Good morning,

 

DXM0  99.000  -0.336                 GCM0  1769.4  +8.0                                         ESM0  2798.00  +38.75                  CLK0  21.20  -1.21

 

Equity markets are trading higher yesterday, as most of Europe returns form the Easter holiday.  JP Morgan’s earnings came in better than analysts feared, helping support prices.  Wells also missed on earnings, but it wasn’t as bad as anticipated.  Oil prices have been caught in a choppy trade, following the OPEC+ agreement from last Thursday, where an agreement to cut production by 10 m barrels a day (beginning May 1).  With the talk in the market that the demand deficit is more like 30m barrels a day, the 10m number ultimately disappointed the trade.  President Trump commented the production cuts could be closer to 20m barrels a day, which provided some brief support, but prices eventually worked back lower again.  Gold prices continue to carry the safe haven status, especially as oil prices appear to be working its way back towards the lows.  Gold now has the $1800 mark in clear sight, and the market seems likely to try to take a peak up there.

 

The grain markets have digested last Thursday’s WASDE data, where inventories were raised everywhere except to the global soybean line.  That slightly lower revision can be attributed to expected lower production from South America.  Corn prices dipped to new lows on the release, but then had a bit of a short covering trade.  Ultimately, with oil prices failing and rotating back down, ethanol and hence corn, were drug back down as well.  Wheat prices remain the lead performing of the complex.  In spite of expected higher inventories, prices recovered from a down trade on the forecast of a major cold front sweeping across the plains this week.  As yesterday’s crop progress and conditions reports showed, the winter wheat crops are in good condition, and are at a heading pace comparable to last year and the 5 year average.  Thus, the potential is there for the weather to cause some stress to the crops.  This is helped put a bid in prices.  Also aiding prices is the weather conditions in the Black Sea, where dry conditions are calling for reductions on the size of the expected production numbers there.  Other countries placing limits on wheat stocks available for the export market, in order to ensure domestic needs are covered, also helps US prices.  Egypt conducted a purchase tender today, and 7 companies made offers from 3 countries, Russia, France and the US.  Even though US prices are close enough to be part of the conversation, the price plus the additional cost of shipping still makes prices just out of reach.  Wheat futures find themselves lower today, even with the poor weather in the Plains.

 

Other commodities continue to feel the effects of the pandemic and oil swings as well.  Cotton prices were lower yesterday, as demand is expected to lag for an extended amount of time as the global economy takes time to get rolling again.  Cattle and hog prices have been under pressure of late as well, as the initial surge of consumption as shelter in place began is now replaced with consumers working off what was purchased.  There have been several hog and cattle producers across the Midwest, the most recent being Smithfield in South Dakota, which have had to close operations, or have greatly reduced staff, due to spread of the virus.  While this could have a longer term positive impact to prices, with potentially less available supply, it is a negative in the short run.  Sugar prices are moving with the price of oil, as lower oil and gas prices provides less incentive for cane producers to make ethanol.               

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SK0                       879.25                   907.50                   920.75

CK0                      363.75                   376.75                   393.75

WK0                     542.00                   545.50                   528.25

KWK0                   468.00                   469.25                   460.00       

MWK0                 530.00                   537.50                   545.50

SMK0                   303.8                     304.6                     308.9

BOK0                   28.42                     30.75                     30.51

CLK0                    37.75                     47.76                     51.07

GCM0                  1615.7                   1570.2                   1536.1

LHM0                  71.858                   79.322                   84.248

LCM0                   98.812                   108.269                 109.685

KCN0                   113.25                   119.15                   114.55

CCN0                   2562                       2586                       2505

CTN0                   61.17                     65.47                     65.13

SBN0                   12.65                     13.15                     13.00

JON0                    105.30                   105.35                   109.00

HGK0                   242.60                   259.05                   262.10

HOK0                   132.63                   161.21                   173.36

XBK0                    117.62                   150.53                   162.59

NGK0                   1.818                     1.992                     2.154

 

Thanks,

Mike

 

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404