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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:
Warmer Weather Forecast Sends Natural Gas Futures Spiraling
Natural gas futures have been in a free-fall for the past week and have spiraled to the lowest levels in the last 3.5 years once recently updated weather forecast models showed unseasonably warmer than usual temperatures in much of the country through the end of next week. Natural gas futures are down .085 cents today currently trading at $2.276 per btu at the New York Mercantile Exchange.
The peak season for natural gas demand starts in November and lasts until March, but the outlook for natural gas speculators is bearish as there may be less demand for the product. Fueling this speculation is the view that the Energy Information Administration’s storage report due for release tomorrow is expected to show a build-up of 75B cubic feet through week ending October 23rd.
“This year’s weather has been abnormally warm in much of the country, and natural gas (futures) prices have reflected this last spring as well,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, sharing his fundamental assessment of the natural gas futures market. Craney adds, “With inventory levels expected to reach a record amount by the end of this month, it will be a plus for consumers hopefully throughout winter.”
Natural gas futures trend is down with no bottom yet in sight. It will take much for natural gas futures to change direction, it seems, at this point – however, the weather does change without notice…
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 Extend Gains Off Disappointing Start
Wheat futures saw higher prices as the news of the domestic wheat crop is making a far worst-than-expected start than was thought due to dryness. Wheat futures extended gains from yesterday before closing a cent-and-a-half lower near $5.075 at the Chicago Board of Trade.
The USDA recently rated the US winter wheat crop in good or excellent condition at 47% which was well below the 55% anticipated rating. The low ratings which were worst than others include Arkansas (26%), Colorado (38%), Missouri (34%), Oklahoma (31%), and Oregon rated the lowest at only “8%” amongst all winter wheat variety growing states.
“These USDA figures hit the wheat (futures) market as a complete surprise,” said Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, sharing his fundamental assessment of the wheat futures market. Plotkin adds, “Apparently drought is lingering on in America’s heartland, however there’s still about 20% more wheat to be planted so we shouldn’t read to much into this single report.”
The trend for winter wheat futures is mixed – soft-red variety still in a technical down-trend, while hard-red variety barely hanging on to its uptrend – so both at a crossroads. Before getting involved with wheat futures at this time I would suggest a clearer picture to unfold.
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: Lean Hogs, Sugar, Gold, Copper, Silver & Japanese Yen
DOWN Trending Futures Markets: Kansas City Wheat (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.
Lack of Global Demand May Keep Milk Futures Depressed
Milk futures prices may have farther down to go well into 2016 as a food group organization views weak demand from China & Russia being the main catalyst for this opinion. Milk futures are down .09 cents today currently trading at $15.70 per CWT at the Chicago Mercantile Exchange.
Weakness in the milk industry had been anticipated, however now milk prices are expected to last longer than previously anticipated due to the extension of a temporary Russian ban (on EU-imports) and the stock market situation in China. On the other hand, this last quarter is reported to have seen an uptick in global dairy demand from an August low, but nothing to get excited about.
“The global diary milk (futures) setback should not be viewed longer-term in nature,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, sharing his fundamental assessment of the milk futures market. Evans adds, “What is driving the dairy milk (futures) depression in Asia & Russia is a temporary situation. Just a matter of time until the dairy farmers hold back output as we have seen in the past.”
Milk futures trend has been down overall since June, however in a temporary sideways pattern since mid-September. If the food group’s prediction is correct (about milk futures), then consumers should benefit from lower dairy prices well into next year.
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 Off Lows as UK Sees Record Yields
Wheat futures are up for a second day in a row after falling .45 cents from their highs earlier this month as the United Kingdom is realizing record wheat yields, however smaller than “hoped.” Wheat futures are up .06 cents today currently trading near $4.97 per bushel at the Chicago Board of Trade.
Data from a UK farm ministry has their wheat yields now estimated at 8.8 tons per hectare – the highest on record – and up 2.8% from last year with no other issues such as disease or pests in this year’s harvest. Despite the record wheat harvest, experts there had forecasted the wheat production to be 16.68M tons, when in fact it comes in at 16.17M – still a record, but less than anticipated.
“Now comes the question what this record wheat harvest in the UK does to the (wheat futures) market,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her fundamental assessment of the wheat futures market. Levy adds, “It all comes down to export demand and right now there seems to be much wheat available on the global market.”
The trend for wheat futures is “mixed” in my work – CBT Wheat just rolling over to a down-trend yesterday, Kansas Wheat still at a crossroad. This has been one heck of a year for these two grain markets – as well as all of them – but wheat futures in general has been trading rather “sideways” all year.
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.
Low Expectations for Ukraine Crop May Boost Corn Futures
Corn futures can be receiving a boost by the situation of the world’s third biggest exporter of corn – Ukraine – because of that county’s dry weather is reportedly providing a lesser yield than expected for their corn crop. Corn futures are up .02 cents today currently trading at $3.75 per bushel today at the Chicago Board of Trade.
A European-agriculture based group stated the harvest for Ukraine’s 127K hectares of designated corn crop land are now expected to produce less than expected corn yields (than previously forecasted) due to the dry conditions in July & August. Last year the country produced 9.3 tons per hectare, but currently at 60% completed harvest it is looking more like 7.3 tons per hectare.
“There is much corn in the global stockpiles, but unforeseen circumstances such as weather can potentially turn things around for the corn (futures) market,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental assessment of the corn futures market. Brady adds, “Another aspect to take into account is less feed for livestock and poultry in that region of the world. More markets over there can be impacted because of corn.”
Corn futures trend has just rolled over to down last week. The up-move in corn futures earlier this month came as a surprise going into harvest, but the markets are always “in the right.”
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: Lean Hogs and Sugar & Gold, Copper, Silver & Japanese Yen (These four new this week.)
DOWN Trending Futures Markets: None 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.
Copper Futures Higher on Chinese Economy Expectations
Copper futures have extended yesterday’s rally as hopes build for Chinese policy-makers to introduce further stimulus measures following a number of disappointing economic reports recently. Copper futures are up 70 points today, currently trading at $2.4225 per pound at New York’s Commodity Exchange.
The “soft-inflation” news earlier this week includes Chinese imports declining more than 20% last month. Plus, a slow-down of China’s domestic brands is indicating their broader economy is rather fragile and in need of further government stimulus. China is the biggest consumer of copper, and last year alone they accounted for nearly 40% of global consumption.
“The copper (futures) trade seems to be in a holding pattern until further supply/demand assessments can be made,” said Laura Taylor, a senior market strategist at RJO Futures in Chicago, sharing her fundamental assessment of the copper futures market. Taylor adds, “With one country accounting for nearly half of all global consumption last year, all eyes are on the Chinese government to see how they handle their economy.”
The trend for copper futures is down, however a bottom formation appears to be unfolding. A “double-bottom” that begins in late August and as late as the end of last month looks as if a base if forming, but copper futures will have to trade and follow-through above $2.50 for the trend to change direction.
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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