Commodity Corner: Morning Comments

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






Michael Clifford


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Ste 1065                                                              

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