Commodity Corner: Morning Comments

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






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC