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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:
Outlook of Supply Surge Sends Cocoa Futures Plummeting
Cocoa futures appears to have made a turn around today after news from a prominent agri-bank forecasted the largest surplus of cocoa beans in six years. Cocoa futures ended the session down 18 points today with trading settling at $2,963 per ton at the Intercontinental Exchange in London.
Last year cocoa futures were the top-performing commodity with reportedly the longest rally in the London Exchange’s history since 1989, and cocoa farmers spanning from Africa to South America are said to be gearing-up to revive supplies for next season. The problem is with demand for cocoa said to be slowing, the risk is for cocoa futures prices to join the other dozen or so flailing commodity markets.
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, shared his fundamental view of the cocoa futures market by stating, “International farmers, in this case cocoa, sometimes have a short-sighted view of the future after a market has been so successful last season.” Medina adds, “The cocoa (futures) market has seen four years in a row of good years has surely motivated farmers to increase production.”
The trend in cocoa futures is clearly down with no bottom yet in sight. Hopefully cocoa (futures) products will start reflecting lower consumer prices reversing the trend of these past few years.
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.
Cotton Futures Inch Higher on Price Forecast
Cotton futures saw an initial spike higher in price after a price forecast for cotton prices were nudged higher (with some opposition. Cotton futures are up 9 points today currently trading at .6270 per pound at the Intercontinental Exchange in New York.
The Int’l Cotton Advisory Committee raised the outlook of the price of cotton by .01 cent to .71 cents per pound for the 2015/16 season per the industry standards of quality. Another advisory group sees it a different way – declining cotton prices ahead due to world stocks supply sufficient to manufacture “127B tee-shirts.”
Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, shared his fundamental view of the cotton futures market by stating, “Two major cotton advisory groups are at odds with the cotton forecast (the ICAC and Bloomberg) when in fact cotton (futures) prices can go either way at this point.” Craney adds, “Cotton (futures) prices have been looking for direction for the past two-and-a-half months, but some would argue when looking at a continuous cotton chart the market has been directionless since late last summer.”
Cotton futures trend is at a crossroads once again in its sideways trading this time poised to trade downward. What can really prompt cotton futures direction right now would be “weather” and the El Nino storm is still in effect…
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.
Third Successive Down Year for Corn Futures
Corn futures are poised, one week before the end of the year, to see lower prices for a third year in a row – as of today, down 8% year-to-date. Corn futures ended the day down .01 cent settling near $3.645 per bushel at The Chicago Board of Trade (“CBT”).
Corn futures have actually outperformed other major grain contracts at the CBT – soybeans are down 13%, and wheat the worst performer down 20% so far for the year. Weaker grain prices have a negative impact on farmer’s motivation to maximize their full yield potential, so at some time – by default – we’ll have to see strong support hold these markets.
Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, shared his fundamental view of the corn futures market by stating, “The outlook in the foreseeable future doesn’t bode well for the grain markets because of high inventories and decent production.” Plotkin adds, “Now should there be a reduction in production, then all bets are off as this would cause potential in upward price action.”
The trend for corn futures is down with possible bottoming action in place right now. Corn futures are trading right at support levels held at four previous times since August.
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.
Soybean Futures Lower as Brazil’s Lack of Rain Causes Downgrade
Soybean futures are finding support today after Brazil’s soy crop received a further downgrade due to much needed rain evading key growing areas. Soybean futures ended the day down more than .05 cents per bushel, settling near $8.86 per bushel at the Chicago Board of Trade.
An expert analyst dampened the hopes for the Brazilian soybean harvest after reportedly stated “poor germination and low plant populations” in the key soy-producing region of Mato Grosso. As it is summer in the southern hemisphere, there is said to be no sign of immediate rain set for one of Brazil’s key producing regions.
Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, shared his fundamental view of the soybean futures market by stating, “If the hot and dry weather is causing poor germination and few soybean plant populations, then reseeding may need to happen.” Evans adds, “This has the potential to turn the whole soybean (futures) market around…an event to keep a close eye on.”
Soybean futures trend has only recently turned up with very little follow-through. Soybean futures are trading in exactly the middle of the range created just this month – $9.10 resistance, and $8.55 support – so these are price points to keep a close eye on.
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 Trading 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, Cocoa & Soy Oil
DOWN Trending Futures Markets: Soymeal, Gold, Crude Oil, Live Cattle and Copper, Natural Gas, Silver & Russell 2000 Index (These four 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.
Dairy Price Revival Dampens with Strong Production: Milk Futures
Milk futures are forecasted to remain weak until late next year as long as strong milk production continues in the EU – putting a damper on any revival in the dairy markets. Milk futures are down .05 cents from last week’s close, currently trading at $14.52 per CWT at the Chicago Mercantile Exchange.
A prominent Dutch agri-bank forecasts whole milk powder will not return to $3,000 per ton until late next year. It was just October of 2014 when milk prices were at their height of $24.50 per CWT (which translates to $2,450 per ton on the American market).
Barb Levy, chief director for The Fox Group’s futures division in Chicago, shared her fundamental view of the milk futures market by stating, “Much of this downturn on milk (futures) prices may be from China previously hoarding milk, to now dwindling down their supplies.” Levy adds, “They are learning what was popular in the USA in the 70’s with stretching supplies with dry milk powder – a fast faded trend.”
The trend for milk futures is down with no bottom yet in sight. Milk futures may be providing a gift for young families with hefty milk drinkers, so enjoy these low prices while we can.
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 Lower on Weak Price Outlook
Live cattle futures ended the day lower after the USDA issued a statement saying “depressed prices are expected to carry into 2016.” Live cattle futures ended down $1.025 per pound today settling near $124.50 per CWT at the Chicago Mercantile Exchange.
The pendulum does swing the other way as just last year it was the feedlots and packers making the money from high beef prices, but now the retailers are finally being handed significant margin opportunities due to beef market dynamics and cattle prices near three-year lows. This downgrade from the USDA was just issued last week when the statement was made for the benchmark fed steer values..
Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, shared his fundamental view of the cattle futures market by stating, “Beef prices (cattle futures) have been steadily working its way downward since summer, but accelerated lower in early November.” Brady adds, “Hopefully a strong US Dollar will help boost needed beef exports to stabilize this market.”
Cattle futures trend is down with no bottom in sight. Cattle futures are supposed to “predict” where beef prices are headed, so this is a plus for consumers as well as families.
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.
Analyst Group Boosts Global Deficit Forecast Lifting Sugar Futures
Sugar futures initially lifted-off today after a prominent analyst group increased their estimates for global sugar production making next season an eight-year high. Sugar futures has since backed-off and is only up 8 points for the day currently trading at .1459 cents per pound at the Intercontinental Exchange.
The sell-off in oil prices may also be contributing to the underlying value of certain commodities such as sugar – used to make biofuel. Sugar has been fluctuating around its 18-day moving average for well over a month now.
Laura Taylor, a senior market strategist at RJO Futures in Chicago, shared her fundamental view of the sugar futures market by stating, “The sugar market has been indecisive since early November.” Taylor adds, “Maybe this news is what the sugar trade has been looking for but only time will tell.”
The technical trend for sugar remains “up,” however at a crossroad with yesterday’s probe lower. If sugar futures can break below yesterday’s low (.1423) before reaching back up to its moving average (.1507) first, then that can change the trend to down.
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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