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Schad Commodity Blog & Commentary
This commentary is intended to provide unique insights with my 30+ years experience for the commodity crypto & 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:
Natural Gas Futures Extend Rally After 18-Year Lows
Natural gas futures reached 18-year lows (of $1.632) only last Thursday, but have been rallying ever since. Natural gas futures are up almost .07 cents today currently trading at $1.78 per btu at the New York Mercantile Exchange.
Natural gas traders are said to be closing bets for lower prices ahead of the US Energy Information Administration’s storage report due for release tomorrow. Domestic natural gas storage reportedly stands at 2.536T cubic feet – 31.3% higher than levels this time last year, and 26.3% above the five-year average for this time of the year.
Danielle Bourbeau, a commodity broker for Capital Trading Group in Chicago, shared her fundamental view of the natural gas futures market by stating, “Demand for natural gas this year just didn’t materialize because of the El Nino phenomena and storage just keeps adding up.” Bourbeau adds, “Lower natural gas prices is a real plus for consumers.”
Natural gas futures trend is down with no “bottoming” formation yet in sight. At these current levels 6% higher off its lows, natural gas futures appear ripe for another selling short opportunity.
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.
World Demand Growth Forecast Makes Crude Oil Futures Retreat
Crude oil futures has made a hasty retreat from the psychological $38 per barrel level reached today and yesterday. Crude Oil futures are currently down $1.35 today trading at $36.55 per barrel at the New York Mercantile Exchange.
Earlier today the US Energy Information Administration lowered its estimation of this year’s “world demand growth” forecast by 90,000 barrels – to now 1.15 million barrels per day. The monthly forecast for 2017 was also downgraded by 250,000 to 1.21 million barrels per day.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, shared her fundamental view of the crude oil futures market by stating, “The news came at a time when crude oil not only approached the $40 threshold, but stiff resistance is at the $36 & $37 area.” Levy adds, “Any hope for an extended crude oil (futures) rally has now been but on the back burner following this official report.”
The trend for crude oil futures just turned “up” early this month, but more information will need to be evaluated. Crude oil futures may see temporary seasonal demand, but these reports take that into consideration.
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
DOWN Trending Futures Markets: Soymeal, Cotton, Kansas Wheat, CBT Wheat and British Pound & Corn (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.
Cotton Futures Edge Higher Amid Forecasted Recovery in ’16-’17
Cotton futures traders are learning yield recoveries will be the catalyst for some recovery in global production next season, rather than extended growing areas – according to the Int’l Cotton Advisory Committee. Cotton futures are up 43 points today currently trading at .5636 per pound at the Intercontinental Exchange.
Apparently it was adverse weather and “pest problems” in many of the cotton growing countries that was responsible for last year’s 7% decrease per hectare. The yield rebound is particularly expected to take place in Pakistan where the last harvest was especially plagued by whitefly – responsible for hundreds of millions of dollars of agri-economic losses.
“With competing crop prices falling so low, and cotton prices remaining comparably stable, we should also see some sort of pick-up with farmers planting more cotton,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental assessment of the cotton futures market. Brady added, “Perhaps the whitefly helped keep cotton prices stable, but this next season we could see an acceleration of lower cotton prices if there is indeed a pick-up in acreage.”
Cotton futures trend is “down” with no bottom yet in sight. New cotton futures lows were made on Monday, and with the lack of follow-through to the downside perhaps we can see a technical rally before the next leg 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.
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.
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