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,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404