Commodity Corner: Morning Comments

Good morning,


DXU9  97.845  +0.094                       GCQ9  1420.2  +0.9                         ESU9  3025.50  +1.00                   CLU9  56.28  +0.08


For most markets, it is a quiet beginning to what is shaping up to be a very active week.  US/China trade negotiations resume, the Federal Reserve meeting and US manufacturing and employment data all flood the calendar this week.  Equities, oil and gold are all hovering around unchanged levels today.  The exception to the relative calmness in the markets can be seen in the grain markets, where prices have moved higher in decent volumes. 


The US corn and soybean farmers just can’t catch a break this year.  From the well known issues trying to get the crops planted, they are now facing hot and dry conditions for the late planted and under developed crops.  The fields have switched from being flooded, to now being parched.  In a strange twist of fate, rain is definitely needed now in many areas.  This week has some cooler temperatures to help alleviate the stress, but precipitation is desired.  Wheat prices are trading higher, in a combination of winter wheat harvest coming to an end, along with global demand for wheat on the rise.  Hot and dry conditions in Russia and Europe are expected to diminish the size of the wheat crops in those areas.  This reduced supply from competitors, along with increased demand for wheat from the feed community is supporting US prices. 


Cotton futures are lower today, probably in a bout of profit taking, following a sharp rally in front of the trade meetings this week.  Now that that the meetings are here, this could be a case of buy the rumor, sell the fact.  Sugar continues to bounce from the lows of the recent trading range.  Friday’s COT report from the CFTC showed funds aggressively piling in to speculative short positioning, pushing the size of the short to the highest levels since 2011.  India’s plans last week to increase domestic inventories and not flood teh4 export market also supports prices.  


As mentioned, oil, gold and copper are all around unchanged levels today, awaiting developments later in the week.  The market is expecting the Federal Reserve to lower short term interest rates, for the first time since 2008, by 25 basis points.  Probably of as much interest as the actual cut will be the press conference that follows, as the market looks for clues to see how aggressive of an easing campaign the Fed may be on.  Odds are they will play it safe, and say they are data dependent going forward.  Friday’s employment data, while an important gauge of the economy, may not carry as much weight for the Fed as there will be another report before the Fed meets again.  Of course, any news on the trade front can spark movement in many markets. 


Rest up with today’s apparently quieter markets.  This week has the potential to be very action packed!           


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                       902.25                   905.25                   924.00

CZ9                      438.25                   413.25                   406.75

WU9                    511.75                   487.00                   511.75

KWU9                  457.75                   448.75                   492.00

MWU9                548.75                   547.25                   569.50

SMZ9                  319.0                      316.4                     319.1

BOZ9                   28.41                     28.94                     29.56

CLU9                    57.06                     59.49                     58.34

GCQ9                    1366.2                   1333.9                   1309.4                

LHV9                    77.120                   81.180                   74.550

LCV9                    107.205                 111.425                 113.190

KCU9                   103.00                   100.25                   108.15

CCU9                   2457                       2384                       2341

CTZ9                    65.72                     70.21                     72.86

SBV9                    12.35                     12.60                     12.96

JOU9                    104.30                   109.75                   121.50

HGU9                  268.75                   278.85                   278.30


Have a good day,




Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC