Good morning,
DXM0 99.460 -0.221 GCM0 1735.9 +1.5 ESM0 2940.50 -7.50 CLN0 31.82 +0.17
Equity markets rotated from being up in the Asian session, to down a touch in Europe. Following yesterday’s strong rally in equities, a correction trade really isn’t that surprising. Equities are quickly baking a lot of optimism about an economic recovery into the prices. It’s tempting to want to fade this, but there is a lot of money on the sidelines, itching to get back involved. This same sentiment took most commodity markets for a ride higher as well.
Gold prices had a correction of their own yesterday, following making a 7 year high in the overnight trade. The screaming bid came from Fed Chairman Powell’s comments on Sunday evening that the Fed has more tools, in terms of monetary policy, to help stimulate the economy. Declining interest rates is supportive for gold. This same school of thought is what is causing gold prices to hold in here.
Oil prices continue to mount an impressive rally from levels that were unthinkable to many. WTI prices are holding above the $30 thresh hold. Today is the last trading day for the June futures contract, which appears to have managed to avoid the disastrous fate of the May contract. The same economic optimism and global producers cutting production amounts is helping to push oil up.
Grain prices are a tad higher today, also on the hopes of seeing increased purchases from China. One thought on ramped up Chinese purchases is that they are very concerned about the coronavirus having a major impact on the world supply chain. Fearing an inability to get necessary commodity supplies, the Chinese are contemplating scooping up what is available….Yesterday afternoon’s crop conditions and progress report didn’t bring many big surprises. The planting pace in corn and soybeans is, as expected, ahead of the 5 year averages. While the recent rains may have created some disruptions to planting, the extended forecast provides plenty of windows for completion. Winter wheat conditions had another modest downtick in the good/excellent category, but the recent rains are viewed as beneficial for wheat.
Weather is also impacting the cotton market, as the hot and dry conditions in Texas cause stress, while the tropical storm in the Carolinas causes damage. Cotton prices are also rising on the same renewed belief of increased business with China, coupled with global demand increasing as the world comes out of the pandemic.
Today, Fed Chairman Powell testifies before the Senate Banking Committee today. It is believed he will not offer anything new from what he has said last week, on 60 minutes and in comments yesterday.
Technical Moving Averages:
Product 50 day 100 day 200 day
SN0 855.25 893.50 918.00
CN0 335.50 363.75 382.50
WN0 531.25 542.50 528.50
KWN0 476.50 482.00 465.00
MWN0 524.00 540.25 546.50
SMN0 299.4 303.0 308.1
BON0 26.58 29.53 30.40
CLM0 24.96 39.43 46.88
GCM0 1669.2 1628.9 1570.8
LHM0 59.660 71.470 80.060
LCM0 88.975 100.970 106.755
KCN0 113.65 114.70 113.70
CCN0 2350 2534 2490
CTN0 55.19 62.42 63.72
SBN0 10.60 12.39 12.61
JON0 111.15 107.15 108.55
HGN0 230.90 249.75 258.00
HOM0 96.60 135.24 160.01
XBM0 78.57 125.47 149.85
NGM0 1.859 1.961 2.140
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404