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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:
2016 Crop in Brazil Can Be a Record High, Bust For Coffee Futures
Coffee futures continue to find lower lows as officials in Brazil are encouraged by favorable weather in the top arabica-coffee growing regions and claiming they can see coffee output spike to up to 58% – a record high. Coffee futures are up .025 cents today (after finding a new contract low only yesterday) and currently trading just above $1.14 per pound at the Intercontinental Exchange based in Atlanta.
Brazil’s top agriculture bureau has reportedly estimated this year’s coffee harvest to be between 49.1-51.9 million bags which could potentially top the record 50.8M bags realized in 2012. The worst coffee production estimate still comes in near the second best harvest only three years ago before the drought conditions appeared in early 2014.
“Brazil is in the midst of a sharp rebound in coffee production thanks to the favorable weather in their top-producing growing regions,” said Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, sharing his fundamental assessment of the coffee futures market. Plotkin added, “The country is reasserting their dominance as the world’s top coffee producing country after a dismal 2015.”
The trend in coffee futures is down with no bottom yet in sight. It will take much fundamental change for coffee futures to turn things around, but a major plus in keeping prices low for coffee enthusiasts all over the world.
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.
Hog Futures Resilience May Be Felt by Low EU Feed Volume
Hog futures newfound strength may be tied with what is going on with the pork industry in the European Union – a decade low feed demand poised for another significant decline. Hog futures are down .42 cents today currently trading at $67.30 (CWT) at the Chicago Mercantile Exchange.
There is reportedly a contraction happening in the EU pork industry in part by Russia banning imports which is helping to cause compound feed used by pig farmers to be expected to drop 2-3% this year. Hog prices in the EU – according to the government’s reference price – touched a 10-year low of E126.02 per kilogram just last month.
“While the European Union continues to see hog (futures) prices falling, here in Chicago a support-base had been made between mid-November to mid-December and has been rallying since,” said Danielle Bourbeau, a commodity broker for Capital Trading Group in Chicago, sharing her fundamental assessment of the hog futures market. Bourbeau added, “This reflection in demand can only mean one thing: our US hog (futures) market is preferred over the EU pork industry.”
Hog futures trend is up since early this month. This could be a technical bounce for hog futures in an overall down-trend, but right now pork prices are in the middle of six-month highs and lows.
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.
Chinese Economy Weighing on Int’l Dairy Futures
Milk futures and other dairy products are lower from the Global Dairy Trade Auction on the outlook of the Chinese economic slowdown. Milk futures (Feb) are currently down .45 cents (per CWT) trading at $13.73 at the Chicago Mercantile Exchange.
Every two weeks these auctions are held in the biggest dairy product producing nation (New Zealand) serving much of Asia and Oceania. The most current auction saw prices down 1.4% than the prior event two weeks ago, and is now being perceives as possible demand outlook uncertainty.
“When your biggest customer is ordering less dairy products, it is a pretty good barometer of the economic health of that nation,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, sharing his fundamental assessment of the dairy futures market. Evans added, “Dairy products are still in demand around the globe, but what we may be seeing here is a demonstration of fair value in (dairy price) discovery.”
The trend for milk futures is clearly down since October, but at a possible crossroads. If milk futures continues with higher highs tomorrow it can possibly change the near-term trend outlook to up.
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: Natural Gas Japanese Yen (New this week.)
DOWN Trending Futures Markets: Soymeal, Crude Oil, Russell 2000 Index, British Pound and Cocoa, Cotton & Copper (These three new this week.)
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.
Gold Futures Plummet as Jobless Claims Uptick and Dollar Rallies
Gold futures are down big today (and this week) with investors reacting to a few events: a bounce in China’s equity markets, an uptick in US jobless claims, and the continuing strength in the US Dollar. Gold futures are down $14.00 today currently trading at $1,073.10 per ounce at the Commodity Exchange in New York.
Gold futures have returned to the mid-level trading of all last month after rallying to $1,113.00 per ounce only last Friday and as high as $1,190.00 in mid-October. Perhaps gold futures are looking to stabilize after China’s devaluation of its yuan-currency last week, after all, they are the world’s largest producer of the precious metal and the world’s second largest consumer.
“Investors (of gold) are also aware the Federal Reserve may be in the beginning stage of a rate-hike trend with another meeting forthcoming in two weeks,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her fundamental assessment of the gold futures market. Levy added, “Gold (futures) compete with higher interest-rate bearing securities, so any further rate hikes could be actually ‘bearish’ for gold (futures).”
Gold futures trend has just turned up (in my study) late last week. This pull-back in gold futures can be viewed as a way for consumers – or investors – to buy on a dip.
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.
Who Believes We Can See $20 Crude Oil Futures?
Crude oil futures’ spiral may continue lower to $20’ish per barrel due to a higher valued US Dollar, so says a prominent Wall Street brokerage analyst. Crude Oil futures are already up 34 cents today currently trading at $30.78 a barrel at the New York Mercantile Exchange.
Most people don’t realize crude oil is somewhat leveraged to the US Dollar, but a combination of an oil glut and a strong dollar are indeed helping push crude oil prices lower. This particular analyst from an article I can across today believes crude oil can fall another 10%-25% if the US Dollar appreciates another 5% – ultimately bring oil prices down to $22.50-$27.00 per barrel from where it is recently.
“Before the original Persian Gulf incident, crude oil traded between $10 to $32 per barrel on average and once conflict began with Desert Shield, oil spiked to $40,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental assessment of the crude oil futures market. Brady added, “Now that the major conflict in the Middle East is behind us, we’re seeing crude oil prices coming back to normal.”
The trend for crude oil futures is down with no bottom yet in sight. A technical spike could come at any time for crude oil futures, but when it will start trading in a range 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.
Wheat Futures Higher as Brazil Realizes Quality Concerns
Wheat futures traders have more data to take in as it is reported the wheat market in Brazil has practically come to a stop in some places due to the poor quality of their domestic crop. Wheat futures are up .10 cents today, currently trading at $4.79 per bushel at the Chicago Board of Trade.
Apparently the official crop bureau in Brazil put out a report which reportedly included language saying the top producing wheat state of Parana has “stopped buying wheat” and in the second top-producing state of Rio Grande do Sul buyers have been returning wheat already received claiming that the quality doesn’t meet their expectations.
“I understand there’s more to the story since the wheat buyers have returned supplies, and how long will this go on?,” said Laura Taylor, a senior market strategist at RJO Futures in Chicago, sharing her fundamental assessment of the wheat futures market. Taylor added, “The wheat shortfall in Brazil is prompting buyers to look toward Argentina to fulfill their ‘bread supply’… If this isn’t enough, will the US wheat (futures) markets be next in line?”
Wheat futures trend is down with a possible bottom formation in the making. Wheat futures has hit solid support recently, but there is equally solid resistance up ahead at the $5.00 per bushel level.
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: Sugar and Natural Gas (New this week.)
DOWN Trending Futures Markets: Soymeal, Crude Oil, Silver, Russell 2000 Index and Kansas Wheat & British Pound (Both new this week.)
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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