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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:
Bloomberg Survey: Agricultural Commodity Futures Prices Most Accurate, Crude Oil Prices Least Accurate
I had a chance to review a video from last October in which a gal from the Bloomberg News organization reported on a survey taken regarding commodity prices. The survey concluded that commodity prices are wrong 27% of the time, but there’s a little more to the story…
A two month survey last year of 270 “traders” revealed the least confidence in actual commodity “pricing,” and the most confidence in currency & stock prices probably because the latter two are more publicly involved and regulated, whereas commodity pricing is not. However, and this is what caught my attention, another conclusion of the survey revealed trader’s consensus is that agricultural commodities are the most accurately priced (more stable), and crude oil prices are the least accurate – as we all know from the unstable gas prices at the pump.
Laura Taylor, a senior market strategist at RJO Futures in Chicago, shared her fundamental analysis insight regarding the current commodity futures pricing situation by stating, “The whole world comes to the Chicago Board of Trade and Mercantile Exchange for their agricultural products because of the solid reputation they have built between the farmer and the users.” Taylor added, “With energy products, there may simply be too many ‘middle-men’ involved causing prices to fluctuate erratically – not surprising results from the survey.”
It doesn’t surprise me that the agricultural commodity futures markets are considered the most stable of all futures markets. The grains are the most favorable market for me trade and there is good reason why I stopped trading crude oil and other energy markets in the last decade…
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 Uptrending on Higher Exports
Cotton futures reached seven-week highs yesterday in a newly emerged up-trend based on less cotton mill usage and increased exports. Yesterday’s USDA Crop Production report revealed 2014/15 domestic cotton estimates showing less mill production and the higher exports compared with last months data. Cotton futures closed down today about 26 points from yesterday’s seven-week high at New York’s Commodity Exchange Center.
More insight from yesterday’s report also showed estimated production and and total inventories unchanged from the last estimate in January. However, there was slower than expected consumption through December, but that balanced against stronger than expected foreign sales and demand for medium to high-grade cotton.
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, shared his fundamental analysis insight regarding the current cotton futures situation by stating, “Based on what appears to be 31% of world market share on cotton, we may very well be in the beginning stages of something bigger for cotton futures.” Medina added, “This level of US exports for cotton is the most in four seasons, so demand is there.”
Cotton futures have rolled over to a newly established up-trend just last week. I am cautiously optimistic on being long, hover cotton futures have not had a significant test of their lows from last month which concerns me.
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 Crop Progress Report Halts Rally in Wheat Futures
Wheat futures had rallied into today’s USDA crop production report, but the reality of ample global supplies and a stronger dollar may have thrown cold water the temporary relief rally. Wheat futures are currently down .07 cents at the Chicago Board of Trade just over an hour after the big report.
It appears speculators had been readjusting their positions yesterday ahead of today’s closely followed “supply & demand” report after rallying about .40 cents from the February 1st low. The consensus was US wheat (futures) prices had dropped to an attractive level that would spark demand for US supplies. Wheat is the USA’s fourth biggest cash crop, behind corn, soybeans, and…”hay.”
Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, shared his fundamental analysis insight regarding the current wheat futures situation by stating, “The sentiment well before today’s big report was wheat was definitely oversold, and a correction (higher) was due.” Craney added, “It’s hard to overcome the fundamental situation of plenty global wheat supply and a recent strong US Dollar pricing out our domestic supply.”
The trend for wheat futures is down – technically, fundamentally, and seasonally. This relief rally we have seen this past week has been what I had been looking for to re-enter the short side of wheat futures (albeit an early entry for me).
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: Cotton and 10yr. T-Notes (New this week.)
DOWN Trending Futures Markets: Copper, Natural Gas, Lean Hogs, British Pound, Euro-FX, Feeder Cattle, Coffee and Crude Oil, Kansas Wheat & Soybean Oil (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.
Corn Futures Relief Rally at a Crossroads
Corn futures have bounced back over .20c from their recent lows, but the outlook for the grain remains uncertain with other factors involved. Corn futures are currently at $3.85 per bushel (as of this writing) at the Chicago Board of Trade, up .015 cents from yesterday’s close.
For the time being, the US Dollar is providing meager support being down just more than one-half percent – a lower dollar provides more buying leverage for importers. However, despite this recent “relief rally” in the corn market, corn remains vulnerable due to dwindling support of ethanol-based fuel, and with ample supplies we could even see further drops in gasoline prices as well.
“It seems not only are corn futures influenced by weather, but politically influenced as well,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, shared his fundamental analysis insight regarding the current corn futures situation. Riordan added, “The ethanol mandate has the ability to send corn futures lower as well as the strong dollar we are seeing.”
Corn futures trend is down with no clear bottom yet in sight. I am looking for a way into the short side of this market soon – hopefully my patience with corn futures will pay-off.
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.
Pork to Surpass Beef Production a First in 60 Years for Livestock Futures
High beef prices and rising demand for pork products as a cheaper alternative are setting the stage for beef to take a back-seat in production (for pork) for the first time since 1952. Both livestock animals have been hit hard lately with drought, high feed costs, and disease these last few years, but hog herds have rebounded sooner and circumstances have led to the breeding of more pigs and bigger animals.
The USDA estimates domestic pork output to increase 4.6% this year (to an all-time high) while at the same time cattle ranchers are still recovering from the 2012 drought that has brought cattle production into what will be a 22-year low. Just over a month ago, for the the fourth-quarter 2014, the USDA reported the breeding-sow herd posted the biggest increase since 1998 with the total hog population jumping 2% from a year earlier.
“Nobody could have ever predicted these circumstances with the beef to pork ratio this time last year,” said Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, shared his fundamental analysis insight regarding the current livestock futures situation. Plotkin added, “With the domestic cattle herd at 60-year lows, disease plaguing the pork industry, and high feed prices it is remarkable at least one side of the livestock industry is rebounding.”
The trend for both cattle futures and hog futures are down with no clear bottom yet in sight. However, if last week’s lows hold in both feeder cattle and lean hog futures, then we can at least see some type of relief rally before another test of yesterday/today’s low.
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.
Grain Futures Find Multi-Month Support at Bargain Prices
Corn futures, soybean futures, and wheat futures have all found temporary support after rallying anywhere between .15c-.40c in today’s session at Chicago’s Board of Trade. Importers around the world had been on the sidelines as US grain supplies had been viewed as overpriced with a climbing dollar, but that all changed today.
The US grain markets were at four-month lows within the last two trading sessions – wheat futures finding lows not seen since early October, corn futures retracing back to November lows, and soybean futures also rallying from lows not seen since October. With soybeans, reported weakening demand from China, and ample South American supplies, have been a black cloud over the soybean market since late last year.
“The US grain markets were due for some type of relief rally in the midst of bearish USDA and older news,” said Jeff Evans, a Senior Broker and Vice-President of the Managed Accounts Division for RMB Group in Chicago, shared his fundamental analysis insight regarding the current grain futures situation. Evans added, “I wouldn’t be too excited about a prolonged rally with these markets because a test of the recent lows should follow.”
All grain futures trends are down with no bottom yet in sight. I am looking to sell short these grain markets, especially once they make a return back to their moving average I follow.
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: Gold and 10yr. T-Notes (New this week.)
DOWN Trending Futures Markets: Copper, Natural Gas, Lean Hogs, British Pound, Euro-FX, Feeder Cattle, Cotton, Coffee, Sugar, Japanese Yen and Soybeans (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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