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Schad Commodity Blog & Commentary
This commentary is intended to provide unique insights with my 20+ years experience for the commodity futures markets we use in our everyday lives and is recognized, and has been selected, by Feedspot as one of the the Top 20 Futures Trading Blogs on the web. Schad Commodity views & opinion only. For additional commentary, and to assure you’re receiving the Schad Commodity Daily Report, be sure to connect on Facebook® & Twitter®.
From the desk of Brian Schad:
Producing Nation’s Currency Devaluation Not Enough to Keep Coffee Futures Down
Coffee futures have ground to a contract low early this year after the devaluated currencies of the coffee producing nations brought coffee prices to new lows when valued against the US Dollar. Coffee futures are up .01 cent today currently trading at $1.1575 per pound at the Intercontinental Exchange.
The underlying coffee market actually is reported to be experiencing tight supplies but that tightness has been masked globally by the weakness of the currencies in the major coffee producing nations. There has recently been a Brazilian currency devaluation, a Colombian devaluation, as well as other emerging market economies in coffee producing countries realizing currency devaluations.
“The currency devaluation in many of these coffee producing nations can be considered short and medium-term situations and can – as we are seeing – overwhelm the overall fundamental situation,” said Laura Taylor, a senior market strategist at RJO Futures in Chicago, sharing her fundamental assessment of the coffee futures market. Taylor added, “Eventually, however, with new coffee drinkers each and every day coupled with a steady demand for coffee already, the price of coffee will really come to light because the fundamental situation always prevails.”
The trend for coffee futures is down however a bottom for coffee futures may be on the horizon. Coffee futures have made a low in mid-January, and a higher mid-term low created just today hovering just above and below the $1.13 per pound support area. If it can hold, this can be a low in prices.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
Cattle Futures Higher as South African Drought Kills-Off 5% of Cattle Herd
Cattle futures are slightly higher on the news South Africa’s worst drought in over a century has damaged more than 5% of the nation’s cattle herd (plus pork breeding herds). Cattle futures are up .17 cents today currently trading at $137.15 per cwt at the Chicago Mercantile Exchange.
The cattle head-count before the drought was reportedly 13M head, but after the El Nino weather pattern set in it prompted the the least amount of rainfall in South Africa since 1904 – effectively wiping out the crops and grazing there. According to the nation’s largest farmers’ lobbying group, corn, wheat, sugar, livestock, have all been adversely affected and if rains don’t come soon, then the citrus crops are threatened with longer-term damage.
“The drought in South Africa is seriously hurting manufacturing, farming output, and overall growth with one in a reported four there out of work,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, sharing his fundamental assessment of the cattle futures market. Craney added, “South Africa is Africa’s second largest economy but its annualized growth rate was a mere six-tenths of one percent last quarter.”
Cattle futures trend is up as of last week. Looking at a chart for cattle futures it has, however, been trading sideways since mid-December so I expect something’s got to give soon.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
Schad Commodity’s Weekend Report: An Insider’s View of the Next Big Market Move
Once each week, usually on Friday evenings, we update our personal weekly commodity trading charts and review them for changes in “net long” or, “net short” holdings between the big commercial commodity traders, large speculators, and the usually uninformed public. This is our professional analysis of “the bigger picture” and current dynamics for each market which provide a spyglass view of the BIG commercial traders and what they are currently doing to influence the futures markets.
As you may already know, insider trading with stocks on Wall Street is very illegal. However, in the commodity trading industry, large/commercial traders MUST report their positions EACH WEEK to the CFTC regulatory body, hence, we monitor them on a weekly basis. Although the futures markets themselves will ultimately provide the most accurate illustration of trend, these (weekly) charts we’ve identified, serve to forewarn us of the next possible bigger move.
Here are the commodity markets which illustrate the changing bigger picture for them:
UP Trending Futures Markets: Japanese Yen and Gold, Silver
DOWN Trending Futures Markets: Soymeal, Cocoa, Cotton, Kansas Wheat, Sugar, CBT Wheat and Eurodollars & Russell 2000 Index
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
Bleak Crop Prices Cause 46-Year Low for Domestic Sowings: Wheat Futures
Wheat futures are finding temporary support with the word out today that farmers are cutting back on their wheat sowings due to prices reportedly having the outlook of falling back to what they were a decade ago. Wheat futures are up .03 cents today currently trading just above $4.54 per bushel at the Chicago Board of Trade..
In its primary report for US crop sowings this year, the USDA estimates farmers will abandon 3M acres this year due to expected price reductions for certain crops such as wheat, soybeans, and corn. It’s not just winter wheat with this circumstance either, but spring wheat is also estimated to decline by 5% with 3.6M acres being abandoned for “all-wheat” production total.
“Farmers are doing their best to economize their time, energy, and overhead with the current glut situation while grain prices were high,” said Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, sharing his fundamental assessment of the wheat futures market. Plotkin added, “Soybeans and corn are also expected to see less acreage for sowings, but cotton seems to be bucking the trend with an additional 800,000 thousand acres for plantings.”
The trend for wheat futures remains down with further losses expected going into the harvest period. Wheat futures have just made new contract lows only yesterday – so no bottom yet in sight.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
Milk Futures May be Finding a Low Soon
Milk futures have been steadily dropping since October of 2014, but if an industry titan is correct milk prices may be correcting for the remainder of the first half of this year – but nothing of significant amounts. Milk futures are down .14 cents today currently trading at $13.50 per cwt at the Chicago Mercantile Exchange.
An executive at the biggest domestic dairy processor claims the expected slight recovery in milk prices are due to demand shown in European production despite Russian limited purchases while imposing sanctions on China and other Western exporting countries. European milk production is reportedly running 150% more than US production and 700% more than New Zealand’s production (the top milk-exporting nation).
“The supply and demand factor in this milk production situation may be a temporary circumstance,” said Danielle Bourbeau, a commodity broker for Capital Trading Group in Chicago, sharing her fundamental assessment of the milk futures market. Bourbeau added, “Milk futures bigger picture still shows enough supply, but when Russia opens there doors once again for milk imports that may add to the demand outlook.”
The trend for milk futures remains down with no bottom yet in sight (in my study). In fact, my work shows solid support in milk futures from December & January taken out just this week. Does the milk executive know something that the market doesn’t expect?
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
Schad Commodity’s Weekend Report: An Insider’s View of the Next Big Market Move
Once each week, usually on Friday evenings, we update our personal weekly commodity trading charts and review them for changes in “net long” or, “net short” holdings between the big commercial commodity traders, large speculators, and the usually uninformed public. This is our professional analysis of “the bigger picture” and current dynamics for each market which provide a spyglass view of the BIG commercial traders and what they are currently doing to influence the futures markets.
As you may already know, insider trading with stocks on Wall Street is very illegal. However, in the commodity trading industry, large/commercial traders MUST report their positions EACH WEEK to the CFTC regulatory body, hence, we monitor them on a weekly basis. Although the futures markets themselves will ultimately provide the most accurate illustration of trend, these (weekly) charts we’ve identified, serve to forewarn us of the next possible bigger move.
Here are the commodity markets which illustrate the changing bigger picture for them:
UP Trending Futures Markets: EuroFx, Japanese Yen and Gold, Silver & Soybean Oil (These three new this week.)
DOWN Trending Futures Markets: Soymeal, Cocoa, Cotton, Kansas Wheat, Crude Oil, Sugar, Corn, CBT Wheat
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
A US Recession May be Drawing Near if Gasoline Futures Are an Indication
Gasoline futures are behaving, according to Goldman Sachs, as if the US economy is headed toward a recession. Gasoline futures are .01 and a quarter-cent today currently trading at $1.2333 per gallon at the New York Mercantile Exchange.
An analyst at the banking/investment firm notes that deferred gasoline futures of the summer months are currently trading less than $20 per barrel higher than crude oil meaning, if this were last trading day of those contracts, then the premiums are the smallest in the past six years when the unemployment rate was higher than 9%. The analyst notes this is quite a deviation from last year when gasoline premiums fluctuated between $23 to $33 a barrel above crude oil prices.
“We’re entering the time of year when gasoline refineries are conducting maintenance and cutting back output because of the low demand driving season, but if we slip into a recession (as predicted), then demand might remain constant at best,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her fundamental assessment of the gasoline futures market. Levy added, “Currently economists reportedly give a 15% to 20% chance of a US recession happening.”
Gasoline futures trend is down with no bottom yet in sight. Gasoline futures low is about $1.12 per gallon wholesale without the ethanol blend, but how long the favorable consumer prices will last before the driving season kicks into gear is anybody’s guess.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
Sugar Futures May be Overcompensating for Perceived Brazil Output
Sugar futures, in the early stages of a new downtrend, may be “too optimistic” about Brazil’s rise of sugar production in the next season says one industry analyst. Sugar futures are down five live today currently trading at $0.1315 per pound at the Intercontinental Exchange
The production of sugar is indeed set to rise next season in Brazil’s South Center region, but not as much as others are forecasting because sugar mills there are reportedly approaching their maximum capacity. Estimates for sugar production in the sugar growing region in Brazil is expected to be 33M tons on the lower end, and as much as 34.5M on the higher estimate.
“These estimates for sugar from analysts & economists sometimes do not take into consideration process capacity, breakdowns of equipment, rain delays, strikes from employees (like we saw just late last year), maintenance stoppages,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental assessment of the sugar futures market. Brady added, “There could be as much as 15% non-usage for a sugar mill due to unforeseen circumstances.”
The technical trend for sugar is “down” as of late last month. Solid support for sugar futures prices comes in at .11 cents per pound.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.
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