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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:
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.
Milk Futures May be Finding a Low Soon
Milk futures have been steadily dropping since October of 2014, but if an industry titan is correct milk prices may be correcting for the remainder of the first half of this year – but nothing of significant amounts. Milk futures are down .14 cents today currently trading at $13.50 per cwt at the Chicago Mercantile Exchange.
An executive at the biggest domestic dairy processor claims the expected slight recovery in milk prices are due to demand shown in European production despite Russian limited purchases while imposing sanctions on China and other Western exporting countries. European milk production is reportedly running 150% more than US production and 700% more than New Zealand’s production (the top milk-exporting nation).
“The supply and demand factor in this milk production situation may be a temporary circumstance,” said Danielle Bourbeau, a commodity broker for Capital Trading Group in Chicago, sharing her fundamental assessment of the milk futures market. Bourbeau added, “Milk futures bigger picture still shows enough supply, but when Russia opens there doors once again for milk imports that may add to the demand outlook.”
The trend for milk futures remains down with no bottom yet in sight (in my study). In fact, my work shows solid support in milk futures from December & January taken out just this week. Does the milk executive know something that the market doesn’t expect?
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: EuroFx, Japanese Yen and Gold, Silver & Soybean Oil (These three new this week.)
DOWN Trending Futures Markets: Soymeal, Cocoa, Cotton, Kansas Wheat, Crude Oil, Sugar, Corn, CBT Wheat
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.
A US Recession May be Drawing Near if Gasoline Futures Are an Indication
Gasoline futures are behaving, according to Goldman Sachs, as if the US economy is headed toward a recession. Gasoline futures are .01 and a quarter-cent today currently trading at $1.2333 per gallon at the New York Mercantile Exchange.
An analyst at the banking/investment firm notes that deferred gasoline futures of the summer months are currently trading less than $20 per barrel higher than crude oil meaning, if this were last trading day of those contracts, then the premiums are the smallest in the past six years when the unemployment rate was higher than 9%. The analyst notes this is quite a deviation from last year when gasoline premiums fluctuated between $23 to $33 a barrel above crude oil prices.
“We’re entering the time of year when gasoline refineries are conducting maintenance and cutting back output because of the low demand driving season, but if we slip into a recession (as predicted), then demand might remain constant at best,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her fundamental assessment of the gasoline futures market. Levy added, “Currently economists reportedly give a 15% to 20% chance of a US recession happening.”
Gasoline futures trend is down with no bottom yet in sight. Gasoline futures low is about $1.12 per gallon wholesale without the ethanol blend, but how long the favorable consumer prices will last before the driving season kicks into gear 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.
Sugar Futures May be Overcompensating for Perceived Brazil Output
Sugar futures, in the early stages of a new downtrend, may be “too optimistic” about Brazil’s rise of sugar production in the next season says one industry analyst. Sugar futures are down five live today currently trading at $0.1315 per pound at the Intercontinental Exchange
The production of sugar is indeed set to rise next season in Brazil’s South Center region, but not as much as others are forecasting because sugar mills there are reportedly approaching their maximum capacity. Estimates for sugar production in the sugar growing region in Brazil is expected to be 33M tons on the lower end, and as much as 34.5M on the higher estimate.
“These estimates for sugar from analysts & economists sometimes do not take into consideration process capacity, breakdowns of equipment, rain delays, strikes from employees (like we saw just late last year), maintenance stoppages,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, sharing his fundamental assessment of the sugar futures market. Brady added, “There could be as much as 15% non-usage for a sugar mill due to unforeseen circumstances.”
The technical trend for sugar is “down” as of late last month. Solid support for sugar futures prices comes in at .11 cents per pound.
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.
Can Food Prices Be Expected to Drop with Crude Oil Futures?
Crude oil prices are dropping back to pre-war levels and if you may recall, food prices have soared over the years with the primary blame being attributed to higher delivery costs…but now times are again a changing. Crude oil futures are down. 44 cents currently trading at $29.00 per barrel at the New York Mercantile Exchange.
A United Nations Food & Agriculture Organization study took monthly data of oil and food prices and determined a higher ratio of food cost since the year 2000 than the prior decade which can only be because of increasing oil costs. Since 2014, however, there has been a disconnect as food prices have been outperforming the cost of oil, but at the same time allowing more food production.
Laura Taylor, a senior market strategist at RJO Futures in Chicago, shared her fundamental view of the crude oil futures market by stating, “There was a lag in higher food costs when crude oil (futures) began its ascent over a decade ago. Now that crude oil prices are returning to pre-war levels, maybe food companies are compensating for their prior losses before food prices come back to more affordable levels.” Taylor added, “With increased food production (with lower energy costs), companies can be compensated earlier with more available product so there is a possibility of higher food costs not lasting that much longer.”
Crude oil futures trend is down with no bottom yet in sight. The technical indicators used to measure strength in the crude oil market illustrate the high probability of lower prices ahead – a major plus for consumers.
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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