Mike Seery’s Daily Commodity Comments For 10-14-19

Mike Seery’s Daily Commodity Comments For 10-14-19
Mike Seery’s Daily Commodity Comments For 10-14-19

Coffee Futures–-Coffee futures in the December contract is currently trading higher by 130 points at 95.00 as I have been recommending a bullish position from the 101 level and if you took that trade continue to place the stop loss at 93.40 on a closing basis only as prices did go below that level at one time last Friday before rallying at the closing bell.

Coffee prices are now trading below their 20 and 100 day moving average as the trend has turned to the downside as I will not 2nd guess and I will continue to place the proper stop loss. Fundamentally speaking coffee prices continue to be undercut by signs that recent beneficial weather in Brazil will boost the country’s coffee yields.

A coffee analyst at RR Consultoria Rural in Mina Gerais, Brazil’s biggest arabic a coffee-growing region said Monday after he toured Brazil’s coffee farms that the arabica coffee crop has had “exceptional” flowering. Another negative for coffee prices was the October 4th report by the National Federation of Columbian Coffee Growers that Columbia’s September coffee production rose +4% y/y to 1.1 mln bags.

At the present time my only other soft commodity recommendation is a bullish cotton trade which continues to move higher on a weekly basis, but these 2 commodities can go in opposite directions as they are grown in different countries.

TREND: LOWER

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

 

 

 

 

Wheat Futures—Wheat futures in the December contract is trading higher for the 2nd consecutive session up $0.02 at 5.10 a bushel continuing it’s bullish momentum as prices are hovering right near a 3 month high.

At the current time the large money managed funds are short about 19,000 contracts as they still believe lower prices are ahead as I strongly disagree with that scenario as I have been recommending a bullish trade from the 4.82 level and if you took that trade continue to place the stop loss under the 10-day low which now has been raised to 4.85 as the chart structure has turned outstanding.

Wheat prices are trading above their 20 and 100 day moving average as the trend is higher and if you take a look at the daily chart the up trend line remains intact so continue to stay long as I see no reason to be short at this time.

Fundamentally speaking there are concerns about the heavy snow that has entered several key states that grow wheat as that could possibly hurt production numbers and that is why you have seen higher prices over the last several weeks. At the current time I also have a bullish recommendation in corn & soybean meal as I think the grain market is headed higher despite the fact that the Chinese trade agreement looks to be postponed once again.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY: INCREASING

 

 

 

Cotton Futures—Cotton futures in the December contract experienced a wild trading session as prices are currently trading at 64.00 up 12 points, however prices traded as high as 65.85 on the night session as the volatility certainly has come back into this commodity.

I have been recommending a bullish trade originally from 61.50 while adding another contract Friday around the 63.60 level as adding to winners while cutting losses quickly is the way to trade over the course of time in my opinion.

If you took both of these trades continue to place the stop loss under the 10-day low which now stands at 60.08 as the chart structure will improve on a daily basis therefor the monetary risk will also be lowered. Cotton prices remain strong despite the fact that the trade agreement looks to be delayed once again as China is the number one importer of U.S cotton in the world & if we could come up with a agreement written in stone that would certainly push prices sharply higher.

Prices are trading above their 20 and 100 day moving average as the trend is to the upside while the large money managed funds are still short around 19,000 contracts as that could fuel even more short covering to the upside so stay long while placing the proper stop loss.

TREND: HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY: INCREASING

 

 

 

Soybean Meal Futures—Soybean meal futures in the December contract is currently unchanged at 310.8 a ton in a relatively quiet trading session in Chicago this Monday afternoon.

I have been recommending a bullish position from around the 306 level and if you took that trade continue to place the stop loss under the contract low standing at 2.91, however in next week’s trade I will place it at the 10-day low therefor the monetary risk will be lowered substantially as I want to give this trade soom room due to the increasing volatility.

Traders are awaiting this afternoon’s crop progress report as estimates of the soybean harvest is about 25% complete as there are still concerns about adverse weather in certain sections of the Midwestern part of the United States hurting production numbers as the 2019 soybean crop was terrible.

Prices are trading above their 20 and 100 day moving average as prices are hovering right near a 3 month high coupled with the fact that the uptrend line remains intact as I still believe higher prices are ahead as I also have bullish recommendations in corn and wheat as the grain market has turned bullish despite the fact that the trade agreement with China looks to be on hold.

TREND: HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY: INCREASING

 

 

 

Corn Futures—Corn futures in the December contract is currently unchanged at 3.98 a bushel as I have been recommending a bullish position from around the 3.80 level & if you took that trade place the stop loss under the 10-day low which now stands at 3.78 as an exit strategy.

The large money managed funds are short 90,000 contracts which is very surprising in my opinion as I think on any type of short covering that could fuel prices even higher with the next major level of resistance at the 4.20 level.

Corn prices are right at a 2 month high as we are trading above the 20-day but still below their 100 day moving average which stands at the 4.08 level as I think that could possibly be touched if today’s crop progress report comes out bullish as expectations are around 23% harvested as last year was 38% as we are still behind schedule due to adverse weather conditions.

If you take a look at any of the grain charts they are mirroring each other to the upside as we grind higher on a weekly basis as I also have bullish recommendations in soybean meal and wheat as I think the tide has turned so stay long and continue to place the proper stop loss as I will be looking at adding more contracts possibly in next week’s trade once the risk/reward becomes more in your favor.

TREND: HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY: INCREASING

 

 

 

When Should You Enter Into A Trade? I have been asked this questions on multiple times over the course of my 25 year trading career as I try to find the trend before entering into a bullish or bearish position as my rule states. I like to buy or sell a commodity when prices hit a 4 week high or low while still maintaining the proper risk management of 2% of your account balance on any given trade as it must also have excellent chart structure.

Trading with the trend I think is the most successful way over the course of time and having a 4 week high or low helps establish that the trend has started, now there are a lot of false breakouts and that’s why you must manage risk as picking bottoms and picking tops is a very foolish game over the course of time.

Generally speaking if prices hit a 4 week low or high that means the moving averages are also in that direction signalling that a trend is being formed.

 

 

 

Silver Futures—Silver futures in the December contract is currently trading higher by 13 cents at 17.67 an ounce as prices have been stuck in a 3 week consolidation looking to breakout to the upside in my opinion.

Prices have dropped about $2 since late August or 10% as I still believe the downside is very limited in silver as I will not take a short position as I will wait for a 4 week high to develop then a bullish recommendation could be at hand as I want the risk / reward to be in your favor. Volatility in recent weeks certainly has slowed down as the entire precious metal group looks to be consolidating except for palladium which hit another all-time high as I still think that commodity has room to run so be patient as we could be involved in a bullish position possibly in next week’s trade.

Silver prices are trading slightly below their 20 day moving average which stands at 17.80, but still above their 100 day as this tells you that the trend is mixed to sideways as another interesting leg-up could be developing.

Fundamentally speaking the precious metal prices are also seeing carry-over support from the Fed’s announcement last Friday that it will start injecting reserves into the banking system with monthly T-bill purchases of $60 billion per month to alleviate the recent squeeze in the short-term funding markets.

TREND: MIXED

CHART STRUCTURE: IMPROVING

VOLATILITY: AVERAGE

 

 

 

Copper Futures—Copper futures in the December contract is trading higher for the 3rd consecutive session up 20 points at 2.6300 as I will be recommending a bullish position if prices close above 2.6500 while then placing the stop loss under the 3 year low which was hit on September 3rd at 2.4820 as the risk would be $4,200 or $2,100 per mini contract plus slippage and commission.

Copper prices have been stuck in a 2-month consolidation as it does look to me that prices have bottomed as the volatility has been lowered significantly over the last several weeks as I don’t see that situation lasting much longer.

Prices are trading above their 20-day, however slightly below their 100 day moving average which stands at the 2.64 level as that could be broken in tomorrow’s trade.

At the current time I do not have any short recommendations as every trade is to the upside as I do think the commodity markets have bottomed so look to play this to the upside while maintaining the proper money management risking 2% of your account balance on any given trade as historically speaking copper is very volatile with high-risk.

TREND: MIXED—HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY: AVERAGE

 

 

 

Palladium Futures—Palladium futures in the December contract is up $14 at 1,684 hitting another all-time high looking to crack the 1,700 level in tomorrow’s trade and if you have been following any of my previous blogs you understand that I think 2,000 is a realistic number in the coming weeks or months ahead.

If you are long a futures contract continue to place the stop loss under the 10-day low standing at 1,605 as the chart structure will not improve until next week’s trade so you will have to accept the monetary risk at this time.

If you take a look at the daily chart the uptrend line remains remarkably intact as prices are still trading far above their 20 & 100 moving average as this is one of the strongest trends to the upside out of all the commodity sectors.

Volatility at the present time is average, however this can be one of the most volatile commodities in the world with huge price swings on a daily basis as this trade should only be taken with a large trading account as the trend is your friend so stay long and continue to place the proper stop loss as I see no reason to be short.

TREND: HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY: AVERAGE

 

If you are looking to contact Michael Seery (CTA—COMMODITY TRADING ADVISOR) at 1-630-408-3325 as I will be more than happy to help you with your trading or visit www.seeryfutures.com 

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