Commodity Corner: Morning Comments

Good morning,


DXU0  93.540  +0.033                 GCZ0  1990.7  +4.4                               ESU0  3275.00  -13.50                  CLU0  40.34  -0.67


It has been a relatively quiet overnight trade as some of the markets correct themselves from yesterday’s moves, while waiting for passage of another stimulus package from Congress, along with waiting for the US employment data to start hitting the market tomorrow.  The good reading of yesterday’s US manufacturing index propelled equities and oil prices higher.  Equity prices fell just short of 3300 (ESU0) in the overnight trade, as the stimulus package haggling continues in Congress.  Oil prices hit some resistance as well, as OPEC+ begins easing up on the production cuts put in place in May to stem the global oil glut caused by horrendous demand.  An additional 1.9m barrels/day is expected to be produced here.  This at a time when the US is also gradually increasing its production, all while the coronavirus talk suggests regression rather than progress, which could be another major hit to demand if true.  Oil is still holding above $40, but the upside could be somewhat limited for the time being.  Gold prices are rotating back higher this morning, in part supported by the softer equity market and the dollar correcting from yesterday’s rally.


Grain prices are lower today, following good crop progress and conditions reports yesterday afternoon, and somewhat disappointing export inspections data yesterday.  The good conditions report really wasn’t aa surprise for the market, given the beneficial weather observed over the past few weeks.  More of the same appears in the extended forecast, and most analysts are revising higher yield estimates for both corn and beans.  All eyes remain on China for the demand story, hoping to see them continue to replenish their domestic reserve in corn as the sell out existing stock to cool the exploding higher prices driven by a huge scramble within China to source corn.  China has also been scooping up soybeans, both from Brazil and the US, as meal demand begins to pick up from the hog population that is recovering from ASF.  Even with the growing tension between the US and China, these purchases of US grain products helps satisfy the Phase 1 trade agreement, along with meeting a demand need in China. 


Weather is also playing a role in the cotton and cocoa markets.  Hurricane Isaias is bringing too much rain into the cotton producing areas of North Carolina, increasing the risks of damage to the crops.  Cotton prices have traded to a 3 week high.  Cocoa has just the opposite problem, not enough rain.  West Africa is observing very dry conditions, also causing stress to the crops.  Cocoa futures have been up for 7 straight days, as the rainfall totals have been far below normal for over a month now.  Coffee futures closed lower yesterday, as the fears of frost which helped spark the rally last week, have abated.  Also, the reported closing of a good chunk of the funds’ spec short position in the COT report released on Friday allowed for some new short positions to be initiated, as a good portion of the short covering bid may have been exhausted.  Sugar prices remain strong and now with the breakout above the 200 day moving average, support should be found back at that level on a pullback, which comes in today in SBV0 at 12.50. 


Today could be a relatively quiet day, as the market awaits progress on the stimulus, more news on the corona virus and its impacts and waiting for the first batch of employment data to come in tomorrow.           


Technical Moving Averages:

Product               50 day                100 day               200 day

SX0                      880.50                   868.50                   906.75

CZ0                      339.50                   342.75                   369.25

WU0                    513.00                   523.50                   536.25

KWU0                  449.50                   466.50                   472.75

MWU0                521.75                   527.50                   544.25

SMZ0                   296.2                     298.0                     305.9

BOZ0                   29.18                     28.28                     30.48

CLU0                    39.30                     34.65                     44.02

GCZ0                    1815.0                   1749.0                   1654.6

LHV0                    50.670                   53.210                   63.175

LCV0                    102.270                 99.330                   107.075

KCU0                   101.70                   108.00                   113.70

CCU0                   2277                       2302                       2457

CTZ0                    60.85                     58.60                     63.49

SBV0                    11.84                     11.28                     12.50

JOU0                    125.20                   119.45                   113.75

HGU0                   271.55                   251.40                   260.60

HOU0                  120.40                   113.36                   146.38

XBU0                    119.64                   102.85                   134.61

NGU0                  1.846                     1.992                     2.120






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

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