Where Are Commodity Prices Going ? Commodity Report 5-8-19

Where Are Commodity Prices Going ? Commodity Report 5-8-19
Where Are Commodity Prices Going ? Commodity Report 5-8-19

Corn Futures—Corn futures in the July contract are currently trading lower by 2 cents at 3.64 a bushel as wet weather continues to enter the midwestern part of the United States as planting is only about 23% complete versus the 5 year average of 36%, however the trade agreement with China looks to be on hold as that has been the main depressor of prices at this time.

A Bloomberg survey for 2019 production numbers are around 14.841 billion bushels as the USDA will release their numbers on Friday as we will not produce a record crop in the United States this year, however weak demand and weak commodity prices across the board continue to hinder corn in the short term.

Traders are keeping a close eye on the next 7/10 day weather forecast as we still look to receive extremely cold temperatures with more rain as I think there’s a chance that corn may have bottomed, however I’m still bearish soybean prices as I think corn acres will be switched into soybeans as that market remains extremely bearish in my opinion.

TREND: MIXED

CHART STRUCTURE: SOLID

VOLATILITY: INCREASING

 

Soybean Futures—Soybean futures in the July contract is trading lower by 4 cents at 8.26 a bushel continuing its bearish momentum as the state of Illinois is raining once again is it certainly looks like more acres will go into soybeans in 2019.

I have talked about soybeans and the grain market on multiple occasions as I still believe lower prices are ahead as 8.10 is the next target and if that is broken we could go down to 7.75 as weak demand an extremely high carry over levels should continue to put pressure on this market.

Chinese officials are headed to the United States as there might be a trade agreement come Friday, however the market is certainly anticipating that a comprehensive deal will not be done. Soybean prices are trading under their 20 and 100 day moving average as clearly the trend is to the downside and if you take a look at the daily chart the downtrend line remains intact so if you are short stay short in my opinion.

Large money managed funds are short a record amount of contracts in soybeans as they still believe lower prices are ahead as they have been correct as soybean meal and soybean oil are hitting fresh contract lows once again putting pressure on the entire sector.

TREND: LOWER

CHART STRUCTURE: POOR

VOLATILITY: INCREASING

 

 

Cotton Futures—Cotton futures in the July contract are trading lower for the 3rd consecutive session down another 70 points at 72.48 as prices hit a fresh contract low earlier in the session at 71.90 before rallying on some positive news about a Chinese agreement.

I have been recommending a bearish position from around the 75.74 level and if you took that trade continue to place the stop loss above the 2 week high which stands at  78.44, however the stop loss will be lowered on a daily basis as the chart structure is improving.

If you have been following my previous blogs you understand I thought prices would retest the contract low and that did occur today as I still think lower prices are ahead so if you are short stay short & continue to place the proper stop loss.

Cotton prices are trading far below their 20 and 100 day moving average as the trend clearly is getting stronger to the downside as ideal weather conditions and weak demand continue to hamper prices. Understanding technical analysis can be very helpful to your trading as this clearly developed a rounding top formation as that was the main reason why I recommended the trade.

TREND: LOWER

CHART STRUCTURE: IMPROVING

VOLATILITY: INCREASING

 

 

Sugar Futures—Sugar futures in the July contract are down 2.34% or 28 points at  11.67 hitting a fresh contract low as prices remain weak hitting a 7 month low this morning on negative carryover from Tuesday’s forecast from Conab that Brazil 2019/20 sugar production will climb by +17.4%.

I have been recommending a bearish position from the 12.25 level if you took that trade the stop loss has been lowered to 12.76 as the chart structure will improve on a daily basis therfor the risk will be reduced.

The next major level of support is all the way down at the September 27th 2018 low of 11.10 and I think if that is broken we could hit the multi-year low at 10.00 as the fundamental & technical picture remains bearish.

The volatility in sugar still remains low as we generally grind lower on a daily basis as prices are trading far below their 20 and 100 day moving average as the trend is lower as I am certainly not recommending any type of bullish position as this bearish trend is getting stronger and stronger on a weekly and monthly basis.

TREND: LOWER

CHART STRUCTURE: IMPROVING

VOLATILITY: LOW

 

 

TRADING THEORY–-This rule is extremely important and I witness it being abused constantly creating tremendous loses that are sometimes difficult to come back from.

Never add to a losing position because if the position continues to go against you and now you have added even more contracts which are all losing money your account will suffer loses much more than 2% and in some case adding positions and never getting out of a losing trade has wiped peoples trading accounts down to zero because of 1 or 2 bad trades.

Remember always play for another day you will have losing trades and the good traders manage losses and move on to the next possible trade.

 

 

Copper Futures—Copper futures in the July contract traded lower for the 2nd consecutive session down another 150 points at 2.7705 a pound right at a 10 week low continuing its bearish momentum as I still think prices look expensive. I have been recommending a short position from around the 2.8240 level & if you took that trade continue to place the stop loss above the 2 week high standing at 2.9235, however the chart structure will not improve for another 5 trading sessions so you will have to accept the monetary risk at this time.

Everybody is awaiting this Friday’s announcement on Chinese tariffs as that will certainly send tremendous volatility into copper and all sectors especially the U.S equity market as I am expecting a quiet trading session tomorrow.

Copper prices are trading under their 20 and 100 moving average as the trend is to the downside, however for the bearish momentum to continue we have to break May 6th low of 2.7415 in my opinion and then I think prices could accelerate to the downside so stay short & continue to play this to the downside.

As I have talked about in previous blogs copper is a very volatile commodity with large price swings coupled with large risk and if you trade a smaller account then trade the mini contract which is half of the size.

TREND: LOWER

CHART STRUCTURE: SOLID

VOLATILITY: HIGH

 

 

Orange Juice Futures—Orange juice futures in the July contract is sharply higher up 405 points at 94.95 closing right near session highs as today’s action was blamed on profit taking in my opinion. I have talked about orange juice for quite some time and I still remain bearish and if you’re short a futures contract continue to place to stop loss above the 10 day high which stands at 105.15 as an exit strategy, however the chart structure will improve on a daily basis as the monetary risk will be reduced.

Juice prices are trading far below their 20 and 100 day moving average as this trend is strong and if you look at the daily chart the down trend line remains intact, however for the bearish momentum to continue we have to break the contract low which was hit on May 6th at 90.60 in my opinion.

I have talked about juice in many blogs, but I think there’s a possibility orange juice prices to trade down to the 75 level as over supplies and excellent crops continue to hamper prices so stay short is I see no reason to be a buyer of this commodity at this time.

The soft commodities remain week as I also have short recommendations in sugar and cotton which were also lower in today’s trade as we await the decision on the Chinese tariffs as that certainly dictate short term price action.

TREND: LOWER

CHART STRUCTURE: IMPROVING

VOLATILITY: AVERAGE

 

 

S&P 500 Futures—The S&P 500 in the June contract settled lower for the 2nd consecutive session down about 4 points at 2886 as I had been bullish this market for quite some time, however prices have now hit a 2 week low as it is time to be neutral and let’s see what the China tariff situation brings about in the next couple of days.

The S&P is now trading below its 20 day but still above its 100 day moving average as the trend is mixed, however I still remain bullish this market as Disney came out with earnings today which were excellent and if they come up with any type of positive trade agreement this market will break the all-time high which was hit on May 1st at 2961 in my opinion.

The volatility certainly will remain high over the next week or so as I will sit on the sidelines and see what develops as you could be flipping a coin as nobody knows what type of agreement or non-agreement will develop.

There is a lot of nervousness in the commodity and stock sectors as we have not experienced this type of drama from China in the past as this could be a major let down as well as I’ve seen that before, but the uncertainty is too high at this time so be patient.

TREND: MIXED—HIGHER

CHART STRUCTURE: SOLID

VOLATILITY: HIGH

 

 

 

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