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Schad Commodity Blog & Commentary
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From the desk of Brian Schad:
Expert Warns “Not So Fast” with Coffee Futures Rally
Coffee futures trend has turned up one week ago today, but one expert is warning about “jumping the gun” on this market because of the Brazilian dryness as the leading cause for this rally (reported here a couple weeks ago). Coffee futures are up 30 points today trading at $1.3465 per pound at the Intercontinental Exchange.
Although weather conditions in Brazil’s main coffee producing region are reportedly worsening with dryness, the El Nino storm system has a very high percentage chance to change everything with late-year moisture. Separate of weather conditions, a major investment bank has publicly stated their positive view for the Brazilian coffee crop including the possibility of a record yield for that country.
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, shares his view regarding the fundamental situation of the coffee futures markets by stating, “Although the current dryness and Brazil’s Real initially boosted coffee futures, the trade may factor in El Nino bringing in too much rain too late in the growing season.” Medina added, “There is good reason for coffee (futures) to be rallying with uncertainty so high.”
Coffee futures trend is up as of recent, but there have been no significant pull-backs since the $1.15 lows late last month. Coffee futures is one of the most volatile markets traded and buying on pull-backs would indeed be recommended.
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 Slide May be Shifting
Cattle futures slid $25 from their June highs, but the $9 retreat may be signaling a beef price turnaround. Cattle futures are down .38 cents per pound currently trading at $137.20 (CWT) at the Chicago Mercantile Exchange.
Feeder cattle has reportedly been trading at a $6 to $10 basis higher than the live cattle contract in the last week all the while feeders have been in topsy-turvy trading these past couple of months. Weighing on finished cattle prices however, may be heavier weights as well as slower beef demand (because of much more affordable pork prices).
Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, shares his view regarding the fundamental situation of the cattle futures markets by stating, “The turnaround in cattle (futures) prices last week is an initial sign that things may be improving for cattle producers.” Craney added, “Another sign that cattle (futures) prices may be stabilizing is similar movements in the deferred cattle (futures) contracts.”
The trend for cattle futures is still technically “down,” however at a crossroads. If the December cattle futures were to take out yesterday’s high ($138.87) before trading back down to the $135.20 moving average, that would reverse the trend in my work.
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 & 10yr. T-Notes
DOWN Trending Futures Markets: Cotton & Feeder Cattle
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.
First Brazil, Now China’s Currency a Concern for Soybean Futures
Soybean futures had been under pressure from the flailing Brazilian currency (as posted here two weeks ago), but now a top importer of soybean oilseed is cutting the price outlook for soybeans once again due to the declining sentiment around China’s yuan. Soybean futures are down .07 cents today currently trading at $8.84 per bushel at the Chicago Board of Trade.
The insatiable demand for soybeans used for China’s enormous pork industry’s animal feed makes it the world’s largest soybean importer, however, with their stock market weakened, their economy stagnating, it means their yuan will have less buying power for imports. The soybean importer has lowered the estimated price for soybeans from $9.10 (two months ago) to $8.75 a bushel in the December time frame.
Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, shares his view regarding the fundamental situation of the soybean futures markets by stating, “It has been an unfortunate domino effect in China ultimately leading to their government devaluating the yuan.” Plotkin added, “This was bad news for soybean demand, but soybean (futures) declined by 11% following this announcement so hopefully the fall may limited.”
Soybean futures trend is technically down, albeit sideways-to-down for the past two months. I think soybean futures will have to get this harvest completely out of the way before it can find a certain direction to clearly trend.
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.
Hard-Red Winter Wheat Futures Led Wheat Rally Yesterday
Hard-red winter wheat futures led the wheat rally yesterday as data reflects the slower than usual pace of domestic plantings for this particular variety, adding to global weather woes and sending the whole complex higher. Hard-red wheat futures are down .07 cents today, however, trading just below $5.09 per bushel at the Kansas City Board of Trade.
Concerns of far drier soil than Russian-area farmers are comfortable planting in, with a reported “bleak” autumn foreseeable weather is what is said to be contributing to the buying. Elsewhere in Australia, dryness is also said to be a problem and adding concerns when at this time many of their crops require much rain ahead of harvest to realize the best yield potential.
Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, shares his view regarding the fundamental situation of the wheat futures markets by stating, “It’s looking more and more that the optimum global wheat yield potential is dwindling away by unusual weather patterns.” Evans added, “The wheat (futures) trade is surely monitoring the global weather conditions closer than normal.”
The trend for wheat futures has turned “up” in the past couple of weeks, however, no significant breakout to the upside as of yet. With the USDA crop production report within 48 hours away, I suspect volatility may take wheat futures in one direction, or the other with conviction.
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.
Rise in Production Prompts Ivory Coast Officials to Evict Unlawful Cocoa Farmers from National Park: Cocoa Futures
Cocoa futures are hovering just below its multi-year highs and the rise in production from country’s such as the Ivory Coast – which supplied 40% of world’s cocoa demand last year – may be prompting the market to back off because of lessor demand. Cocoa futures are down $10 today currently trading at $3,082 per ton at the Intercontinental Exchange.
The Ivory Coast’s Mont Peko Nat’l Park is reported to have an illegal population of 28K farmers taking advantage of the cocoa production boom which, officials say, have destroyed 99% of the 34K hectares park. The unprotected forests in the entire area account for the 600K tons of increased production from the 2000/1 season.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, shares her view regarding the fundamental situation of the cocoa futures markets by stating, “The cocoa farmers in West Africa have been doing all they can to keep supply matched with demand, but doing so illegally and now being forced away from farming (in the national park) may change the fundamental dynamics for this market.” Levy added, “Cocoa futures could head right back up to their 2011 highs if the supply isn’t there.”
Cocoa futures trend has just rolled over to the down side late last week. In the overall picture of cocoa futures, it may be in a sideways trading pattern unless it can close weaker than $3,000 per ton, or close higher than $3,400 – the current trading range since mid-May.
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 & 10yr. T-Notes (Both new this week.)
DOWN Trending Futures Markets: Soy Oil, Coffee, Cotton & Feeder Cattle
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 Higher on India’s Drought Woes
Sugar futures have climbed nearly .02 cents a pound since the latter part of September amid India’s first two-year drought in three decades – thanks to El Nino’s disruption of the normal monsoon season there. Sugar futures are up 38 points today currently trading at .1326 cents per pound at the Intercontinental Exchange.
Brazil and India are the world’s top producers of sugar and data from India’s meteorology department reported rains during the June through September monsoon season were only 86% of their normal level – qualifying it as an official drought for the second year. Sugar production in another region in the country is reportedly seen down 14% from last season.
Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, shares his view regarding the fundamental situation of the sugar futures markets by stating, “Sugar plantings (in India) may be limited because of the unusual weather happening there.” Brady added, “The dry weather can easily be perceived as a ‘bad investment’ for sugar farmer’s new plantings.”
The technical trend for sugar futures has been up since mid-September, but has only broken out to the upside this week. I am looking for some kind of pull-back in sugar futures before committing to the long-side of this market.
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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