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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:
Pit Traders from Chicago & New York Find New Homes: Commodity Futures Markets
Commodity futures traders that once worked the world renowned trading “pits” in the CME Group exchanges have had the doors shut on them, but they’re not quite ready to throw in the towel. Instead, some Chicago & New York based futures traders appear to be setting up shop right next door to the active commodity futures options pits by renting booths as office space.
The decision to remove the pit-traders from the Chicago Mercantile and New York Mercantile Exchanges was actually made in February because open outcry trading reportedly only accounted for a mere 1% of futures volume – to keep the doors open and the lights on apparently isn’t worth the owners efforts. This open outcry system dates back to the 19th century, but over the past 15 (or so) years off-floor trading has been taking over the volume with the rise of computers being used for trading- and leveling the playing field for most in the meantime.
Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, shares his view regarding the fundamental assessment of the commodity futures markets by stating, “As the commodity futures (pit) traders on the floor thinned out over the last decade, the ‘playing field’ for most other (off-floor) traders has been leveled out.” Evans added, “Futures trading volume has been dominated by those off the floor for quite a few years now.”
At one time at the height of commodity futures trading, it was standing room only in the trading pits as floor traders and brokers yelled and screamed for business. The last time I visited Chicago, I saw much fewer brokers and traders with some even killing time by reading magazines right there on the floor. The computer-age now dominates, and this is something I have been looking for for many years in anticipation of the “level playing field.”
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.
After USDA Acreage & Planting Report, Wheat Futures Pause
Wheat futures have stalled after reaching six-month highs following Tuesday’s major USDA crop progress report and the concern over the pace of the harvest. Wheat futures today are down one cent (as of this writing) currently trading at $5.875 per bushel – off .30 cents from Tuesday’s post-report, six-month high.
Traders rallied wheat (futures) prices into, and after, the USDA announced two key reports on acreage committed to certain grains and crops, plus quarterly stock inventory. Even before the report was released the last day in June, wheat prices had already soared 23% on the outlook that excessive rainfall in the Midwest will damage crops and delay the pace of harvesting.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, shares her view regarding the fundamental assessment of the wheat futures markets by stating, “The speculation may have been too heated for wheat (futures) especially after rallying .30 cents after the report Tuesday.” Levy added, “(Wheat) traders brought the price up so far, so fast, only they can negotiate where wheat prices go from here. All eyes on the actual harvest from here.”
The trend in wheat futures is clearly up, but at the beginning of last week this wasn’t the case. Wheat futures came out of a down-trend on this current speculation, and there is no top 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.
Copper Futures Hover at Two-Week Highs Amid Greek Default
Copper futures have been back-and-forth in prices this week with the Greek debt issue and the nation’s potential departure from the Euro-community fresh on traders minds. Copper futures settled today at $2.6295 per pound, up $0.0120 for the day at New York’s Commodity Exchange.
Copper futures had been trading at four month highs in mid-May, but just last month had fallen to four month “lows.” Coming into the confrontation week for Greek default, copper futures are near two-week highs.
Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, shares his view regarding the fundamental assessment of the copper futures markets by stating, “Copper futures are having a heck of a time with price discovery.” Brady added, “Between the non-starter economy in China, and a possibly Greek default and departure from the European Union, the trade is still looking for some concrete direction it seems.”
The trend for copper futures is down with no bottom yet in sight. With the nation holiday ahead of us, if copper futures can’t find direction before Friday then perhaps the trade needs to get the holiday behind them.
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 Production at Record Levels, Some Gets Dumped: Milk Futures
Domestic milk output is said to be set at the highest ever for the fifth straight year, but now some dairies are reportedly not able to find buyers because milk is so abundant. Raw milk supplies are reportedly over capacity at processing plants in some parts of the country, and although demand is said to be improving, the US milk production is contributing to an existing global surplus.
The USDA stated last month domestic milk output in May reached 18.4B pounds – the most in any month – and is on pace to reach a record 208.7B pounds this year. Contrast this to the global milk production said to be rising 2.1% to a record amount of 582.5M tons (with New Zealand being the top milk exporting nation).
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, shares his view regarding the fundamental assessment of the milk futures markets by stating, “Normally there are destinations in the Midwest where milk can find a home at a reduced price.” Medina added, “Evidently those processing plants are at full capacity already and the milk wouldn’t even be a perishable product by the time they got around to processing it.”
Milk prices have been going up steadily for the past five years due to reasons such as drought and (formerly) high feed-grain prices. Now we learn some of our nation’s milk is going to spoil because there’s so much produced – well that cost in and of itself may be contributing to the current high price as well.
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: Euro-Currency and Soymeal (New this week.)
DOWN Trending Futures Markets: Sugar and Lean Hogs & Silver (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 Close Lower on US Data & Greek Woes
Gold futures barely worked its way lower today for a fourth session in a row most likely on two main concerns: lack of progress with the Greek-debt concerns, and strong US consumption data. Gold futures are down a nominal .80 cents per ounce currently trading at $1,172.10 per ounce at New York’s Commodity Exchange.
Earlier this morning, the US Commerce Department communicated that consumer spending spiked last month by 0.9% – the biggest single-month gain in almost six years. Meanwhile in Europe, high level meetings including the European Central Bank, the IMF, and the European Commission failed to reach a deal to avoid Greek financial aid and ultimately bankruptcy.
Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, shares his view regarding the fundamental assessment of the gold futures markets by stating, “The overall gold (futures) market seems to be discounting bearish data while the Greek situation is still being worked out.” Craney added, “The gold trade appears to be awaiting a final solution with the Greek debt.”
The technical trend for gold futures is down, but like many markets right now, it has been trading “sideways” for three full months now. When this market breaks out (in either direction), it could be one heck of a trend following.
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.
Rally Extended for Corn & Wheat Futures
Both corn futures and wheat futures have extended their gains from Monday’s & Tuesday’s sharp rallies on the outlook of crop conditions in the Midwest. Corn futures are making new highs currently trading at $3.8425 per bushel, and wheat futures are near their highs at $5.3325 per bushel at the Chicago Board of Trade.
The pace of the winter-wheat harvest has traders concerned because, according to the USDA, only 19% of the crop was harvested as of Sunday – 31% is the five-year average for this time of year. With corn, the USDA has down-graded its crop-rating to 71% (from 73% a week earlier) with a good to excellent condition.
“I understand the torrential rains the Midwest has been experiencing may be impacting these grains,” said Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, sharing his view regarding the fundamental assessment of the corn & wheat futures markets. Plotkin added, “Traders should have all eyes on the June 30th USDA Planting & Stocks report for the grains next direction.”
Corn & wheat futures trend is technically down at this time, but more “sideways” for at least the past two months. The corn futures & wheat markets must be traded with caution until a clearer trend picture unfolds.
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.
Natural Gas Futures Hover at Two-Week Lows
Natural gas futures are trading at this month’s mid-range and at two-week lows as trader’s eyes seem to be focused on short-term domestic weather in order to estimate demand for the fuel. Natural gas futures are down slightly today currently trading at $2.75 per BTU at New York’s Mercantile Exchange.
It might not only be weather concerning the natural gas trade, but speculation that power and utility plants may switch from clean coal to clean natural gas because of such low prices. Most consumers may not be aware that natural gas is used in about 25% of domestic electricity generation.
“Natural gas (futures) prices may be low now, but if US power companies and utilities convert (or, commit) to natural over the summer, it can be a game changer for the natural gas (futures) charts,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, sharing his view regarding the fundamental assessment of the natural gas futures market. Evans added, “Natural gas (futures) have been hovering at these lows for the past four/five months and a hot summer with power companies switching may be the catalyst to jump-start this market.”
The trend for natural gas futures remains down with possible bottoming taking place. A sustained natural gas futures breakout about last month’s high near $3.20 per BTU could have this market in an uptrend – but low prices are great for the end-users.
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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