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Schad Commodity Blog & Commentary
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From the desk of Brian Schad:
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.
E-Coli Concerns with Canadian Beef Recall Spikes Cattle Futures
Feeder cattle futures spiked higher this morning after a “limit-up” session yesterday most likely on the Canadian beef scare. The ag-company Cargill has recalled all ground-beef products sold in Wal-Mart stores (under the brand name “Your Fresh Market”) from British Columbia to Manitoba, but before realizing the entire situation cattle futures had spiked higher.
The good news for consumers is that no illnesses have been reported so far in the food-safety investigation underway while the 31,000lbs of beef packaged at Cargill’s Calgary, Alberta plant are being inspected. Cattle futures have since retreated $2.50 from their highs today.
Laura Taylor, a senior commodities broker at RJO Futures in Chicago, shared her fundamental analysis insight regarding the current cattle futures situation by stating, “The fact that Cargill and beef inspectors have this situation ‘by the horns’ should take the scare out of cattle futures trading.” Taylor added, “Thankfully no beef consumers were harmed by the products sold, and that too should be a relief in the cattle futures trading pits.”
Cattle futures trend remains “up,” but is at a crossroad. Cattle futures came very close to turning the corner (to “down”) last week until the Canadian-beef scare was realized over the weekend. These market require extra supervision lately…and I’m on 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.
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 that we have identified, serve to forewarn us of the next possible bigger move.
Here are the commodity markets which illustrate the bigger picture changing for them:
UP Trending Futures Markets: NASDAQ Index, Corn, and S&P 500 Index
DOWN Trending Futures Markets: Crude Oil, Gold, Silver, British Pound, Euro-FX, Copper and Japanese Yen (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.
Wheat Futures Higher on Frost Concerns in US & Black Sea Region
Wheat futures have climbed to a one week high today when it was learned freezing weather may damage winter wheat varieties in the Black Sea growing region and may have affected crops here in the US. The US is the world’s biggest exporter of wheat, yet it is only the US’s fourth biggest cash crop behind corn, soybeans, and “hay.”
A USDA report recently showed domestic winter-wheat crop conditions deteriorated in the week ending November 23rd, and snow cover in the Russian wheat growing region is forecasted to remain “limited” for the next couple of weeks – leaving the crops vulnerable to cold snaps.
Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, shared his fundamental view regarding the current wheat futures situation, “Wheat (futures) prices seem to be fluctuating based solely on exports and weather.” Medina added, “Supply is still plenty, but if the weather persists we can expect wheat futures to grind higher.”
The trend for wheat futures is still in a newly emerged up trend, with hard-red winter wheat turning up only today (in my study). I am looking for more upside with wheat futures into early 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.
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