Closing Commodity Comments For 6-22-12
Grain Futures--- The corn market this week soared on speculation of the U.S drought cutting production causing prices to nearly shoot up .50 cents a bushel in the December contract which we harvest this fall to currently trade around 5.57 a bushel going into the weekend as traders are nervous about how much rain is forecast for the next 7 to 10 day forecast while soybeans also finished the week up about 50 cents currently trading at 13.74 of bushel near contract highs looking ahead to the weekend with a possible big jump in prices on Monday if the forecast comes out with less rain than expected or higher than normal temperatures arrive next week which would also be construed as bullish the grain market. Demand for soybeans is doing very well due to the fact that China may 61 million metric tons of soybeans and 7 million metric tons of corn in the 2012 – 13 season which is the most in history while farmers planted nearly 9 6 million acres of corn the most since 1937 reducing the soybean planted acreage by 1.5% reporting that carryover next year as low as 140 million bushels which would be a four year low and would prop up soybean prices in the near-term. The U.S drought Monitor has released their latest assessment and it's even that the Midwest is experience drought conditions nearly 40% of the Midwest is now a moderate drought while that is compared to only 20% last week. Extreme drought has tripled in the last week now to around 12% and some of the areas in Illinois and Indiana are worse but they are seeing the harshest part of the heat and the lack of rain. The area in Illinois has more than doubled since last week and now stands at 70% is considered moderate which is more than double last week as we go into the critical month of July with extreme volatility in prices in my opinion basically on every given day. Wheat futures are up another 9 cents in the December contract currently trading at 7.09 also due to dryness and the Great Plains and extreme temperatures causing wheat futures to jump about $.50 this week also pushing oat futures up for the December contract up another $.2 cents in today's trading session to close right around 2.98 right at a three week high. Many of the commodity markets have been doing poorly in recent weeks especially after yesterday's debacle in many commodities such as gold and oil as well as the stock market on perception that an economic slowdown is going to curb demand and that might be true but the point right now is the grains are in a weather market and if we don't get rain prices will move higher if we do get abundant amount of rain prices will head lower. In my opinion I am bullish the grain sector I think prices have bottomed out and I would be playing at on the long side, however I've experience weather markets in the grains before and they come down very quickly so make sure you have a stop loss in place to try to minimize your risk when you are wrong.
Sugar Futures--- Sugar futures this week rallied to a 5 week high on concerns of heavy rains in Brazil cutting estimates on the sugar production causing prices to rally sharply from contract lows although today finishing lower by about 98 points to close at 19.80 a pound in heavy volume in New York today. Even though crude oil prices have sharply declined in the last week sugar prices are looking to bottom in the short term, however sugar is still only about 100 points away from contract lows so you're not out of the woods yet if you are bullish sugar. Demand for gasoline and ethanol is low right now also putting pressure on sugar prices however sugar has come a long way from its highs of a couple years ago and maybe demand is right around the corner once again especially if there is a U.S drought cutting corn production dramatically causing all ethanol products to rise.
Cotton Futures--- Cotton futures in New York this week saw incredibly volatile trading action every single day while finishing up on a high note closing higher by 150 points currently trading at 69.27 after yesterday's locked limit down to 500 points in a wild trading action. Earlier in the week December cotton which is considered the new crop which will be harvested this fall traded above $.74 only to collapse all the way down to $.67 2 days later on massive profit-taking plus the federal reserve cutting the GDP forecast which definitely hurt the outlook for cotton demand especially with a weakening Europe and a slowing economy in China. In my opinion I believe cotton prices are in the bottoming stage and if we suffer weather problems throughout the United States prices could shoot higher it is very early in the growing season to say that cotton will not be affected by weather as you can see the volatility picking up at these levels and I believe if you're a longer-term investor trying to buy something on the cheap look at the cotton prices at these levels because you have to remember just two years ago cotton prices were over 200 and have dropped 70% in price in just a short period of time. The cotton fundamentals have changed dramatically two years ago we went from the lowest supply since the Civil War all the way now to possible record supply causing prices to plummet in the last couple of months only to consolidate with violent action in the last couple of weeks looking ahead at the weather next week to dictate short term prices.
Coffee Futures--- Coffee futures in New York this week saw volatile trading action every single day well closing on a sour note this Friday afternoon down around 300 points in the September contract closing at 155.80 still within striking distance of new contract lows after an impressive day yesterday with most the commodity market sharply lower coffee finished 700 points higher looking like a possible bottom is forming before profit-taking took prices back down once again. Coffee prices have been the only commodity that is not seen at least a short term bump up in price but in my opinion I believe coffee prices are bottoming here in the low 150 level which is down around 33% in 2012 all on a pessimistic outlook in Europe and China causing prices to consistently grind lower except in the last week where there looks like there is major support right that 150 level. Coffee volatility is very low historically at this point so if you're looking at possibly enter this market take a look at the put or call options because the premiums are much lower than they have been in recent memory allowing you to trade coffee minimizing your risk to what you purchase the premium for. I do think if you're a long-term investor and coffee prices head lower from these levels I would take a look at possibly taking a long position and try to take advantage of these relatively cheap prices hoping that the European and Chinese economies will stabilize improving demand. If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading.
There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Trading is not responsible for the accuracy of the information contained on linked sites.
Precious Metal Futures--- Precious metal futures this week were slammed on several bearish economic indicators such as lowering the GDP by the federal reserve as well as major problems existing in Europe and in China causing global economic slowdowns pushing gold down $60 dollars for the week currently trading at 1,566 this Friday afternoon while silver futures were down for the third consecutive trading day another 15 cents at 26.71 down around $1.70 for the trading week also making new fresh lows continuing its bearish momentum. Copper futures plunged this week settling down about 1400 points in the July contract to trade currently around 329.50 on waning demand due to stagnant economies including our own. Platinum futures took it on the chin this week finishing down around $55 dollars currently trading at 1,435 also on able to escape the massive commodity selloff that took place yesterday as investors flee out of hard assets and stocks. The Federal Reserve came out couple of days ago and stated they will continue to do the twist program which is selling short-term treasuries and buying long-term treasuries however it was construed as not enough so traders sold stocks and commodities dramatically hoping that the fed were doing QE3 instead of the twist program which many traders and economists think will have very little impact. The precious metals in my opinion look very weak although they have not had a solid trend except for silver which looks like it's going to retest the $23 – $24 level in my opinion however gold, copper, and platinum are still in a choppy market and I still advise to sit on the sidelines and wait to see if new lows are broken. The currency market this week had a big impact on the prices of the precious metals sending them sharply lower due to the fact that the U.S dollar surged against the Euro currency especially in Thursday's trading session causing a sharp selloff across the board in stocks and commodities as investors were seeking the safe haven of the U.S dollar and selling all other assets. The next major support area and gold is $1,535 – $1,545 if that level is broken I think you could retest the low 1,500s and possibly go as low as 1,450 however I do not see a total collapse in gold prices because there are too many uncertainties throughout the world and people are still going to buy gold and use it as a currency and as a hedge.
Energy Futures--- The energy markets are sharply lower this week on a pessimistic outlook by the federal reserve cutting the GDP forecast here United States also with a gloomy outlook in Europe and China sending crude oil prices sharply lower to a new nine-month low down about $4.50 dollars a barrel this week however trading up about $1.80 this Friday afternoon close right around $80 a barrel while unleaded gasoline is up this afternoon in New York still will settle about 1400 points this week to settle right around 2.48 also creating a nine month low on waning demand continuing its bearish momentum. Heating oil futures are slightly higher today as well but are down over 1100 points for the trading week currently trading at 2.54 also new lows on the weekly chart with the next major support around 2.40 which could happen next week's trading session. There were many bearish economic indicators this week pushing crude oil prices to new lows including the cut the GDP and that giant mess in Europe and the fact that Moody’s cut rating on 15 global banks which causes more concern in the investment world causing many hard assets to selloff just like they did in 2008 during the U.S banking collapse. In my opinion like I've stated in many previous blogs I believe crude oil and the products are going lower with the next major support crude oil around $75 level which was hit in the summer of 2010 during the last economic European crisis and at this point the trend is your friend and it does not look like a bottom has been in place in any of the energy markets. Natural gas futures were up sharply this week closing last Friday at 2.50 basically to settle around 2.67 an outlook of an above average temperatures here in the summer propelling demand for natural gas which is been a giant bear market for many years now but it looks to me that a possible bottom is in with the next major support at 2.88 if it breaks that level you are talking about a four-month high in natural gas prices which you have not been able to say in a long period of time. The spread between natural gas and crude oil prices is starting to narrow while earlier in the year at one point crude oil was hitting $110 a barrel and natural gas was hitting 10 year lows however since that point natural gas is rallied about 30% and crude oil has dropped off about 25% in the last two months alone.
Meat Futures--- Live cattle futures this afternoon in Chicago are down another 10 points in the August contract currently trading at 116.55 looking at possibly breaking new lows near 114 a pound while feeder cattle prices for the August contract are basically unchanged for the trading session 152.50 dropping around 800 points in the last couple of weeks right at fresh 8 week lows on pessimism of a lack of demand and an outright bloodbath in the commodity markets today. Lean hog futures which have been doing very well right near 8 week highs are down 100 points at 91.35 in the August contract. The commodity markets yesterday were sharply lower in a mass liquidation pushing crude oil futures to new yearly lower lows as well as the stock market and the metals markets both sharply lower across the board an outright pessimistic view of the economies throughout the world since the Federal Reserve yesterday lowered their GDP forecast here in the United States causing liquidation of all assets in the last couple of days. Cattle prices have been directly affected by the rise in corn prices this week which rallied about 60 cents due to U.S drought conditions causing farmers to send their cattle to slaughter as it is getting too expensive to feed them hurting the bottom line.
Currency Futures--- The currency market saw some wild swings this week on a number of economic reports pushing prices up and down the ladder while today traded in a very quiet range in the U.S dollar for the week finishing up around 50 points which was all in yesterday's trade as the Euro currency sold off 150 points yesterday and finished down only 70 points for the trading week with its contract low right at 123 still trading right around 1.2550 looking ahead next week for some type of new fundamental news propel prices higher or lower. The British Pound was down about 100 points this week currently trading at 152.66 still stuck in a sideways action while the Japanese Yen plummeted nearly 300 points for the trading week hitting a fresh two month low currently trading at 124.47 on a bleak and pessimistic Japanese economy which has gone nowhere in over 10 years. The currency markets have been choppy in the last couple of weeks with really know direction, however lately there have been kickbacks from the lows but are still stuck in a choppy sideways pattern which is very difficult to make money unless you're a day trader so I still advise to sit on the side-line and wait for the currency market to either make new lows or wait for a trend to develop for at least 5 or more weeks. Moody's downgraded 15 global banks yesterday causing massive selloffs in stock and commodity markets while investors flooded into the U.S dollar causing the Euro currency to sell off dramatically as European banks do not have what they call FDIC insurance so they can lose deposits which is causing people overseas to be buying U.S treasuries no matter what the yield is paying but because of the fact that they will get their money back if it's guaranteed by the U.S government.
Bond Futures--- The bond futures were quiet this week with the 30 year bond yield at 2.75% currently trading in the September futures contract at 148 – 06 down about a full point for the week selling off on some profit-taking as the S&P 500 showed some strength today after yesterday's 32 point debacle and bad economic news in the United States and across the globe. The 10 year notes were slightly higher this week with an average yield of 1.67% still hovering around all-time lows in yield with uncertainty in Europe the rest of the world as well as the United States while the federal reserve stating they will continue to buy treasuries until at least 2014 so look for yields to stay extremely low with very little volatility. The five-year note which has very little volatility at this point because it is only yielding .75% with an all-time low yield of .62% which happened about three weeks ago also waiting for the next major report which will be the unemployment report which be the first Friday of July which will definitely have an impact on bond yields. I don't really have an opinion on the yields except for the fact that I do believe they will remain low for several years because the Federal Reserve is forcing low yields with the constant purchasing of their twist program's and QE3 and at this point I think you just stay away from this market until something happens when the federal reserve stops manipulating bond yields. If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading.
Stock Futures--- Stock futures yesterday plunged across the board with the S&P 500 down 31 points but rallying today on over sold conditions up 8 points currently trading in the September contract at 1327 while the NASDAQ composite futures for the September contract were down 60 points yesterday however is also rallying 20 points today in a very volatile week currently trading at 2585 on worries about economic slowdowns across Europe and China as well as the United States with the federal reserve yesterday lowering GDP forecast which is very negative many commodities and stocks around the world today. The Dow Jones industrial futures contract for the September delivery yesterday finished down by 250 points which was the 2nd worst day of the year only to rebound by 60 points currently at 12.565 in sympathy with the rest of the commodities with precious metals and the energy sector making new yearly lows this week putting pressure on many of the oil companies in the S&P 500 which is causing slightly lower prices across the board this week. The fact that the GDP is been lowered definitely is a negative to stock prices, however the one thing I've realized in the S&P 500 is that generally it does come back just probably not today but still bullish longer-term because stock market is relatively cheap compared to interest rates and other hard assets. The Federal Reserve announced yesterday that they will continue the twist program which is selling short-term treasuries and buying long-term treasuries trying to get the 30 year yield as low as possible which was disappointing the traders yesterday which were looking for more of a QE3 type of scenario causing traders to sell.
If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading. There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Trading is not responsible for the accuracy of the information contained on linked sites.