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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:
Domestic Soft-Red Winter Wheat Quality Not Up to Par: Wheat Futures
Wheat futures may have a new situation to deal with in the foreseeable future – poor quality as well as quantity of the soft-red winter wheat variety said to be of the poorest rated going back more than 20 years. Wheat futures are trading lower by .07 today, currently at $4.79 per bushel at the Chicago Board of Trade.
Purchasers of US soft-red winter wheat are being advised by the US wheat export group, US Wheat Associates, to inspect their wheat purchases to ensure it meets their expectations of quality after unfavorable weather affected the crop. The wheat crop’s volume fell by almost 15% (to a five-year low) this year with the help of lower sowings.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, had this to say regarding the fundamental assessment of the wheat futures markets, “The soft-red wheat growing region saw much more moisture than usual this past Spring causing harvest delays for many farmers.” Levy adds, “With the heavy rains comes crop diseases which will reduce the quality, so this is what’s going on.”
Wheat futures trend is down but finding long-term support at the $4.70 level. Still no bottom left in sight for wheat futures at this time, but I would await some type of temporary relief rally before committing to a short position.
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.
Corn Futures May Soon Have to Price in Midwest Crop Damage
Corn futures are trading within last month’s USDA crop production report’s price range for that particular day, but corn farmers in the Midwest are reporting crop damage due to first, soaking rains in late spring/early summer, followed by a hot and dry August. Corn futures are trading down .06 cents currently at $3.69 per bushel at the Chicago Board of Trade.
A farmer that says he grows corn in Illinois on 1,500 acres calls his progress “a mix of the good, the bad, and the ugly” with normal-sized ears, but just as many plants hit with disease and/or lack of nutrients, or just plain dying on the vine. There are reportedly similar results appearing across the Midwest because of the crazy weather, so this isn’t a micro-regional situation.
“With this development spread across the Midwest, the question must be asked if the USDA will cut it’s September corn production forecast,” said Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, regarding the fundamental assessment of the corn futures markets. Brady added, “A cut in production estimates has the potential to stop falling corn (futures) prices into next month’s harvest.”
The trend for corn futures is down, however the $3.65 area is offering strong support since late May. Corn futures is testing this support again, but if $3.57 fails there’s no bottom 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.
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 (New this week.)
DOWN Trending Futures Markets: Soy Oil, Sugar, Russell 2000 Index, Silver and S&P 500 Index & Feeder Cattle (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.
Gold Futures Sink Another $21 on Durable Goods Data
Gold futures have sold-off for a third session in a row from its $1,170 highs only on Monday once domestic durable goods orders rose an unexpected amount last month and now boosting sentiment for a forthcoming interest-rate hike. Gold futures are now down $12.40 per ounce and currently trading at $1,126 at New York’s Commodity Exchange.
When durable goods orders were expected to “drop” by 0.4%, the US Department of Commerce reported an actual increase for total durable goods orders by 2% last month. To reinforce the sentiment, June’s durable goods order’s were revised to a “4.1%” gain from the 3.4% which was previously reported.
Laura Taylor, a senior market strategist at RJO Futures in Chicago, shares her view regarding the fundamental assessment of the gold futures markets by stating, “Traders have been looking for something they can sink their teeth into regarding the direction of interest-rates. This durable goods order maybe created a ‘capitulation’ for the gold market correction.” Taylor added, “The gold trade will have to keep today’s lows if the rally will continue.”
The technical trend for gold turned up only one week ago today. Gold futures still look strong despite the three-day sell-off so if there are any jewelers or electricians out there looking for a place to buy, this may be it.
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.
Australian Cattle Market at Record High Diverging with US Cattle Futures
Maybe cattle futures “down under” are lagging behind the US livestock market, but Australian cattle prices are hitting record highs as our domestic cattle market continues to slide from late last year’s highs. Feeder cattle futures for October delivery are trading down $4 (CWT) today currently at $1.955 per pound at the Chicago Mercantile Exchange.
So far the Australian cattle market has realized gains as high as 68% (YTD) over the past year at a time when US cattle futures are down about 10% for the year, and steer values in Brazil are seeing their lowest in the past five years. It was only this past October that US “live cattle” futures saw a record high of nearly $172.00 a pound (CWT) after animals were taken out of the beef production line and beef prices raised for the animals that were available.
“The US cattle market is showing it has already priced in the lack of supply and has discounted the drought-breaking rains earlier in the year by failing to rally,” said Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, regarding the fundamental assessment of the cattle futures markets. Medina added, “It is clear the domestic cattle market is in ‘full-swing’ rebuilding mode and cattle futures have little chance of return to new highs at this point in the season – in my view.”
Feeder cattle futures trend is down with no bottom in sight. Two weeks earlier feeder cattle futures was at a crossroads to test the highs of last year, but have failed miserably since. Back to “what is good for the consumer” as time passes…
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.
Commodity Crop Markets a Hot Potato for Hedge Funds
Hedge funds are reportedly bailing on crop commodity markets such as the grains and cotton while the USDA reports excess supply adding to inventories. The grain markets have closed mixed today after an initial sell-off in the overnight markets, but cotton has been weak all during this trading session and is currently down 285 points to close the day near .6406 cents per pound at the Intercontinental Exchange.
For five straight weeks now the USDA has reported professional funds downsizing their bets for higher crop prices when in fact markets such as corn, soybeans, and wheat are seeing a reported combined slowing demand amid bumper global harvests. The “bullish” holdings have reportedly dropped 67% in five weeks!
“The fundamentals just don’t support higher crop prices right now and in the foreseeable future,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, regarding the fundamental assessment of the crop-orientated commodity futures markets. Craney added, “The hedge funds may have been looking for an orderly way out of the bullish positions, but evolved more into a situation of ‘musical chairs’ or getting out when opportunities presented itself which never materialized.”
All of the grain markets that are followed here are in down-trends with no bottom yet in sight. Cotton futures, however, appear to be resuming its overall downtrend just when a bullish scenario had been unfolding.
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: 10yr. T-Notes (New this week.)
DOWN Trending Futures Markets: Soy Oil, Sugar, Russell 2000 Index, Crude Oil, Silver and Coffee (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.
Industry Experts See Higher Cocoa Prices for Next Season
Cocoa futures have backed-off its yearly highs made last month, but forecasts from industry experts agree new highs are expected by the end of the year due to a cocoa industry shake-up. Cocoa futures are down two points currently trading at $3,114 per ton at the Intercontinental Exchange.
Ecobank – a pan-African banking conglomerate – agriculture advisors claim cocoa prices are poised to break out above the current July yearly high (nearly $3,400/ton) before October because Africa’s top producer and exporter of cocoa beans are taking steps to corner a bigger share of the market. The West African cocoa bean growing season starts in two months and already they predict a continued supply shortage amid global demand allowing for higher producer prices.
“There is actually an expectation of higher fixed prices for cocoa beans and because of this, farmers are naturally holding back their product from the marketplace,” said Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, regarding the fundamental assessment of the cocoa futures markets. Plotkin added, “A potential spike higher in cocoa (futures) can be expected under the conditions of recovering global demand and a shortage for next season.”
Cocoa futures trend is currently down at this time, but looking more like a retracement lower from the July high. More upside action will have to unfold before the overall cocoa futures uptrend resumes, but if you notice higher cocoa prices down the road…this is what’s going on where cocoa beans originate.
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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