Recently in agriculture Category

In the last three days Crude oil has advanced nearly 6% lifting prices back above the 100 day MA. We missed this most recent move with clients and being we only see an additional $2-4 upside we would not suggest getting on the train at these levels. Pullbacks should find buyers between $79.50-80.00 in the September contract. Natural gas had some trouble getting thru the $5 level with prices correcting back to the 50 day MA today losing just over 4%. We suggest keeping your stops on futures just below that MA. For fresh option entries we would be buying November 50 cent call spreads. On a move above today's highs we would also suggest moving your October option positions out to November.

I do not trust the up move in indices but as I said to a client today that and a nickel will get you a piece of gum. Indices are above the 200 day MA and until we get back below those levels the bulls are in the driver's seat. Aggressive clients will fade rallies in the S&P as long as prices remain below 1135 in September. Some clients hold September Es puts expecting 1000-1025 into the fall. At the moment they are down on the trade with the last two day's activity. We see the next upside resistance in the Dow just above 10800 and in the S&P at 1135-1140. Bearish engulfing candle in October sugar today with prices closing 0.90% lower. We anticipate a trade back to 17 cents in the next few weeks. December cotton failed to get above 80 cents today; aggressive traders could short futures with tight stops or buy December put options. December coffee closed nearly 5% off its highs; is an interim top finally in?

Lumber is back above the 50 day MA; we expect a gain of 10% in the coming weeks. We expect to see a pull back in lean hogs, live cattle and feeder cattle but at the moment do not have any exposure with clients. Pork bellies which we rarely trade are trading at an all time high, brace your self for higher bacon prices. Tomorrow the test will be if gold can close above the 100 day MA; in December at $1187. One would think with outside market influence today gold would've seen better performance. When markets should move higher and they do not that generally means they will move lower...stay tuned. September silver gained 2% today solidly above the 50 and 100 day MA's. Those levels which had previously served as resistance now will act as support. We suggest moving trailing stops up from $17.40 to $17.80 on futures. Continue to buy December call spreads as this leg could lift prices back near $19.50. We suggest booking profits on agriculture longs as a correction appears to have begun today. That means take profits in corn, soybeans, soy meal and wheat and look to re-enter longs on a set back and be positioned long ahead of the 8/12 USDA.

We do not expect prices to get back to the levels from one month ago but after a 12-40% appreciation even bull markets need a rest. The dollar index broke the 200 day MA today but we think we're over due for a "dead cat" bounce. Clients cut losses on all their futures in the Swiss franc today; this one stung as clients ended up losing just over $3,000 per contract including all hedges and fees. Option traders remain in puts in the Swissie and Euro currently carrying a loss. We cannot seem to figure out the currency market at the moment so we will refrain from new recommendations until we get a clearer picture, perhaps three Central bank meetings this week will shed some light?

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

ICE December cotton futures prices on Tuesday hit a fresh 4.5-month low of 72.96 cents a pound. In five weeks' time the cotton market has shed 6 cents (600 points) as prices are in a five-week-old downtrend on the daily bar chart and the bears have downside technical momentum. The next downside price objective for the cotton market bears is to push and close December futures below solid technical support at 72.50 cents. Below that lies chart support at 72.00 cents. For the weakened cotton market bulls to begin to regain some fresh upside near-term technical momentum to suggest that a near-term market bottom is in place, they will have to push and close December futures prices above strong chart resistance at 75.00 cents a pound. Below that price level does lie technical support at 74.00 cents and 74.50 cents. Stay tuned! Jim Wyckoff

December corn futures at the Chicago Board of Trade on Monday morning were under some modest profit-taking pressure from recent gains that on Friday saw prices hit a fresh two-month high of $3.98 a bushel. The corn market bulls do still have some near-term upside technical momentum as December futures prices have rallied around 50 cents a bushel from the contract low of $3.43 1/4 that was scored on June 29.

The next major upside price objective for the corn market bulls is to produce a close in December futures prices above major psychological resistance at $4.00 a bushel. A daily close above the key $4.00 mark would then open the door to a challenge of strong technical resistance at the March high of $4.15 1/2. Above that level lies solid chart resistance at the $4.25 mark, basis December futures. The corn market bears would begin to gain some fresh near-term downside technical momentum by producing a close in December futures below chart support at last week's low of $3.78 1/2. Below that lies solid chart support at the $3.70 level. Stay tuned! Jim Wyckoff

As long as indices tread water or move higher money should flow back into commodities and out of Treasuries and the US dollar. Crude followed thru today and now has the 20 day MA in its sights. As we said yesterday as long as equities move higher we think we could see Crude appreciate $3-5 relatively quickly. As of this post August is higher by $1.70. For the time being we would treat Crude as a range trade with resistance around $80 and support around $70. We advise position traders to remain long as long as August holds the $73.40 level. With an additional $3-4 move north in crude we should see the distillate move approximately 15 cents. August natural gas broke $4.50 today; futures traders should take off their longs at a loss. We continue to like buying clients October 50 cent call spreads but they may get clipped a little in premium in the coming sessions. That being said scale into the trade and do not try to outsmart the market.

Sideways congestion in indices was expected after yesterday. We're looking to be a seller from higher levels in the S&P. It is my opinion we will see upside surprises on earnings that will paint a false hope allowing our clients to get short closer to 1100 in the coming weeks. We worked out of some of our client's longs in October sugar today and hope to see a higher trade tomorrow and to work out of the remainder. Inside day in cotton today; clients need a trade at/or around 73 cents in December to get filled on their gtc profit orders. OJ was lower by 5.43% today. Another 7-10% decline and we may have an interest in buying November calls for clients. Aggressive traders can continue to short Treasuries with stops above the recent highs. As we said yesterday we're looking to lighten our clients exposure in currencies before stepping into September NOB spreads.

Trail stops up on your live cattle longs; we remain bullish but prices have appreciated nearly 4% in the last three weeks and nothing moves in a straight line. Buyers were able to support silver again today with September closing flat on the day but remaining above the 100 day MA. We suggest longs in September futures and purchasing December call spreads. In our opinion gold could go either way; we would use a settlement above $1216 or below $1173 to signal the direction of the next leg. September copper failed to get above the 50 day MA today; a level that served as resistance last week as well. We would expect a trade above $3.06 to lead to a probe of $3.20-3.25. We are satisfied with the performance in grains of late but the problem is we're anticipating a setback to add to longs for clients and to remove previously placed hedges.

Tomorrow morning's USDA supply and demand report could deliver the set back we've anticipated. Use setbacks in agriculture to be a buyer. The Loonie continues to work higher and we suggest buying dips. The Swissie which some clients are currently short continues to stubbornly inch higher. We still anticipate a trade back to .9200 but if we do not roll over soon we will cut losses. As expected the BoE left rates at 0.50% and the ECB at 1.0%.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

December Chicago soft red winter wheat futures at the Chicago Board of Trade on Tuesday hit a fresh seven-week high of $5.53 1/4 a bushel. Prices are in a four-week-old uptrend from the early-June contract low of $4.72 3/4. The wheat market bulls have recently gained fresh upside near-term technical momentum to firmly suggest that a market bottom is in place.

The next near-term technical objective for the wheat market bulls is to push and close December futures prices above strong chart resistance at the May high of $5.58 1/4 a bushel. A close above that key technical level would then suggest prices can continue to trend higher in the coming weeks. Wheat market bulls would begin to fade again if December futures prices closed below solid chart support at the April low of $5.07. Near-term technical resistance is located at $5.50 and then at Tuesday's high of $5.53 1/4. Support is seen at $5.33 1/2 and then at Tuesday's low of $5.25 3/4. Stay tuned! Jim Wyckoff

Very suitable fireworks in the markets as we celebrate our Independence. Be safe we will be back Tuesday...enjoy your long weekend. We feel oil could have another 3-4% downside at the most before we get a bounce higher. As we voiced in recent posts we expect the $70 level to act as solid support in August. If next weeks trade finds buyers we should have some bullish plays in September or October futures and options.

Inside day in natural gas wiped out most of the previous days gains. Aggressive trades could have used today's setback to buy as we will stay long with clients as long as $4.50 supports in August. Our featured play is call spreads in October with clients. From here we expect indices to bounce; we view this as a tradable bottom but nothing more. On a bounce to 1060-1070 in the S&P we will be shopping bearish plays for clients. October sugar was higher by 2.58% today's closing at a six week high. On a run above 17 cents we see resistance at 17.45 followed by 18.35. If lucky enough to see that we advised clients to exit ALL remaining longs. On a settlement below 16 cents early next week our upside objectives would need to be reduced. December cotton closed lower all five sessions this week; our 74 cent objective is getting closer.

Aggressive traders that are ok trading illiquid markets could lightly buy November lumber as an interim low is likely in. Though volumes were light yesterday could prove to be an interim top in Treasuries; on confirmation next week clients will be looking at NOB spreads (short 30-yr bonds/long 10-yr notes). Continue to accumulate longs in December live cattle.

It was encouraging today in the metals to see little down side follow thru. Gold was slightly higher but unable to close above the 50 day MA. We will let the dust settle before making any calls. Trade lower was rejected in silver with prices closing just above the 100 day MA; in September at $17.83. We suggest buying silver as prices have come down 7.5% this week. Use set backs in corn, wheat and soybeans to be a buyer as we think the lows are in. Our favorite remains corn as we suggested clients to buy December next week on any retracement. As for currencies we have three ideas, long the Loonie, short the Yen and short the Swissie. For specifics do not hesitate to contact us.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

After making a new high Crude failed and closed almost $2 off its' intra-day high. We suggest exiting all remaining longs as we suspect a set back. We anticipate a challenge of at least the 20 day MA; in August that level is $75.15. We're not suggesting getting short but rather moving to the sidelines. Natural gas finally filled the gap we'd been calling for today; at $5.865 on the August contract. Aggressive traders could scale into longs with tight stops though they'd be catching a falling knife. The more prudent move may be to see if the trend line at $4.80 holds. In a perfect world $4.55-4.65 in August serves as the ideal long entry.

A failed rally in indices as the 50 day MA acted as stiff resistance...this may sound familiar as we forecast this exact scenario in recent posts. From here aggressive traders could fade rallies in the S&P and ES. Today most clients started to buy September ES puts. First target in the futures is 1075 followed by 1045. October sugar gained 3.77% today closing just under 16 cents. We continue to feel this contract is a buy near 15 cents and a sale near 16.50 cents. Traders still holding October longs COULD get a push to 17/17.50 but if that lucky we would suggest exiting the trade. We continue to suggest selling December cotton at these levels anticipating a trade back under 75 cents is in the future.

September lumber was lower by 4.28% today reaching a seven month low. Bottom pickers this commodity should be on your radar. We advised clients to exit their NOB spreads at a small profit this morning when 30-yr bonds could not breach 122′20 and it appeared equities were rolling over as to their inverse relationship. Apparently the market liked the Cattle on feed report as cattle were well bid today gaining nearly 1%. We continue to suggest bullish exposure in December live cattle. Lean hogs were higher by 2% today; prices have retraced 61.8% in the last two weeks. We're not suggesting shorts yet but our bullish objective was obtained today.

Key reversal in the metals today; we liquidated ALL clients bullish gold and silver today. As for gold if the trend line gives way at $1235 we could see $1155-1175 soon there after. We will be looking to re-establish longs for clients after the coming wash out (as we see it). Silver made a new high and failed forming a bearish engulfing candle on the daily chart. We expect $17.80 and potentially $17.25.

Corn is allowing us to lift our July hedges for clients and get more length in the September options and December futures. As we've said use this set back as a buying opportunity. Trail stops on your longs in soybeans and soy meal. We would need to see $2.40 in July oats to hit clients profit objectives in their July $2.50 oat puts; current price $2.64′4. The US dollar likely bottomed today and if indices move lower the dollar should gain this week. Our upside target is the 20 day MA at 87.30. Clients were advised to cut losses on their Yen puts today; a loss of $328/per including our fees. Our featured currency play is bearish exposure in the Loonie with clients via futures and options expecting a trade to .9550 in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

A supportive inventory report aided energy prices today with Crude oil and the distillates putting in another positive showing. We feel prices are overdue for a setback so we advise tightening up stops and lightening up on longs. On a pullback we would not expect much more than $3-5. At that point we would be a buyer again for clients. With natural gas prices unable to push thru $5.20 this could be day one of the pullback we had anticipated. A 38.2% Fibonacci retracement would also fill the gap from Friday we mentioned yesterday. We will be looking to be a buyer of September for clients if prices come off an additional 4-6%. We expect another 20-30 points higher in the S&P but think the 50 day MA at 1140 could be a significant hurdle.

If October sugar trades above 16.50 in the balance of this week we will be working out of most of our clients remaining longs. Risk to reward we still like the idea of short exposure in December cotton with tight stops or put options. September 30-yr bonds will close below the 20 day MA for the second day in a row but we've expected more of a breakdown. It may take the last gasp of air from sock traders to break Treasuries. Clients remain in bearish positions expecting 120/121 in September 30-yr bonds. Continue to work long December live cattle via futures and options. We suggest light exposure ahead of Friday's Cattle on feed report and then we will be adding to positions next week as long as we get no curve-balls on the report.

Sideways congestion in gold and silver as metal traders are trying to figure where from here? If we see new highs in gold and buying does not come into the market we will be offsetting those positions in the next few sessions. Stay tuned and we will let you know the outcome if we make a move for clients. Most clients have bullish exposure to silver but are growing impatient of the non-action. Those carrying large positions long corn we advised to establish some hedges or to lighten up on their longs taking some money of the table. We think there is more upside but we could get a setback in the short term.

We pulled back the order on the wheat we mentioned in recent commentaries; buying CBOT wheat and selling KCBOT wheat. Not because we do not like the trade...we do. We need to exit other positions before feeling comfortable gaining more exposure for clients. Traders could have been filled at our suggested limit today (25 cent premium to KCBOT). We suggest risking 8-10 cents looking to make 20 plus cents on the spread. Clients remain long the Euro expecting 1.2600, short the Yen expecting a trade below 1.08 and we put on a trade in the Loonie for some clients today. We think the upside should be capped at .9850 and could see prices give back after the 4.25% appreciation in the last week. Clients went short futures and sold puts against their position with an initial target of .9600.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.