Commodity Corner: Morning Comments

Good morning,


DXM0  99.825  -0.109                  GCM0  1719.4  -2.8                                             ESM0  2903.25  +36.00                  CLM0  14.54  +2.20


**Some positive news on Gilead just hit the tapes at 7:30 AM CDT, and e-mini’s took off**


After basically failing above 2900 yesterday, ESM0 took another shot at it in the overnight trade.  Prices did manage to pop above the level (2905.00 the high), but once again fell back below.  Volumes were on the lighter side yesterday, and appear to be the same so far today, as the market waits for the Federal Reserve monetary policy meeting results later today.  No changes to current policy are really expected, especially with all of the actions taken thus far during this pandemic, but Chairman Powell’s press conference and the Q&A could be of interest, if he shares what thoughts the Fed may have regarding the depth of the economic implications from the pandemic.


Oil prices are attempting to bounce today, following some choppy back and forth price action yesterday.  For WTI, the lead contract (June) found support just in front of $10 ($10.07 low).  The pressure was the continuation and possibly the capitulation of the position adjustments taking place by the ETF community, most notable USO.  The strategy now involves holding positions spread out along the futures curve, with limited exposure to the front contracts. Yesterday afternoon, API projected crude inventories rose by 9.98m barrels this week.  As stocks  continue to grow, and with more reports of insufficient storage, globally, oil prices will have a difficult time mounting a sustainable rally.  As economies come out of being locked down, which is likely to be a gradual process, oil could then get a little momentum as it tries to rally.


The better feeling in the oil markets today (temporary as it may be) is helping the other commodity markets continue to recover from the global commodity meltdown felt through all of this pandemic.  In addition to the serious demand concerns for all products, the weakness in the Brazilian real, due to political turbulence and on economic stagnation caused by production being slowed or stopped as a precautionary measure.  The real moving down to all time lows allows South American producers to more aggressively price in the export market and still capture a substantial return. 


Hog and meat prices have found support and been trading higher as more meat packing plants are closing down, as more workers come down with the virus.  This severe halt in meat production can possibly lead to a temporary supply squeeze on meat produced.  While President Trump just signed a bill forcing the meat packing plants to stay open, it will certainly face headwinds and as staffing is reduced, production should slow as well.  Hogs also could benefit from another wave of AFS spreading across China.  This wiped out half of China’s hog herd last year, and the threat of it again this year can create a bit of a demand squeeze.  China has also been trying to honor some of its obligations from Phase 1 of the trade deal, as has been seen by some of the recent grain purchases, and hogs could benefit from this as well. 


Tomorrow is First Notice Day for May futures commodities.  Any LONG positions are eligible to receive a delivery notice.  To avoid being stopped for delivery, all LONG positions need to be liquidated or rolled to another contract by the close of business TODAY.    


Technical Moving Averages:

Product               50 day                100 day               200 day

SN0                     873.00                   908.00                   925.00

CN0                     353.25                   374.25                   391.50

WN0                   537.50                   546.25                   529.25

KWN0                  476.00                   480.50                   466.25

MWN0               532.75                   545.00                   550.75

SMN0                  304.1                     305.8                     310.4

BON0                   27.61                     30.49                     30.64

CLM0                   32.61                     44.22                     49.08

GCM0                  1648.1                   1597.1                   1532.3

LHM0                 64.955                   75.215                   82.070

LCM0                   92.975                   104.650                 108.210

KCN0                   115.10                   118.40                   114.20

CCN0                  2445                       2553                       2494

CTN0                  57.90                     64.07                     64.39

SBN0                    11.66                     12.83                     112.81

JON0                   106.60                   105.55                   108.55

HGN0                  237.45                   255.80                   260.65

HOM0                 116.16                   150.23                   167.18

XBM0                  98.26                     138.78                   156.09

NGM0                 1.885                     2.018                     2.179





Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC