Good morning,

 

DXU9  98.200  +0.021                     GCZ9  1506.2  -9.5           ESU9  2937.00  +7.75                     CLV9  56.32  +0.64

 

Federal Reserve Chairman Jay Powell delivers his economic outlook tomorrow morning at 9 AM CDT at the annual Fed symposium at Jackson Hole, beginning today.  In addition to Chairman Powell’s speech, many Fed officials will be on numerous media outlets, voicing their opinions on the economy and monetary policy.  So Chairman Powell is on the main stage, but the side stages may have some entertaining acts as well.  All markets are waiting for this to unfold, and mired in trading ranges ahead of it.

 

Leading off the speaking today was Kansas City Fed President Esther George, who said she was against cutting short term interest rates at the July 31 meeting.  She thinks 2% growth is attainable, and needs further proof the economy is struggling before considering cutting rates as prudent.  Just ahead of George’s comments, the ECB released the minutes of its last monetary policy meeting.  It cited the economic slowdown is likely to be more protracted than expected, and prospects for global trade remained poor.  Basically setting the table for further rate cuts from the ECB.

 

Grain prices are steady to higher today, even with the dollar stronger, as the Pro Farmers Crop Tour continues to project yield expectations behind last year and the 3 year averages.  Some reports are the crops appear decent, but overall, they are behind.  The final results of the tour will be released tomorrow.  Corn was also supported yesterday by the announced sale of 358k tons of corn to Mexico.  Cooler temperatures are in the near term forecast, but more rain could be used as well, as crops continue to develop.  With the crops behind in the maturation process, the risks, as the calendar soon switches to September, will be cooler temperatures moving in, as crops are in the final stages of growth.

 

Gold prices have come off in the overnight trade, but are still holding above the $1500 support area.  The continued grind higher in equities, coupled with today’s dollar firmness applies pressure to gold.  Gold is also under pressure following the minutes of the July 30-31 Fed meeting, released yesterday afternoon, where it was suggested the rate cut last month was viewed as an insurance move by the Fed to help sustain economic momentum and because of the lengthy trade talks.  Some in the market feel the Fed may not be on as aggressive of an easing plan as what was being priced in.   

 

Oil prices have bounced overnight, after rotating lower yesterday on data, that while showing a decline to inventories, wasn’t as soft as what had been expected.  Oil prices are receiving support today from the positive vibe in the equity market, along with the hopes that talk of softer monetary policy comes out of Jackson Hole.   Since President Esther’s interview on Bloomberg TV, oil prices have receded a touch, as she applied a hawkish tone to her views. 

 

Cocoa prices have traded higher the past few sessions, bouncing from the lowest prices over the past 5 months, as increased demand out of Asia prompts short covering.  Cotton prices continue to sink, as the delays in trade dwindle demand prospects.  Sugar prices have caught a small bid this morning, as Brazil’s CONAB reduces its projection for sugar output this season by 6%.  Sugar prices have also been hovering near the recent lows on expected large surpluses, and funds increasing shorts.  A bit of covering maybe taking place today.   Coffee prices are lower today, but have bounced the past couple of sessions.  The weaker Brazilian real a couple of days ago inhibited producer selling, and Brazil’s volatile extreme weather causes concerns about the welfare of the coffee crops.

 

Tomorrow is options expiration at the CBOT for September options contracts.  Large open interest at a particular strike can have a magnet effect on prices on expiration day, especially if there isn’t much else driving the market.  Potential implications from Jackson Hole may mitigate this a bit for this expry.              

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                       901.50                   895.25                   920.00

CZ9                      427.25                   413.75                   406.50

WU9                    504.75                   489.00                   505.00

KWU9                  438.50                   439.50                   477.50

MWU9                532.25                   537.75                   560.75

SMZ9                   313.1                     313.4                     317.8

BOZ9                   28.74                     28.70                     29.44

CLV9                    56.26                     58.62                     57.20

GCZ9                    1440.9                   1375.6                   1342.0

LHV9                    71.875                   78.975                   74.635

LCV9                    106.220                 108.940                 112.235

KCZ9                    105.30                   102.90                   108.90

CCZ9                    2424                       2406                       2356

CTZ9                    63.27                     67.60                     71.34

SBV9                    12.13                     12.38                     12.77

JOX9                    104.70                   107.85                   119.75

HGU9                  266.15                   273.40                   276.50

 

Thanks,

Mike

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404