterly stocks report and 2020 planting intentions report later this morning.  Corn acres are expected to be around 94m, and soybeans around 85 m acres, which both represent larger areas than last season, which was marred by horrific weather which took many acres out of play.  Wheat acres are expected to see a small downtick.  Another comment for wheat.  Yesterday afternoon, the weekly crop rating report came out for winter wheat.  Kansas and Texas reported improved conditions last week (2 & 7 respectively), while Oklahoma reported a 7 point decline in GE conditions.


Technical Moving Averages:

Product               50 day                100 day               200 day

SK0                      889.50                   915.25                   925.00

CK0                      374.50                   382.00                   399.75

WK0                     545.25                   542.50                   528.75

KWK0                  470.50                   466.00                   462.25

MWK0                 535.50                   538.75                   548.25

SMK0                   303.9                     305.5                     310.2

BOK0                   29.43                     31.21                     30.63

CLK0                    43.36                     50.64                     52.46

GCM0                  1599.1                   1553.5                   1524.1

LHM0                  77.802                   82.928                   85.881

LCM0                   104.364                 111.279                 110.780

KCK0                    110.30                   116.85                   112.25

CCK0                    2645                       2609                       2516

CTK0                    64.07                     66.20                     65.10

SBK0                    13.45                     13.37                     13.09

JOK0                    101.30                   102.40                   106.55

HGK0                   250.60                   263.10                   264.20

HOK0                   146.15                   168.98                   177.29

XBK0                    137.28                   160.86                   167.45

NGK0                   1.872                     2.052                     2.187






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604