RJO Futures Website
March 4, 2014 Volume 8, Issue 5


Feature Article

2014 Outlook Insight Now Available!

RJO Futures has put together some of the best insight into where the markets have been and what might be ahead for 2014. These papers aren't just a quick overview, they average 20-pages of in-depth content and graphs. Papers include:

  • 2014 Market Outlook
  • 2014 Grain Outlook
  • 2014 Energies Outlook
  • 2014 Metals Outlook


Metals - Gold

Nick DeGeorge

In the early morning trade, April gold is down roughly $13 and currently trading at $1337.0. Monday, the shiny one extended its rally due to the turmoil in Ukraine and Russia's statement over the weekend. Since September gold has not seen prices like this, as the worst showdown between the West and Russia since the cold war escalates so does gold as a safe haven. Furthermore, gold will also find some support with reports that the Indian Trade Minister is working toward a reduction in gold import duties.

If April gold breaks yesterday's high of $1355.0, then it will be prone to extend its rally up to $1400.0-$1450.0 a troy ounce. Also, the 20-day moving average is currently crossing above the 200-day, which is an indicator that momentum will continue to the upside. I have highlighted these technical levels below.

If you'd like to learn more about futures trading or the metals market specifically, please contact Nick DeGeorge at 312-373-5316 or ndegeorge@rjofutures.com.

Apr '14 Gold Daily Chart

Source: RJO Vantage


Metals - Silver

After aggressive strength rallying in the silver market has brought multi month highs, the May silver market has come into weakness recently. All hope is not lost on this with this week's low of 21040 and last week's low of 21025 setting up as a potential double bottom. A double bottom creates stronger support on the market to hold in order to continue upward strength. In this case, if the 21025 low can hold this market could be setting up for another leg higher. From the high of August at 24780 the 38.2% retracement also sits at this level, creating a more complex story for the resuming silver bull.

Yesterday, most of the eurozone, UK and the US released their manufacturing data. The information was mixed with most of the numbers lower than the previous month, but still above 50 which indicated expansion. China, however, had another bad month with the HSBC manufacturing PMI reporting 48.5, one of the lowest prints since July. This economic information in the US has been mostly mixed with most of the poor information being blamed on the unseasonably bad weather. The FOMC continues to hold their stance that the economy has been improving and we're just hitting a rough patch. With the weather continuing to be poor and most of the recent economic information blamed on such tomorrow's ADP and Friday's non-farm payrolls might be difficult to get a good gauge if we're seeing weather follow through, or if employment continues to slow. The Beige book tomorrow will help gauge if the FOMC sentiment has actually changed since the previous meeting. Continued slowdown, weather related or not, could still indicate strength for the silver market as there's still uncertainty.

If you'd like to learn more about futures trading or the silver market specifically, please contact Mike Rataj at 800-453-4494 or mrataj@rjofutures.com.

May '14 Silver Weekly Chart

Source: RJO Futures PRO


Energies - Crude Oil


My thoughts and ideas haven't changed much from the last eView issue in that April crude oil is over extended on the upside. April crude oil has continued to work its way higher despite what I would consider to be bearish data. April oil posted a new recent high yesterday of $104.96, over $3.5 higher from the last eView and over $14 a barrel off its January 9th lows. Last week oil appeared to be losing upside momentum only to break higher (again) in yesterday's session - although today oil has given up almost all of yesterday's gains. The question still remains where does oil go from here? And I still believe oil will move lower over time, probable areas to me look to be a range of $90 to $100 a barrel. Current oil stock piles still appear more than ample; a look at tomorrow's EIA data should help to confirm this. Economic data still continues to be a mixed bag both here in the US and globally. Although looking at the S&P 500 chart one would think we have solved all of our countries problems, and of course we all know that's not true. Part of the reason for the recent breakout is due to the growing unrest between Russia and Ukraine and the possible implications that may arise in the region as well as other countries that are picking sides. Already the US and EU have committed to economic sanctions against Russia, which could mean less oil flowing out of Russia. BUT, once again, our stocks of oil appear ample, hence the reason I believe oil is selling off today as it appears traders realize the lack of impact this may really have on oil.

Short-term technical indicators still appear to be overbought, after almost a week and a half of tight market consolidation oil broke to the upside yesterday. At these levels the market might be approaching an area of serious resistance again. So the question remains how to play oil to the short side? I believe one way may be through a bear put ratio spread specifically buying one near the money put and selling three deeper out of the money puts. With this type of strategy traders don't really get "hurt" by the market moving higher – please call me for more details.

If you'd like to learn more about futures trading or the energies market specifically, please contact Mike Sabo at 312-373-5248 or msabo@rjofutures.com.

Apr '14 Crude Oil Daily Chart

Source: RJO Vantage


Softs - Sugar

Joe Nikruto

With this week's commentary it is difficult to find a new fundamental that is impacting the May sugar futures market. Stop reading now and return to your charts. Indeed, continuing dryness in Brazil but ample global supplies would lead one to believe that sugar may have rallied enough. But a quick look at the chart for May sugar futures paints a different picture. Last week's breakout above the 17.00 level inspired further buying from trend followers which took the May contract over 18.00 briefly, followed by an almost immediate retracement back to 17.00. Had the market been able to close near 17.00 technical traders would have viewed that as a rejection of the 18.00 level and the new longs would have been under pressure. In fact, the market closed at 17.69 on 2/26 and rallied again the next day to close at 18.07. Since then we have seen mild flagging action which could portend a move above 19.00. With the supply situation as it stands, ample and the demand situation highlighted by the Hightower group this morning as "sluggish" it is difficult to view the fundamental picture as bullish. But so far the chart says otherwise. Funds have been buyers all the way up and have more room to add positions. Unless we see May sugar futures erode below 17.00 it will be difficult for me to advise aggressively shorting this market.

If you'd like to learn more about futures trading or the sugar market specifically, please contact Joe Nikruto at 800-453-4494 or jnikruto@rjofutures.com.

May '14 Sugar Daily Chart

Source: RJO Vantage


Softs - Cocoa

May cocoa tried to move higher this morning, trading between 2972 and 2921 so far. Looking at the chart, cocoa is trading in some tight consolidation. Look for a breakout up due to supply and demand - supply remains tight with plenty of demand in the market. North American cocoa processors may be expanding their capacity which would be bullish on the demand side of the equation. There has been very little rain in Ivory Coast. Port arrivals in Ivory Coast are slightly ahead of last year's numbers. Technically, 2957 remains to be strong resistance; a close above this should attract the bulls. May cocoa continues to trade near or at the 9-and 20-day moving averages. Look to buy on dips and take profits at 3000 - this has proven to be a mental resistance line and attractive to profit takers.

If you'd like to learn more about futures trading or the cocoa market specifically, please contact Peter Mooses at 800-826-4124 or pmooses@rjofutures.com.

May '14 Cocoa ICCK14 Daily Chart w/ Moving Averages

Source: RJO Vantage


Softs - Coffee

Adam Tuiaana

May coffee prices continue to receive weather premium related to Brazil's hot and dry weather, which is expected to affect younger plant yields in the upcoming crop. However, it may be time for larger producers to start hedging. I believe we will begin to see, at least in the near-term, a slightly large correction to answer a very aggressive, large price explosion very soon. Producers will begin selling to lock in prices, and I believe this will take coffee prices down to at least 50% of this rally. Keep an eye out for a visit back down to the 160 level, which should be fairly strong support. Traders should consider put options to manage risk, and allow themselves time in the trade.

If you'd like to learn more about futures trading or the coffee market specifically, please contact RJO Futures Senior Trading Broker Adam Tuiaana at 800-453-4494 or atuiaana@rjofutures.com.

May '14 Coffee Daily Chart

Source: RJO Vantage


Agriculture - Grain

Stephen Davis

The world is breathing a sigh of relief as Russian President Putin has pulled back his troops off of Russia's southwest border with Ukraine. World stock markets have recovered most of Monday's loss and the soybean and grain markets are higher.

Crimea is still being occupied by members of the Russian military, but Putin has pulled back tens of thousands of Russian Troops that were conducting military exercises across SW Russia. It was the presence of these troops that caused worry that Putin could dig deeper into Ukraine and produce a war with a fledging Ukraine government.

Russian military have not pushed outside of Crimea and the area appears to be stable. Putin indicated that Russia will protect the interests of their countrymen and assets in the Ukraine. For now it appears that Putin just wants Crimea and the strategic ice free port of Sevastopol.

Ukraine was the breadbasket of Europe 100 years ago. Today grain exports are continuing normally and exporters are offering grain and sun oil for export out into July. This could be more business for US corn exports. We certainly have the corn to export.

Soy discovery is not part of Ukraine and hence the reason soybeans were the first market to sell off from the highs yesterday. There is certainly no guarantee, but I think the fundamentals are in place to trade old crop soybeans up to $15.

If you'd like to learn more about futures trading or the agricultural market specifically, please contact Stephen Davis at 800-367-7181 or sdavis@rjofutures.com.

May '14 Corn Daily Chart

Source: RJO Futures PRO

May '14 Soybeans Daily Chart

Source: RJO Futures PRO


Agriculture - Livestock

Jeff Gilfillan

Live cattle futures formed a bull flag in late February as the cash prices continue to build a hefty premium over futures. Today, cattle futures are following the strength of lean hogs (limit up) and are on the brink of developing another bull flag higher. Fundamentals remain very bullish and buyers, or lack of buyers, continue to chase the market higher. June / April spread while usually seasonally strong is one of the few bearish signals in the last two days. Look for this spread to hold over 8.50 as long as cash remains tight.

Prices across the board need to remain high to rebuild supply and packers need to adjust their capacity to prevent further losses. Live cattle supply concerns will not go away soon as heifer retention has gone up and beef cattle producers have more incentive to build weights. The SE states are showing signs of rebuilding stocks and should see good profits in 2014 at the feeder level.

Look for the markets to keep a strong underlying bid. The weekly front-month charts show value at 135.00 which could be a washout level in response to a test of the net record longs.

Hightower research posted an idea (02/18) for aggressive traders and last recommended selling April puts. Continue to follow RJOF research or contact us at 888-861-0382 for spec and hedge recommendations.

If you'd like to learn more about futures trading or the agricultural market specifically, please contact Jeff Gilfillan at 888-861-0382 or jgilfillan@rjofutures.com.

Live Cattle LT Monthly Chart Combined

Source: GeckoSoftware.com


Interest Rates

Eli Tesfaye

March bonds, notes and Eurodollar are all trading lower this morning with diminished safe heaven demands. The immediate Geo-political risk seems to be off the table this morning, at least for now, with comments coming out of Kremlin that the situation in Ukraine will not require military action. The equity markets did a nice "turn around Tuesday" reversal erasing all loses from Monday and adding some for good measure. For the remainder of the week I expect the economic reports to come in on the weaker side. If that is the case I expect the Treasury futures to firm up from these levels.

The 30-year Treasury bonds are posting higher highs and higher lows at least from the daily chart even with today's pull back. Treasuries remain firm unless it closes below 13209 which would signal a reversal to lower levels.

If you'd like to learn more about futures trading or the interest rates market specifically, please contact Eli Tesfaye at 800-367-7290 or etesfaye@rjofutures.com.

June '14 30-Year Treasury Bonds Daily Chart

Source: RJO Futures PRO


Equity Indexes

Greg Perlin

Definite risk on trade giving bullish reversal in this morning's opening trade. The E-mini S&P turned sharply higher this morning after Russia's Putin ordered troops involved with military exercises this week to return to base. The market took this as a very positive sign and with risk on the S&P has rallied to 1865 basis the March. Another positive development overnight is that the Nikkei is up around 2.7% and the September Yen is down a half penny at 9809. This coming Friday we get the monthly employment number which will be watched very closely to see if the bad weather is still being blamed for poor economic numbers or if we will see a real pick up in the economy.

Technically the market is bullish, staying within the framework of a bullish trend pattern. If we see contract highs above 1865, the possibility of 1909 comes into play. Key support on the E-mini comes at 1832 and resistance at 1865.

If you'd like to learn more about futures trading or the Equity Indexes market specifically, please contact Greg Perlin at 800-826-2270 or gperlin@rjofutures.com.


This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.


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