Commodity Corner: Morning Comments

Good morning,


DXU9  96.310  -0.099                       GCQ9  1395.0  +5.7                                                                   ESU9  2964.50  -3.25                      CLQ9  58.95  -0.14


Unlike yesterday, it is a relatively calm start to the day, with equities and oil a touch lower, while gold is attempting to bounce from the annihilation it endured yesterday (really began towards the end of last week).  The markets continue to digest the results from the G-20 and OPEC+ meetings, and deciding how and where to be invested, as the second half of the year gets underway.  While today is quiet, economic data wise, it is a pretty packed week, with more manufacturing data coming out tomorrow, along with trade figures.  Friday brings the employment data for June, which will be the last reading before the next Fed meeting on July 31.  Toss the 4th of July holiday in the middle of all of this on Thursday, and the market could be vulnerable to pockets of illiquidity, which often makes the trade more interesting. 


OPEC+ agreed to keep the production quotas in place for the next 9 months, carrying them into 2020.  The tentative date for the next meeting appears to be in early December.  Oil prices, after spiking through the $60 level (WTI, CLQ9 contract) came off over the course of the session yesterday and have continued to do so overnight.  Prices keep moving back and forth across the 200 day moving average level for CLQ9, mitigating any impact it may have from a support/resistance perspective.  Weekly production and supply figures come out in the US this afternoon and tomorrow, and the market will be looking for clues about available supply.  Clearly OPEC, with its decision to keep quotas in place, feels available supply will be sufficient going forward. 


Grain prices are mixed to higher today, as the market continues to attempt to make sense out of what the USDA released last week in the planting intentions report.  Since there will be a resurvey taking place, and the results will not be posted until August with the WASDE, prices may be confined a bit, and subject to any drastic weather developments, which can impact the crops.  Last night crop progress and conditions were updated, basically showing unchanged readings in conditions, while the crops development remains behind the yearly averages.  Wheat prices have been under pressure of late, as winter wheat harvest progresses.  Results thus far have shown yields of 60 to 70 bushels per acre, but protein levels are lower.  US prices remain too high compared to global competitors, as was seen with the Saudi purchase of 730k mt of hard wheat from the Baltic and today’s Egyptian purchase will most likely go to the Black Sea. 


In other commodities, coffee had a huge day higher yesterday, as concerns grow about colder temperatures in Brazil having the potential for frost which could harm the beans.  Cotton prices were up yesterday, and remain firm today on improved demand prospects resulting from trade progress.  Lumber futures were limit up yesterday, reversing from being sharply lower last week.  Trade, and the effect on the overall economy the reason for the bid.  Orange juice futures were sharply lower yesterday.  OJ prices face stern resistance from the stronger dollar and from a consumption shift away from sugary products.  Speaking of sugar, it continues to have a back and forth trade, within the $12 to 13 range. 


As mentioned, gold is attempting to bounce today, in a correction which saw prices drop almost $60 from the highs put in before the last Fed meeting.  Gold prices could begin to stabilize in this new trading range established, approximately $100 higher than the range it spent a majority of March to May in, as the markets get more comfortable with the levels and aggressiveness of global monetary policies.  Copper prices are lower this morning, and actually were leaking lower throughout the day yesterday, as equities also leaked following the euphoria coming out of the G-20.  Even though prospects of a trade deal have improved, the realization that nothing has been established yet does bring some caution to equities, and copper, since copper tends to follow equities.


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                      887.75                   913.25                   924.75

CZ9                      418.00                   406.25                   403.00

WU9                    491.00                   487.00                   517.00

KWU9                  448.00                   457.25                   503.50

MWU9                546.75                   554.75                   577.25

SMZ9                   315.6                     317.3                     319.0

BOZ9                   28.32                     29.46                     29.73

CLQ9                    59.05                     59.44                     59.47

GCQ9                   1321.4                   1318.7                   1292.2

LHQ9                   88.130                   88.435                   84.860

LCQ9                    107.405                 112.040                 112.720

KCU9                    98.45                     100.20                   108.75

CCU9                   2406                       2354                       22316

CTZ9                    68.97                     59.44                     59.47

SBV9                    12.50                     12.84                     12.98

JOU9                    104.15                   113.25                   125.85

HGU9                  273.65                   282.35                   279.50


Have a good day,




Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC