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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:
Regulations to Accommodate Hens to Affect the Egg Market
The egg market is in for a shell-shock next month when legislation from California catches-up to everybody from the producer to the consumer. Voters in the state approved a law which calls for egg-laying hens to have “more space” in their hen houses to ensure the birds are allowed to lay down, stand up, extend their wings, and dance around (I cannot make this up!).
The price of USDA Grade AA Extra Large, and Grade AA Large, eggs may have been .02c slightly lower yesterday in New York’s cash market, but starting next month when the legislation comes into effect we should start seeing prices holding to higher over time. Farmers around the country that sell eggs to the Golden State will either have to comply with larger cages for their birds, or have less birds in existing cages (which implies culling their flock).
“With farmers selling eggs to the country’s most populous state, it can only mean higher prices for the consumer,” said Laura Taylor, a senior commodities broker at RJO Futures in Chicago, sharing her fundamental analysis insight regarding the current egg market situation. Taylor added, “Who elects California legislators…chickens, or people? Who are California legislators elected to serve…people, or chickens?”
On a national scale, wholesale egg prices average a record $2.77 per dozen which is up 34% from the year before. With this new law coming into effect, a Iowa university professor claims the amount Californians themselves will pay can be as much as 20% within three to six months into next year.
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: Corn, CBT Wheat, KCBT Wheat & 10yr. T-Notes (New this week.)
DOWN Trending Futures Markets: Crude Oil, Copper, British Pound, Japanese Yen, Natural Gas, Sugar 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.
Butter Futures Expected Lower With Milk Production Increase
Butter eaters around the world will delight with an extra helping as wholesale milk prices continue to drop from all-time highs in September. Dairies have kept the milk flowing like never before the former high milk (futures) prices have helped to expand production around the world.
USDA data shows farmers have taken advantage of the spike in milk prices as well as low animal-feed costs which has sent production for the year ending in October up almost 2% from the same period last year. Top producers around the globe are contributing to the global milk glut with our domestic dairy exports dropping to a year and a half low.
“The all-time milk (futures) highs this past September drew a tremendous response from dairies “down under” and Europe,” said Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, sharing his fundamental analysis insight regarding the current milk futures situation. Medina added, “With more milk & butter on the int’l market, our domestic brands have backed-up putting pressure on milk (futures) & butter (futures) prices. That simple.”
As with falling oil (lowering transportation costs) and overall commodity prices, milk futures and butter futures are not immune to glut prices. We don’t trade butter futures or milk futures from the Chicago Mercantile Exchange, but this human interest story is out to assure the financially “tapped-out” public that the pendulum does indeed swing the other way!
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’s Raised Forecast for Global Crops Tempers Grain Futures
Soybean futures, wheat futures, and corn futures have all retreated from recent gains after the USDA released it’s monthly crop production report this morning. They have once again raised their forecast on global grain supplies which continue to drive down food costs.
The USDA says the expanding crops are due to bigger than expected crops in both China and Europe. With the global forecast raised for soybean production, the USDA expects soybean inventories to peak-out at an all-time high.
“No surprise with today’s report…we knew corn, soybean, and wheat supplies are plentiful,” said Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, sharing his fundamental analysis insight regarding the current grain futures situation. Craney added, “We also expect ‘left-over’ supplies of soybeans adding to next year’s harvest despite record demand for the product.”
Grain futures trends are all over the board, so let’s go over each complex: Corn futures trend is technically up, but appears topped out as of last month and due for a “double-bottom.” The soybean futures complex has beans at a crossroad (technical down in my work), soybean oil futures technically up, but appearing weak, and soybean meal futures technically up – but trading sideways for the past two months. Wheat futures trend is still up and I expect the market to resume up into next month (at best).
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.
Cattle Futures Finding Support as News of Beef Imports Increasing
Cattle futures have paused at recent highs from early October as news of the US domestic herd is updated – and it’s not looking good. Exports of beef to the US is reportedly jumping 35% for the 2014-2015 fiscal year to amounts not seen since 2004-2005 (according to a recent report from the Australian Bureau of Agricultural & Resource Economics and Sciences).
If you may recall from previous postings, the US cattle herd started the year at a record-low number of animals not seen since 1951 after prolonged years of drought forced cattle ranchers to cull their herds. This will help the Australian beef industry significantly as they are already reporting as much as 35% of their exports going to US dinner tables.
Kevin Riordan, director of research at Capital Trading Group in Chicago, shared his fundamental analysis insight regarding the current cattle futures situation by stating, “Cattle numbers are now the lowest since 1950 due to a prolonged drought.” Riordan added, “In light of the fact that U.S. cow slaughter is not expected to increase in the short term, cow/beef production will likely remain low and demand for beef imports strong.”
The trend for cattle futures is up with no bottom yet in sight. This cattle futures market is one where we must trade with caution in light of the limit up/down days we have been seeing in recent trading sessions.
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: Corn, CBT Wheat, NASDAQ & S&P 500 Indices and KCBT Wheat & Russell 2000 Index (Both new this week.)
DOWN Trending Futures Markets: Euro-currency, Crude Oil, Copper, British Pound, Japanese Yen and Natural Gas & Sugar (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.
Larger Than Expected Harvest in Canada Helps Lower Wheat Futures
Wheat futures have been set-back since Tuesday after a spectacular run-up over the Thanksgiving holiday period. Just today, wheat futures have extended their lows after Canada’s statistics office upped its forecast for their wheat production when it was learned farmers harvested bigger wheat crops than expected.
Word from Ottawa is Canada’s wheat production will reach just over 29M metric tons, compared to its previous prediction of 27.5M tons. Last year Canada realized a record amount of wheat reaching 37.5M tons of total production.
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 wheat futures situation by stating, “This is something traders simply weren’t expecting.” Evans added, “It’s unusual for such numbers to be provided so late in the year.”
Wheat futures trend is up as of mid/late November. I am looking into a lower-risk entry into wheat futures 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.
Sugar Futures Extend Low’s With Oil’s Drop
Sugar futures have extended their lows, yet again, to prices not seen in years as demand for the sweet-stuff reportedly remains subdued. Sugar futures ended the day down 14 points at $0.1510 per pound on the ICE Exchange.
Sugar futures, as well as crude oil futures, are two (of “22” total) commodity futures markets that comprise the Bloomberg Commodity Index. These two markets have helped slide the commodity index to a five-year low.
Barb Levy, chief director for The Fox Group’s futures division in Chicago, shared her fundamental analysis insight regarding the current sugar futures situation by stating, “Sugar futures continue to extend losses to the downside fueled by weak demand and good growing weather in Brazil. The sugar crop for this season is estimated to come in 473,000 metric tons larger than current demand needs.” Levy added, “Weakness across the commodity markets sparked by the sell-off in crude oil is also adding pressure to the downside.”
The technical trend for sugar futures is down with no bottom yet in sight. I will be looking for a way back in the “short-side” of this market as I believe I was prematurely stopped-out very early this morning.
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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