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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:
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: Sugar (New this week.)
DOWN Trending Futures Markets: Soy Oil, Russell 2000 Index, S&P 500 Index, Crude Oil and Coffee
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.
Brazilian Rains Help to Boost Sugar Futures
Sugar futures eased back a bit today following yesterday’s 3% rally on news of rains in South America helping to extend the current rally. Sugar futures closed down 13 points to settle trading today at .1130 cents per pound at the Intercontinental Exchange .
Despite the sentiment of sugar being more abundant than sand on the beach, bullish factors are emerging such as the Brazilian rains seen stalling the sugar-cane harvest in South America’s center-south growing region, and sugar output behind analysts expectations last month. Brazil is one of the world’s top producers of the sweet stuff and mills in that region are responsible for reportedly 90% of the country’s sugar output.
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, had this to say regarding the fundamental assessment of the sugar futures markets, “Brazil is big on bio-fuels and much sugar-cane is needed to proper ‘ethanol’ as their main ingredient – as corn is the U.S.’s – and their busy driving season in that hemisphere is approaching.” Medina adds, “When you add the driving season demand, adverse rains over the past few weeks, and the possibility the market has already priced-in all the bearish news, then we could possibly have a trend reversal.”
The technical trend for sugar is down, however sugar futures are at a crossroads at this time. A trade above .1165 in the near-term could push sugar futures to an uptrend while a trade down to .1084 could keep the lower prices intact – a plus for the consumer.
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.
Coffee Futures Slightly Higher as Colombia’s Harvest Extends Recovery
Coffee futures may be pricing in Colombia’s resurgence of coffee production regardless of dry weather these past few months due to replanted trees maturing. Coffee futures are up a nominal 10 points currently trading just over $1.21 per pound at the Intercontinental Exchange.
The Colombia Coffee Growers Association is watching the developments closely as the government there anticipates 2015 production to be 13M tons on the high end. The country is the world’s second largest producer of the “arabica” coffee variety.
Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, had this to say regarding the fundamental assessment of the coffee futures markets, “Colombia’s coffee tree replanting program has helped to ensure a rebound in that nation’s production.” Craney adds, “The volume of coffee trees planted is also helping to offset sometimes dry weather conditions and common fungal disease in that growing region.”
Coffee futures remain down with contract lows made just this past week. Coffee futures are still pricing in future supply with current demand so this is a plus for the coffee drinking public.
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.
China’s Culling a Boon to the Pork Industry: Hog Futures
Hog futures should be finding solid support as news of China’s culling of their sow hog-herd by 19% is predicted to provide support to the global pork industry for some time to come. Hog futures are actually down .20 cents per pound today currently trading at $68.95 (CWT) at the Chicago Mercantile Exchange.
The culling of the Chinese herd over the past year and a half has been recognized as one of the biggest in history and, get this, said to be equivalent to the loss of the more recent Canadian, Mexican, and US herd culling – combined! The effect of this action in China is now apparent in the global pork industry with tightened pork supplies and higher prices.
Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, had this to say regarding the fundamental assessment of the hog futures markets, “As news spread about this event, over the past two months the near-by hog futures contract has risen by $10 (CWT) a pound.” Plotkin adds, “Higher stable pork prices also positively affect the pork producer’s margins as well as recovery of the hog-to-corn price ratio for these producers. In the meantime, the hog herd rebuild is still clearly underway for the benefit of the consumers too.”
Hog futures trend is technically up at this time, but looking at a bigger picture this market has actually been trading sideways since February. Hog futures could breakout to the upside with a sustained price move above $72, however, and if it happens it could be 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
DOWN Trending Futures Markets: Soy Oil, Russell 2000 Index, Silver, S&P 500 Index, Feeder Cattle and Crude Oil & Coffee (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 Find Support Amid Chinese Net Exporter News
Cotton futures are pricing in news of China reportedly becoming a net exporter of cotton (and wheat) by the end of this decade due to the slump in their cotton industry. Cotton futures settled up 27 points today to close at .6276 cents per pound at the Intercontinental Exchange.
Of all China’s commodities produced, cotton is said to be the only market that has suffered negative demand growth since 2008, and is expected to continue through 2020. China is reported to have lost international competitiveness in the textile industry which is the reason they will no longer need to import cotton after 2018.
Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, had this to say regarding the fundamental assessment of the cotton futures markets, “The boom in the cotton (futures) market four years ago was due in large part because of the boom in the Chinese marketplace.” Evans adds, “With Chinese demand subsiding, its anybody’s guess at what price cotton futures will find its floor. Traders must remain aware that these are cotton prices denominated in today’s stronger US$ than in years past, which has the potential to suppress prices (in US$).”
The trend for cotton futures is down (once again) as of this week with no bottom in sight. Cotton futures have been trading in a .07 cent range for the better part of this year and is still finding its direction.
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.
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.
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