Good morning,
DXU9 98.220 +0.100 GCZ9 1554.3 -1.0 ESU9 2918.25 +28.50 CLV9 56.27 +0.49
Risk on as the market heads towards month end! The market continues to have a cautious approach, as gold, while making a run up towards the highs, has rotated back off, but still hovering around the $1550 area. At the European open, a headline hit that the US and China were working towards China making a September visit to the US to resume the trade talks. This is what contributed to the current euphoria. Oil prices are continuing to grind up, in a continuation from lower inventory numbers yesterday along with the positive effect from the equity rally. Copper prices also have a bid today, from the positive economic vibe as well.
Hurricane Dorian is expected the hit the Florida coast this weekend, and this has put a big bid into orange juice prices over the past couple of sessions. It is also helping to support the oil market, just as a precaution in case there could be some disruptions to production resulting. Coffee prices are again under some pressure, as the softer Brazilian real allows producers to more aggressively price. Sugar prices are a touch higher, primarily due to a corrective bounce after the recent drubbing. Cotton prices are touch higher, taking the news of growth concerns from the weather in Texas and adding on from the improved prospects of trade talks announced a few hours ago.
Corn and soybean prices are a touch higher, from today’s trade news, and following yesterday’s rally, led by corn as USDA Secretary Perdue suggested that President Trump would be making an announcement related to the Renewable Fuel Standard. The presumption is that there will be a push to increase the amount of biofuel quotas required to offset existing exemptions which waive refineries from the annual blending requirements. Wheat prices are lower this morning, after ending up in the red yesterday, although bouncing off the lows, following the corn trade. US wheat prices remain too expensive when compared to global competitors, and this is pressuring the wheat. Stats Canada released its 2019 crop projections yesterday, with levels for the wheat below what the market was looking for. The extended weather forecast is calling for cooler temperatures into the beginning of September. With the US corn and soybean crops being behind in development, this could cause some problems for the health, and ultimately the size of the crops.
As mentioned, gold prices are a touch lower at the moment, but did manage to push up towards the year’s highs in the early overnight trade. Once the proposed trade talks were announced in Europe, gold retreated. Gold should continue to find support on all pullbacks, as global economic uncertainty remains, keeping central banks leaning towards easier monetary policy. The real yield for the US 10 year Treasury note being below that of the annualized inflation rate also supports gold prices.
The end of this week brings month end and First Notice Day for numerous September futures contracts. For month end, it is common to see profit taking or position window dressing taking place ahead of this. If the market quiets down at week’s end, into the holiday weekend, this position squaring could influence the late trade on Friday. Regarding First Notice Day, any LONG September positions, as of the close of business today, Thursday, August 29, are subject to being stopped for exchange delivery. To avoid the risk of receiving a delivery notice, all LONG September positions should be liquidated or rolled to another contract by the close of business today.
Technical Moving Averages:
Product 50 day 100 day 200 day
SX9 895.25 891.75 918.25
CZ9 418.25 412.75 405.50
WZ9 506.00 499.75 515.50
KWZ9 447.75 456.25 492.25
MWZ9 538.25 548.25 570.75
SMZ9 309.9 312.3 317.3
BOZ9 28.74 29.63 29.42
CLV9 56.46 58.24 56.99
GCZ9 1459.1 1386.8 1348.9
LHV9 70.480 77.780 74.530
LCV9 105.595 108.080 111.890
KCZ9 104.75 102.65 108.10
CCZ9 2396 2399 2353
CTZ9 62.48 66.70 70.84
SBV9 11.99 12.29 12.73
JOX9 104.05 106.65 118.75
HGZ9 265.75 272.20 276.55
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404