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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: 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.
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.
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