Good morning,

 

DXU9  98.625  +0.318                       GCZ9  1499.4  +0.2                                                                       ESU9  2983.00  +4.50                       CLV9  57.87  +0.47

 

President Trump puts a little oomph in the morning coffee with another round of Twitter blasts aimed at the Fed, calling for zero (or lower) interest rates.  Equity markets are essentially unchanged at the moment, and gold, which spent most of the overnight session below, has now popped its head back above $1500.  The oil market continues to be an interesting trade, pushing back up late in the afternoon yesterday, as the API reported crude stocks declined by 7.23m barrels last week, compared to an expected decline of 2.48m. The dollar is stronger again today, since, in spite of President Trump’s continued calls for lower rates, the market appears to be pulling back somewhat from the very aggressive easing campaign that was being priced in. 

 

The grain markets are slightly lower this morning, with one more day before the latest WASDE report from the USDA.  The trade has been rallying as the spec short positions get squared up in front of the report, where the market expects production and stocks numbers to be revised down.  Prices are also a touch lower today as China released a list of US products that would not be included on the initial set of tariffs.  US agricultural products were not on the list.  Speaking of China, there was some news overnight regarding this season’s African Swine Fever epidemic.  It was announced corn demand would be reduced by 40m tons, due to ASF.  Also, China is facing issues with pork, as large demand is meeting a now large deficit.  Prices have been up sharply, and the thought is that prices need to keep going higher, temporarily, to get demand under control.  Ultimately, stable pork prices are important for the Chinese economy. 

 

Coffee prices were up sharply yesterday.  Hot and dry weather is now in the forecast, creating risks of damage and stress to the beans.  This along with the funds carrying a short position has pushed prices higher.  The overall firmer dollar over the past few sessions, doesn’t help either, as Brazilian producers are less incentivized to sell.  Cotton prices continue to trade higher ahead of tomorrow’s USDA report.  Monday afternoon’s downtick in cotton conditions has the market looking for lowered revisions to cotton production.  Sugar prices continue to sag as expectations for a large crop remain, and demand moves lower.  Cocoa prices are also going down, in part from there not being much interest in taking delivery over the next cycle.  Cameroon has large stockpiles of cocoa, making it less attractive for buyers to take delivery from the exchange.

 

As mentioned, oil prices are about 70 cents higher at the moment, having traded basically 30 cents either side of $58 overnight.  OPEC+ is meeting in Abu Dhabi, with deeper production cuts not being discussed at this time.  OPEC is calling for lower global demand for oil in 2020.  Yesterday afternoon’s lower than expected decline in crude stocks from the API has the market expecting similar coming from the DOE later this morning.  This is keeping a bid in prices at the moment. 

 

Gold keeps working back and forth across $1500, but has spent most of the session thus far below the mark.  Long profit taking continues, as traders recalibrate monetary policy.  After today’s PPI data in the US, tomorrow’s ECB meeting will be the next hurdle for the gold market.  While taking out the psychological $1500 support level, if the market keeps correcting lower, $1477.4 is where to 50 day Moving Average comes in for GCZ9.  This should be solid support.             

 

Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                       885.75                   886.75                   915.50

CZ9                      403.75                   410.50                   404.00

WZ9                     493.25                   498.25                   512.00

KWZ9                  431.75                   450.50                   485.50

MWZ9                 527.25                   543.25                   566.25

SMZ9                   305.3                     310.4                     316.3

BOZ9                   28.73                     28.53                     29.40

CLV9                    56.24                     57.65                     56.94

GCZ9                    1477.4                   1404.2                   1360.0

LHV9                    69.290                   75.565                   74.395

LCV9                    104.340                 106.360                 111.245

KCZ9                    103.05                   102.35                   106.90

CCZ9                    2358                       2387                       2353

CTZ9                    61.31                     65.24                     70.10

SBV9                    11.74                     12.13                     12.64

JOX9                    103.60                   105.50                   117.25

HGZ9                   263.90                   269.35                   275.80

 

Thanks,

Mike

 

 

Michael Clifford

 

141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC                                              

312-604-6404