Commodity Corner: Morning Comments

Good morning,


DXZ9  97.970  +0.140                     GCZ9  1511.4  +11.9                        ESU9  2995.50  -11.00                  CLV9  60.32  +5.47


CLV9:   High 63.34      Low  58.77           Friday High  55.68      Friday Settle 54.85            2019 High  65.47  (04/23/19)


Above is the story from the weekend news about the drone attacks of the Saudi oil processing plant and the overnight trade.  Everything else is in response.  As could be expected, gold caught a bid and equities were hit.  The dollar index is a touch higher and fixed income markets have shot higher in price (lower in yields), as the geo-political tensions create a risk to any global economic expansion thoughts, and make keep central bankers with softer monetary policy on their minds.  The market saw the type of response from the ECB last week, and the Fed gets its turn this week.  The latter half of last week saw the US fixed income markets take back some of the aggressive easing thoughts that had been priced in.  This morning sees those thoughts matriculating back into the marketplace with this rally in the rates space.


An interesting part of the oil futures trade today will be there were 62 million barrels of call options on WTI, thought to be worthless, that have now become in the money options.  Expiration is tomorrow, and this creates a new dynamic to the trade, with the owners of these calls most likely selling futures to book some unexpected profits, while those with exposure being short the calls are scrambling to buy futures.     


Not surprisingly, gold also gapped higher on its open last night, and proceeded to trade up over $20 from Friday’s settle.  This heightened geo-political tension, and the already mentioned concerns being expressed in the fixed income markets, supports gold prices.  The weekend story allowed gold prices to once again reject pricing below $1500.  This level should remain as a good support area, given the current landscape. 


Grain prices are mixed today, with corn and soybeans slightly lower, while wheat prices are a touch higher.  Friday afternoon’s COT report showed funds continued to add to short positioning in corn and soybeans.  The report did show the spec short wheat positioning did observe some covering, as harvest season comes to an end. 


Cotton prices, having rallied last week on optimistic trade thoughts and a lower projection from the USDA on production, have come off today with the newly developing concerns on the economy.  Sugar prices have had a decent rally the past few sessions as well, as the COT report showed funds carrying a massive short position.  Coffee futures are higher again today, as concerns about recent weather, and the impact on this year’s crop, calls for some weather premium to prices.


Aside from the oil story, which will capture most attention, directly to oil and other markets as well, markets will be focusing of this week’s Fed meeting (Tuesday-Wednesday), where the market believes another cut to short term interest rates is in the works.  Aside from looking for the result, markets will be looking for clues on what policy may look like going forward, which will impact numerous markets.            


Technical Moving Averages:

Product               50 day                100 day               200 day

SX9                       884.25                   886.25                   915.00

CZ9                      399.75                   410.00                   403.75

WZ9                     490.75                   498.50                   511.00

KWZ9                  428.00                   449.00                   483.50

MWZ9                 524.25                   542.25                   564.75

SMZ9                   304.4                     310.0                     316.0

BOZ9                   28.77                     28.52                     29.40

CLV9                    56.10                     57.37                     56.99

GCZ9                    1482.6                   1410.5                   1363.7

LHZ9                    67.345                   72.895                   70.565

LCZ9                    108.675                 110.305                 114.555

KCZ9                    102.30                   102.50                   106.60

CCZ9                    2347                       2386                       2355

CTZ9                    60.96                     64.77                     69.87

SBH0                    12.68                     13.05                     13.46

JOX9                    103.60                   105.20                   116.70

HGZ9                   263.65                   268.50                   275.65






Michael Clifford


141 W Jackson Boulevard                             

Ste 1065                                                              

Chicago, IL 60604                                              

Trean Group, LLC