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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:
Sugar Futures Expert Expects No Quick Recovery
Sugar futures were hit with a glut following multi-year highs in 2011 and has since given back two-thirds from its high prices, but one expert says sugar prices may recover in the 2016-17 season. Sugar futures are down 12 points from yesterday’s close closing the day near 10.61 cents per pound at the Intercontinental Exchange.
The top sugar producing and exporting countries (such as India & Thailand) actually subsidize sugar growers and this fact could keep a lid on higher prices short-term – says the CEO of a Brazilian sugar company. He goes on to say that investment has been rather low in cash-strapped sugar mills and this fact alone could see lower volumes of sugar production which will support values to the product.
“Low prices of any product – such as sugar (futures) in this case – can only stay low for so long,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, regarding the fundamental assessment of the sugar futures markets. Evans added, “Eventually there are less workers to produce the product affecting supply, while others see the value in it creating supply.”
The technical trend for sugar is down with no bottom yet in sight. Pretty soon holiday demand for sugar should pick-up, but I don’t see any fundamental issues that would change the overall trend happening any time soon – enjoy the low consumer prices while we can.
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.
“Godzilla El Nino” Forecast Getting the Attention of Coffee Futures
Coffee futures changed its trend just last week (from down to “up”) just before the US National Weather Service’s Climate Prediction Center posted an “El Nino” advisory that could be potentially devastating for the global coffee market. Coffee futures are currently down a nominal 35 points at this time, trading at $1.3835 per pound at the Intercontinental Exchange.
The weather service’s Pacific models are suggesting the forthcoming El Nino to be bigger and badder than the devastating one during the winter of 1997-98 with scientists predicting it will begin this winter and extend into spring (for the Northern Hemisphere). If the weather model plays out as the scientists predict, there is an expectation for food production to be disrupted worldwide and to reach nearly every coffee-producing region.
“From what I understand, this potential storm may be different from just making food more expensive, but rather interfering with the coffee crop’s global supply,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, regarding the fundamental assessment of the coffee futures markets, Levy added, “Millions of people rely on coffee as their primary livelihood from southeast Asia in the western Pacific, to Central & South American coffee crops on the other side of the ocean.”
As mentioned above, the trend for coffee futures has just turned to the upside. I sure hope the big coffee producers are hedging their purchases with coffee futures because this can be a potential job killer if there is little coffee to “sell.”
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 Prices Down One-Third Since Spring
Milk futures continue to make lower highs and lower lows since wholesale milk prices reached a five-year high last September and are now down one-third from this high making the Dairy State farmers feel the economic pinch. Milk futures for September delivery are up .04 cents today currently trading at $16.50 (per CWT) at the Chicago Mercantile Exchange.
The La Crosse Tribune reported wholesale milk prices topping out with a five-year high of $27.10 (CWT) in Minnesota and Wisconsin dairy farmers seeing $26.60 (CWT) for their milk, but since this past March – when the USDA reported milk prices as low as $17.10 and $17.60 (CWT) respectively in those states – milk prices have only come up slightly and are at a premium to the milk futures prices. Even the exports of milk have all but dried-up with economic sanctions in Russia, and glut of milk production in China, and New Zealand becoming a major player in the milk exporting business.
Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, had this to say regarding the fundamental assessment of the milk futures markets, “Losing one-third the value of your product is a major hit in any industry, but for the dairy farmers its a devastating blow.” Brady adds, “The costs to produce milk such as electricity, veterinarian fees, equipment and land, all take a toll when you’re receiving one-third less for your milk.”
Milk futures trend is down with no bottom yet in sight. What is temporarily bad for the dairy producer is good for the family budget, but for how long will this last…?
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: N/A
DOWN Trending Futures Markets: Gold, High-Grade Copper, Soy Oil, Natural Gas, Sugar, Russell 2000 Index and Crude Oil, Cotton, Silver & Japanese Yen (These four 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.
Wheat Market to Evaluate South American Crops Hit by El Nino
Wheat futures will have to assess the damage done to South American crops affected by the reportedly worst El Nino to strike the continent in 30 years. Wheat futures ended the day up .11 cents to close just above $5.03 per bushel at the Chicago Board of Trade.
This week has seen flooding and landslides in both Argentina and Chile that is said to have damaged crops as well as 30 towns affecting 20,000 people. It is reported that not only 3.5M hectares of wheat crops were hit in Argentina, but the heavy rains will also bring on fungal disease which will adversely affect the wheat’s quality.
Laura Taylor, a senior market strategist at RJO Futures in Chicago, had this to say regarding the fundamental assessment of the wheat futures markets, “The wheat (futures) market was just hit hard with yesterday’s report, but this news concerning South American wheat cannot be overlooked.” Taylor adds, “Hopefully our domestic wheat market will be enough to feed those affected there.”
The trend for wheat futures is down with no bottom yet in sight. Hopefully yesterday’s downward action was a “capitulation” phase for wheat futures.
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.
USDA Report a Shocker, Sends Corn Futures & Soybean Futures Limit Down
Corn futures and soybean futures initially went limit down following today’s USDA Crop Production report which increased corn and soybean yield estimates significantly. Corn futures ended the trading day down .195 cents at $3.68 per bushel and soybean futures down .615 cents to end the trading session at $9.10 per bushel at the Chicago Board of Trade.
Today’s report is the first survey-based yields for corn and soybeans which obviously came in much greater than analysts had predicted. For corn, the yield is estimated at 168.8 bushels per acre – much higher than the anticipated average of 164.5; and soybeans now have a current yield estimate of 46.9 bushels per acre when experts were expecting an average 44.7 bushels per acre.
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, had this to say regarding the fundamental assessment of the corn futures & soybean futures markets, “Not a darn thing bullish in today’s USDA report.” Medina adds, “We expected good yields with the favorable weather the Midwest has been experiencing, but nothing like today’s numbers.”
Corn futures and soybean futures trends are down with no bottom yet in sight. I expect these markets to fall further over the next two months as we get closer to the harvest period.
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.
Hog Futures: Bacon Demand Making Pork Belly Prices Soar
Hog futures may not reflect it now, but spot pork belly prices have been on a tear since May due to the many creative uses of bacon in restaurants which is helping demand, but also depleting supplies. Hog futures are down .65 cents (CWT) today currently trading at $62.32 per pound at the Chicago Mercantile Exchange.
Late last week, the USDA reported a one-year wholesale price high for pork bellies – nearly $1.70 per pound – with much of this price surge due to a 174% spike since making a five-year low just this past April. Pork belly prices continued to make new lows despite the overall hog surge last year after a brutal virus required producers to cull a reported eight million (plus) piglets.
Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, had this to say regarding the fundamental assessment of the hog futures markets, “While pork prices were finding a low earlier this year, simultaneously beef prices were making a multi-year high in May creating demand for an alternative meat source.” Craney adds, “It seems as if though bacon is all over the menu’s around town recently with proprietors taking advantage of low pork belly prices.”
The technical trend for hog futures is at a crossroads – the trend is technically “up,” however lower-low prices tomorrow could turn the trend down. In the meantime, many of us can enjoy the benefits of relatively low pork prices while it lasts.
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
DOWN Trending Futures Markets: Gold, High-Grade Copper, Corn, Soy Oil and Natural Gas, Sugar, Russell 2000 Index (These three 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.
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