Good morning,
DXM0 100.560 +0.269 GCM0 1725.4 +9.0 ESM0 2780.50 -32.50 CLM0 25.90 +0.61
Just a couple of bullet points today.
Oil rallies following the DOE reporting lower inventories and another drop in production. Saudi Arabia and Russia were both on the tapes, discussing how they intend to continue to work together to bring the oil market back to normalcy. The oil futures failed to hold the gains in the trade yesterday, as the market recognized that the DOE re-benchmarked it’s data. Not to beat a dead horse, but LTD for CLM0 is this coming Tuesday. OI this morning is 137k.
Grains, following an apparent relief rally post WASDE on Tuesday, resumed the slide down yesterday. There is a school of thought that the USDA may have been playing some games with the demand side of the balance sheets, in an attempt to mask the expected large crop production and potential large carryout. In addition, the extended weather forecast looks good for a big chunk of planting to take place. China did announce another large purchase of soybeans yesterday, but this wasn’t enough to keep prices elevated.
Cattle and hogs traded lower yesterday. Meat processing plants are attempting to reopen, which may alleviate some of the short term stress on available meat supply. There also may have been a bout of profit taking, especially in cattle, which has had a decent rally since the middle of last week.
Cotton prices rotated down yesterday, as the market appeared to look at the strong global production and inventories data from the USDA. In spite of expected stronger demand from China, concerns that a potential second wave of the virus could choke off a good portion of demand from elsewhere. Cotton has also been in the midst of a 5 day rally, ahead of WASDE, so yesterday was probably profit taking here as well. Sugar has been in an orderly grind higher, following oil prices. Coffee prices were lower for the 3rd consecutive day, drug down by disappointing export data and another swoon down in the Brazilian real. More political corruption talk, involving President Bolsonaro was the culprit for the real yesterday.
Today’s initial jobless claims data caused another leg down for equities this morning, which were already under some pressure following Fed Chairman Powell’s fairly gloomy outlook for the state of the economy over the next few months. Initial claims were +2.981m, vs +2.5m expected and +3.176m last week. Probably more important, continuing claims was +22.833m, although the market expected +25.120m and it was +22.377m last week. Maybe a small hint of some progress, if continuing claims weren’t up as much as forecast. It’s still hard to paint a rosy economic picture with over 22m people on unemployment benefits.
Technical Moving Averages:
Product 50 day 100 day 200 day
SN0 859.25 897.25 919.50
CN0 339.25 366.25 384.25
WN0 532.25 544.00 528.75
KWN0 476.75 482.75 465.50
MWN0 525.75 541.75 547.50
SMN0 300.8 303.7 308.5
BON0 26.76 29.77 30.45
CLM0 25.88 40.32 47.27
GCM0 1664.5 1621.4 1566.8
LHM0 60.935 72.405 80.490
LCM0 89.325 101.615 106.985
KCN0 114.10 115.45 113.75
CCN0 2362 2535 2490
CTN0 55.54 62.77 63.84
SBN0 10.77 12.49 12.65
JON0 109.75 106.70 108.45
HGN0 232.20 251.15 258.50
HOM0 99.76 138.33 161.42
XBM0 81.54 128.18 151.06
NGM0 1.870 1.977 2.150
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404