Commodity Corner: Morning Comments

Good morning,


DXM0  96.105  -0.216                 GCQ0  1729.8  +7.9                                ESM0  3216.00  +10.50                  CLN0  38.33  -0.61


Markets are in a somewhat consolidation pattern, ahead of this afternoon’s announcement on monetary policy from the Federal Reserve.  While no change to the actual level of rates is expected, some tweaking of the other stimulus measures put in place could be announced.  As any changes could have an impact on numerous markets, the trade has been somewhat muted overnight.  Gold prices are at the upper end of the overnight range.  Any further reductions to rates or additional stimulus moves would be supportive for gold.  Oil prices are coming off, continuing with the rejection of the $40 level observed on Monday.  Yesterday afternoon, the API projected crude inventories rose by 8.42m barrels last week, as the market was expecting a second week of declining stocks, at -1.5m.  Inventories beginning to build back up could quickly become an issue, as US oil companies are looking to get production rolling again.  The DOE releases the production and inventory figures later this morning. 


The grain markets are waiting for tomorrow’s WASDE report from the USDA.  While some changes to the balance sheets could occur, more of the market’s focus appears to be on the acreage and quarterly stocks report at the end of the month.  Prices were lower yesterday, with the 2 main drivers being decent reports on Monday afternoon from the USDA on crop progress, and on beneficial weather.  Speaking of weather, the weather outlook for global wheat has improve in Australia and in parts of Russia, allowing for respective government entities to raise production output estimates.  A couple of other random points pertaining to the grains.  Currency markets have been impacting the US grains.  The correction up in the Brazilian real has made US beans much cheaper to China than Brazil’s.  The Russian ruble has been rallying with the oil rally, which makes Russian wheat at a price disadvantage for local producers.  Egypt is coming with a purchase tender today, so we will get a look at how comparable prices are.  In Brazil, CONAB raised it’s soybean crop estimate a touch, which is lower than what the USDA is projecting.  CONAB did lower its corn estimate by just over 1mmt, basically matching the USDA.  Winter wheat harvest is underway, with some good yields being reported, but mixed on protein. 


The cattle market has been relatively quiet this week, as lower cash cattle prices, and anticipation of further drops, are bult into the futures prices.  The expected continuation of lower cash prices comes from processors returning to slaughter capacity.  Lean hog futures have been under similar pressure.  Underlying support for hogs is expected to come from China, which has been a good buyer of hogs over the past few months, and is expected to continue to be. 


The other markets are basically waiting on the Fed, as any significant moves in the currency markets can have an impact on many commodities.       


Technical Moving Averages:

Product               50 day                100 day               200 day

SN0                      850.50                   875.50                   912.75

CN0                      325.25                   352.25                   375.75

WN0                    526.00                   535.00                   529.50

KWN0                  474.25                   475.75                   465.25

MWN0                520.75                   533.00                   543.75

SMN0                  292.1                     299.2                     306.0

BON0                   26.86                     28.39                     30.21

CLN0                    29.16                     37.06                     46.01

GCQ0                   1716.9                   1659.2                   1590.7

LHQ0                   58.390                   68.715                   78.425

LCQ0                    93.885                   99.075                   105.580

KCU0                   110.65                   112.15                   114.95

CCU0                   2348                       2494                       2481

CTN0                   55.91                     60.52                     63.49

SBV0                    10.76                     12.15                     12.66

JON0                    117.55                   110.40                   109.50

HGN0                  235.80                   244.15                   256.85

HON0                  98.06                     123.74                   155.34

XBN0                   90.19                     115.00                   145.12

NGN0                  1.993                     2.015                     2.186






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

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