Commodity Corner: Morning Comments

Good morning,


DXM0  99.085  -0.803                 GCM0  1727.5  -8.0                                         ESM0  3009.00  +56.00                  CLN0  34.17  +0.92


The start of summer brings a “risk on” attitude, as economies continue to gradually  come out of the pandemic shut downs.  With a good portion of the recent data coming in not as bad as expected, there is a school of thought that the worst for the global economy may be behind.  US equity futures have popped back above 3000, in the 2 days of trade since Friday’s settle.  Numerous stories in the US of states that have re-opened, have been buried with patrons, leading to the belief that the economy may be able to recover. 


Oil prices continue to push higher, on the expected increase in demand as citizens re-engage with the economy.  Front month July WTI has taken out $34 in the overnight trade.  A comment out of the Kremlin says the OPEC+ additional production cuts deal that was agreed upon, is working successfully.  Weekly US production and inventory data have recently shown declines to both numbers, and more is anticipated for this week. 


Gold prices have come off at the beginning of this week.  Not a big surprise, given the risk on sentiment, as gold’s safe haven appeal loses a bit of glimmer.  However, prices remain above $1700, and another test to the $1800 area is certainly attainable.  Copper prices continue to follow the equities track, pushing higher as well.  Copper and other industrial metals are also receiving support from the better economic data coming out of China, where the economic revitalization is already underway.


On Friday afternoon, the CFTC released the weekly COT report, showing the spec short in corn is at a record high of over 290k.  Corn prices are just a couple of cents off the lows, and the bearish sentiment makes sense, given the large crop size expected, the pace of planting, lower than normal ethanol usage and uncertainty on trade given the recent US/China arguing.  The speculative short positions in Chicago and Kansas City wheat futures increased by about 40% of the prior position.  The ample global supplies of wheat, and the US still struggling to be competitively priced, weighs on wheat futures.  Ample rains have supplied beneficial moisture to the wheat crops.  Last week’s Kansas crop tour showed the crops’ condition as worse than last year, but not to be as damaged or stressed as what may have been feared, given the period of freezing temperatures, followed by insufficient moisture.  Funds are also record short in Minneapolis wheat.  The COT report also showed the positioning in soybeans turned from that of a small spec long to a small spec short.  Again, the apparent turbulence in the US/China relations threatens the expected increased Chinese demand for beans.  Soybeans are also expected to have a very big crop this season, and there remains talk that some corn acres in areas like North Dakota, which couldn’t get planted, may still switch to soybeans.  Soymeal positioning also saw a decent sized increase in the spec shorts.  Demand concerns plague the meal market.  Given the current fundamental backdrop in the grains, it appears that it will take some type of weather market to put any pressure on these short positions in the grains.    


The other soft commodities are riding the euphoric wave being put out by the equity and oil markets.  Brazil’s struggles with the handling of the COVID-19 pandemic within its own country has led to concerns about the availability of products produced there.  Worker absences and port disruptions have brought into question the size of the supply that may come from Brazil.  Sugar, coffee, cotton, cocoa and orange juice are all higher in price this morning.  Today’s decline in the dollar is also helping these commodities, which are denominated in dollars.                     


Technical Moving Averages:

Product               50 day                100 day               200 day

SN0                      852.25                   888.25                   916.50

CN0                      331.00                   360.50                   380.25

WN0                    530.75                   540.75                   528.50

KWN0                  476.75                   480.25                   464.50

MWN0                523.25                   538.25                   545.50

SMN0                  297.8                     301.9                     307.5

BON0                   26.53                     29.19                     30.35

CLN0                    27.37                     39.53                     46.90

GCM0                  1676.7                   1637.4                   1575.6

LHM0                  58.070                   70.190                   79.595

LCM0                   89.085                   100.150                 106.515

KCN0                   113.05                   113.50                   113.60

CCN0                   2337                       2531                       2491

CTN0                   54.93                     61.91                     63.63

SBN0                   10.50                     12.28                     12.57

JON0                    113.40                   107.95                   108.75

HGN0                  230.30                   248.05                   257.65

HON0                  98.63                     133.34                   159.36

XBN0                   81.58                     123.04                   148.04

NGN0                  2.019                     2.067                     2.214






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

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