Commodity Corner: Morning Comments

Good morning,


DXM0  100.600  +0.072              GCM0  1753.6  +15.3                               ESM0  2789.75  +1.25                  CLM0  16.35  +2.57


A relatively calm session this morning, as the markets await the next reading of the weekly jobless claims report.  Analysts are looking for claims to be 4.5m from last week, versus 5.245m the week before.  Continuing claims are expected to be 16.738m vs 11.976m the week before. 


Oil prices appear to remain in recovery mode, following the carnage observed on Monday and early in the Tuesday trade.  The liquidating / blow out nature of the sell-off has the market thinking things were overdone, for the time being.  However, the reality that economies are going to be very slow to get back up and running will still weigh heavy on the demand side of the equation for oil and gas.  Available storage facilities will remain an issue, and while much more aggressive production cuts will be needed by all producing countries, if anything further is agreed upon, it still won’t be sufficient. 


Gold prices continue to move back up, trading near the overnight highs.  As COVID-19 crippled global economies, crushing demand for most commodities, gold remains the most reliable asset to invest in.  The main risk for gold, as was observed on Monday, is that gold also tends to be the vehicle used to raise cash for margin calls, etc. 


So, with the poor demand story beaten down like a dead horse, it is likely to remain a problem for any commodities looking to have some price recovery.  While all the commodity markets will have their own stories, the general tone all these markets will face can basically be derived from the equity and oil markets.


Some quick comments before the claims data:

May corn futures held the $3 level on the sell-off earlier this week, and are mounting a bounce off of that.

Soybeans also traded near $8, and have bounced as well. 

US wheat prices, with the recent rally, have made themselves less competitive in the export arena.  Nonetheless, the US could still be in position to win some business, as dry conditions in Europe and the Black Sea is putting stress on the wheat crops and export restrictions also limits the amount of available supply.

Hog and cattle prices, which have been hit on the demand story with restaurants closed, could be in for a rally here in the short run.  Continued closures of meat packing and processing plants could create a short term supply deficit for this market. 

Sugar, cocoa and cotton all had corrective bounces yesterday, following the oil bounce.  However, another down day for the Brazilian real limited the rallies in these products, as Brazilian producers were incentivized to sell. 


The jobless claims data should set the early tone for the market, but the trade for most assets will still have one eye watching the trade in oil. 


Technical Moving Averages:

Product               50 day                100 day               200 day

SN0                      879.25                   911.25                   927.25

CN0                      358.75                   377.00                   394.25

WN0                    538.50                   546.50                   529.75

KWN0                  475.50                   479.25                   466.75

MWN0                535.25                   545.25                   552.00

SMN0                  305.0                     306.3                     311.1

BON0                   28.08                     30.72                     30.72

CLM0                   334.98                   45.84                     49.95

GCM0                  1636.2                   1587.1                   1546.4

LHM0                  67.140                   76.485                   82.750

LCM0                   95.120                   106.020                 108.800

KCN0                   115.10                   119.05                   114.40

CCN0                   2489                       2563                       2498

CTN0                     59.01                     64.52                     64.60

SBN0                     12.07                     12.96                     12.88

JON0                    106.10                   105.40                   108.65

HGN0                  239.65                   257.15                   261.40

HOM0                 123.61                   154.69                   169.60

XBM0                  106.28                   143.09                   158.40

NGM0                 1.889                     2.030                     2.190






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC