Commodity Corner: Morning Comments

Good morning,


DXM9  97.705  +0.027                       GCM9  1283.2  -3.0                                                          ESM9  2861.00  -17.50                    CLM9  63.37  +0.50


Never a dull moment in the markets these days, as the trade talks drag along and the Middle East tensions remain.   While the market still wants to believe that there will eventually be a trade agreement between the US and China, it is looking like this may be on hold until later next month, when President Trump plans to meet with China’s President Xi and Russian President Putin at the G-20 meeting.  Global equities are lower today, following yesterday’s rally.  The oil market continues to march higher, in front of this weekend’s OPEC meeting.  It is expected that maintaining the production limits put in place last October, along with the heightened tension taking place recently in the Middle East will be the prime topics of the discussions.   The dollar index remains firm, putting pressure on some commodity markets.  Not fazed by the dollar at the moment would be the corn and wheat markets, which continue to surge higher in a short covering rally, driven by the excessive rains across the Midwest and Great Plains.  Gold, which was hit hard yesterday, as equities rallied, on the removal of safe haven status for gold.  Gold is back up to positive territory today (slightly) as equities are retrenching yesterday’s upward steps.  Copper is lower, following a strong day yesterday on the good US housing data, being hit on economic growth concerns. 


As mentioned, the oil markets have a strong bid, leading into the OPEC+ meetings.  Both WTI and Brent crude traded sharply through the psychological resistance barriers of $63 and $73 respectively.  Deep discussions of production levels going forward are expected in the meetings being held in Jeddah, Saudi Arabia.  In addition, the recent attacks on tankers and pipelines will be at the forefront of conversations.  There are still some issues with the contaminated Russian oil from a couple of weeks ago, and a refinery in Germany has halted production.  As the market anticipates a tightening of supplies, prices continue to move higher. 


Corn and wheat prices continue to surge higher, as the excessive rain systems and flooding continues to cause significant planting delays.  This is driving the fund community, which is carrying a large spec short in both corn and wheat, to cover, especially after making new low prices on Monday following President Trump’s Twitter blasts about the China trade talks last weekend.  With the window for planting spring wheat and corn coming to a close soon, the reality of acres not getting planted is prevalent.  The crop progress reports from last Monday showed the planting pace well behind last year and the averages.  While it is believed that the farmers were able to get some work done at the beginning of this week, it remains to be seen how much of the deficit has been cut into.  A fresh look at planting progress comes on Monday afternoon.  However, with rains across the Midwest and Great Plains this weekend, the market is not very hopeful for good news.  These same rains also pose a risk to the winter wheat crops, which have been running at exceptional condition levels this season, as the rains can pose as risk to the quality of the harvest.  Soybeans, which have a later planting period, have lower prices today, as the market thinks that any corn or spring wheat acres lost could end up as soybean acres.              


Other commodity markets are lower for the most part are lower today, taking their cue from the firm dollar and the general theme of delays to the trade talks leaving the chances for bad news outweighing that of good news.  This is also hitting copper prices as well.  A fresh look at fund positioning in all of the commodities will come this afternoon, when the CFTC released the updated Commitment of Traders Report.  As the markets whip around on trade headlines and other whims, keep an eye on key technical levels to serve as support and resistance levels for these markets.  Moving average data for many of these markets can be found below.  On a side note, commodity ETF’s observed the 7th consecutive week of outflows, assuming equity markets have been the benefactor of this.


As mentioned, the US weather has rains across the Midwest and Great Plains this weekend and into next week.  It is widely expected the planting delays will persist through the month of May.  Corn and wheat futures are set for the biggest weekly rallies in years in response to this.  European weather has cooler temperatures and drier conditions in the forecast for most of the remainder of May, and into June.           


Technical Moving Averages:

Product               50 day                100 day              200 day

SN9                      885.875                 910.375                 913.0    

CN9                      371.0                     381.25                   387.0

WN9                    454.5                     484.5                     518.25

KWN9                  427.75                   466.625                 512.0

MWN9                537.375                 555.25                   582.25

CLM9                  61.82                      57.75                     60.65    

GCM9                  1295.3                   1303.5                   1269.1

LHM9                  91.000                   84.460                   82.835

LCM9                   118.215                 117.960                 116.145

KCN9                   94.72                     100.88                   108.44

CCN9                   2305                       2317                       2278

CTN9                   75.88                     75.45                     78.71

SBN9                   12.52                     12.71                     12.64

JON9                    112.55                   117.55                   132.95

HGN9                  288.00                   282.50                   280.10


Have a good day,




Michael Clifford


141 W Jackson Boulevard                             

Ste 1201A                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              


312-896-2012  (fax)