RJO Futures Website
June 10, 2014 Volume 8, Issue 12


Feature Article

Wall of Supply for Soybeans?

Producer Hedge Strategies for the 2014 and 2015 Crops

June 5, 2014, RJO Futures exclusive report from The Hightower Report

In the stock market, there is an old saying, "don't fight the tape." For grain traders, the saying is "don't fight the weather." The weather outlook for the next several weeks looks ideal for growing soybeans, and this suggests a "sell shallow rallies" mentality will develop for grain traders. The June 30th Planted Acreage and Stocks reports from the USDA is the next key volatility event for the soybean market, but the key focus in the weeks ahead of that will be the weather. We think that given the great start to the crop, soybean producers-hedgers should look to…
Full article


Metals - Gold

Nick DeGeorge

In the early morning trade, August gold is currently up $6 and trading at $1,260.0 an ounce. It looks like some profit taking, along with overnight news out of China that their inflation data came in a little better than expected has provided a lift to this market. As of late, it seems like gold is currently trading along with the US dollar and equities, hinting that a positive economic tone is providing a risk on appetite, which seems good for gold. Furthermore, the recent South African platinum strike talks might also be lending support to the shiny one for the near-term.

If we analyze the August gold chart, you can clearly see that gold is once again in a down trend. Gold broke major support back on May 27th breaking $1,268.0, which has put the bears back in control. For the bulls, I would like to see August gold back above $1,300.0 a troy ounce to get any kind of major buying momentum to the upside.

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.

Aug '14 Gold Daily Chart

Source: RJO Vantage


Metals - Silver

Most emotions seem to have left the silver market as it continues to trade in some of the tightest monthly ranges in years. One of the reasons can be the tight watch that the central banks have on the markets. Another potential reason could be the economic information here in the US that's been mostly positive. Earlier in the year of course the weather was the continued blame for most economic weakness, but as the weather improved, conveniently, the economic information has mostly improved. On Friday we received some great news on the employment picture. The headline number reported that 217,000 jobs were created. The most positive fact about this number is with this report the US is now 98,000 jobs above the peak. There are still some Labor Force Participation Rate and full-time/part-time kinks to be worked out, but this is in the right direction. How does this effect silver? The fact that more people are working should provide some extra stability to the economy and as we've seen in the chart it has helped put downward price pressure on this market. The housing market and manufacturing continue to slowly improve and if a negative print on GDP can't bring this market higher, what will?

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.

Jul '14 Silver Daily Chart

Source: RJO Vantage


Energies - Crude Oil


July oil has enjoyed a nice sell off from a high of $104.50 on May 27to a low of $101.60 on June 5 and today back up to a high $105.06 – what a ride we have seen! After a small consolidation period, the market has broken out the last two sessions to make a new contract high. Current oil stock piles are still running high for this time of year, but last week we did see a draw of 3.4 million barrels. This represented a year-over-year change of -1.7 million barrels, leaving the 5-year average at 373.5 million barrels and the total stocks at 389.5 million - just about 2 million less than the all time high for this time of year. This week traders appear to be focused on the stronger than expected export data out of China over the past weekend and this week's OPEC meeting. Saudi Arabia could step up production levels to make up for lost production out of Libya. The situation in Russia and Ukraine has taken the back burner for now, conflict still continues in Libya. Interesting to note that US oil exports continue to rise. In March 2014 the US exported approximately 246k barrels of oil per day, the highest level of exports in 15 years. This was mainly due to rising oil production which stood at about 8 million barrels per day in February 2014.

Short-term technical indicators appear overbought after the recent climb higher. If today's upside breakout fails this could signal the potential for a nice pullback. With the current supply situation and overbought technical indicators this could be the time to establish a position to the downside. Please call me for more details if you would like to discuss some strategies.

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.

Jul '14 Crude Oil Daily Chart

Source: RJO Vantage


Energies - Natural Gas

Bill Moore

Greetings. The July contract for natural gas started the week on a much more negative tone. The rally seen last week has all but given back its gains. The last traded price on GNGN14 is down 6.7 cents @ 4578. (10:51 CDT) Markets are looking like they could be poised for continued downside. With relatively mild temperatures, it's looking like another strong injection could be in store on Thursday. Last week's injection of 119 BCF was up from the week prior. Current supply sits at 1,499 BCF which is still below the 5-year average.

We really haven't seen much of a break in either direction for prices in the last five months. 4300 has proven to be solid support and 4950 is the roof of this channel. This July contract was relatively immune to the extreme volatility seen in Jan/Feb. If you're looking to add on a swing trade to the downside, be weary of that 4300 low which is also now where the 200-day moving average is sitting. Yesterday was an outside day down, which is a bear signal. Contact me you'd like to learn about very specific seasonal trades in natural gas.

If you'd like to learn more about futures trading or the energies market specifically, please contact Bill Moore at 800-422-6610 or wmoore@rjofutures.com.

Jul '14 Natural Gas with moving averages, MACD and RSI.

Source: RJO Vantage

Softs - Sugar

Tarik Husseini

The current consensus on sugar is that continued weakness may prevail in the short term. As my esteemed colleague Joe "sweet tooth" Nikruto, the unrivaled authority on sugar, mentioned in the last eView, there is a band of support at the 16.80 level for the July futures contract. That neckline support, formed in Jan-Feb of this year, has held for the time being. This is providing solace to the overindulgent speculators who can't satisfy their appetite for the sweet stuff. As of this morning, Hightower notes that non-commercial and non-reportable combined traders held a hefty net long position of 164,458. However, the demand picture is murky and if the aforementioned support band is taken out, a rather painful toothache may ensue. I could see a close below 1662, the 8/22/13 low in the July contract, as a catalyst for long liquidation. On the flipside, as illustrated by the chart, sugar is in a 3+ month channel and the lower reaches of the channel are holding for now. The natural point of rebound would be the 1800 level if the channel holds. Thus, in a nutshell, should July sugar fall through the bottom of the channel and close below 1662, look for significant follow through to the downside.If you are inclined towards the upside, buy sugar in this band of support with a stop below the bottom of the channel and the 1662 level. As a backyard beekeeper, and one who hasn't used sugar in over a year, I will have to recuse myself from any further articles on the subject. It's back to "sweet tooth"next issue.

If you'd like to learn more about futures trading or the sugar market specifically, please contact Tarik Husseini at 800-672-0664 or thusseini@rjofutures.com.

Jul '14 Sugar Daily Chart

Source: RJO Vantage


Softs - Cotton

Erik Tatje

Cotton continues to remain under pressure after hosting a short-lived corrective bounce and the big question now for traders will be whether or not price will confirm the downtrend by making a new low. The 84.00 level appears to be a potential level of support in the cotton market, which could potentially provide a base for any attempt at a corrective rally. With that being said, a fresh low below 83.86 would reconfirm the negative sentiment in cotton and validate the current bearish momentum. The 20-day moving average remains below the 50-day, confirming the recent short-term bearish trend in cotton. Traders should continue to look for opportunities on the short side of this market until price action can prove itself above the 88.60 swing high.

If you'd like to learn more about futures trading or the cotton market specifically, please contact me directly at 800-826-1120 or etatje@rjofutures.com.

Jul '14 Cotton Daily Chart

Source: RJO Vantage


Softs - Cocoa

Technically, September cocoa has turned bullish as we trade along the 9-day moving average and continue to close above it. Cocoa spent the second half of May in the green and broke above a key resistance level – 3050. Some may say we have reached overbought levels, but this commodity has continued to climb higher for about a year. Pullbacks have proven to be buying opportunities. In the short-term, without any supply concerns we may see some consolidation. Calm weather with good growing conditions will be something to keep an eye on. Strong output levels from Ivory Coast will take center stage for now. Some analysts have forecasted record levels of production. Look for resistance at 3090 and consider buying futures on momentum as we attempt to break above 3100.

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.

Sep '14 Cocoa( ICCU14) Daily Chart w/ Moving Averages

Source: RJO Vantage


Softs - Coffee

Adam Tuiaana

Lack of "new"- news on the Brazilian crop damage (or lack thereof) has forced longs to liquidate positions. Initially the downfall to July coffee was precipitated by producers locking in prices at the 200 level, but now we've seen follow-through selling on strong momentum which possibly means more short speculators are now involved. We shall see the affects of how bad the hot and dry weather truly was this season, and the results will either lift the market heavily or force a continued selloff.

On the technical side, July coffee recently violated the critical low of 16795, which should have longs moving to the sidelines. Some traders may see significant value at this level, and I wouldn't disagree with taking a long position, however take a measured approach to manage the risk. Call or email me for a specific strategy.

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.

Jul '14 Coffee Daily Chart

Source: RJO Vantage


Agriculture - Grain

Stephen Davis

The USDA considers the corn crop to be planted. It is 92% emerged compared to 90% on average. Many in the trade were expecting corn crop conditions to improve, however good to excellent ratings fell 1% to 75%.That is still an excellent start to the planting season and it is hard to sustain super high condition ratings. Analysts have noted there is little correlation between beginning crop conditions and final yield. However it is positive to get the crop in the ground and off to a good start. The northern Corn Belt will be the laggard this year in corn production. The "I" states (Illinois, Iowa and Indiana) have a lot of good to excellent corn at this time. A steady grind lower is anticipated with normal Midwest weather. Any 10 or 15 cent rallies will offer new selling opportunities.

There is nothing today from the USDA on new sales or cancellations of soybeans. The market seems very unconcerned and complacent on tomorrow's crop report. The trade knows that upcoming weather development will move the market more than early season paper projections. That being said,World Agricultural Supply and Demand Estimates (WASDE) analysts tomorrow may be forced to make some hard choices with regard to US soybean balance table. New crop soybeans are being supported by old crop soybeans. I think this will be the key to tomorrow's WASDE report; the US soybean2013-2014 supply and demand updates.

Weather trumps everything this time of the year. We are one month away from corn pollination and two months away from soy pollination. Hence, soy should hold together better than corn does in the days and weeks ahead.

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.

Nov '14 Soybeans Daily Chart

Source: RJO Futures PRO

Dec '14 Corn Daily Chart

Source: RJO Futures PRO


Agriculture - Livestock

Jeff Gilfillan

As mentioned in previous blogs, high prices in the feeders are eventually going to rollover into what packers can and do charge. Retail prices should stay firm as margins are still attractive and demand is there. Export markets are also contributing to higher prices.

Look for long-term support in live cattle futures to continue to hold at 137.00 with resistance at 167.00. Feeder resistance hangs at 215.00 with support at 181.50.

See RJO Futures research to access daily reports on the livestock sector available in report and audio format with speculative and hedging recommendations alongside both fundamental and technical research.

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 Futures - Monthly LT

Source: GeckoSoftware.com

Feeder Cattle Futures - Monthly LT

Source: GeckoSoftware.com


Interest Rates

John Kennedy

Senior Market Strategist John Kennedy gives you his interest rate futures commentary for the week. The bonds traded higher in the overnight, but have turned back towards negative as the US came into the stock market open this morning. As economic indicators improve, pressure increases in the notes and bonds creating a bearish bias. There's also a supply of new Treasuries coming into the market, adding to the pressure. John gives traders some technical analysis and some fundamental events to watch.

If you'd like to learn more about futures trading or Interest Rates market specifically, please contact John Kennedy at 866-397-8194 or jkennedy@rjofutures.com.



John Caruso

The US Dollar has tracked higher for the past three straight sessions to an almost four month high of 80.91 for the September futures contract. But let's not get too far out in front, as it was a shift in the ECB's monetary stance last week that has the Euro currency falling out of favor and investors running back to the USD trade. The ECB invoked a .10% cut in its benchmark rate from .25% to .15%, which is expected to help incentivize eurozone business loans. However, while interest rates come down, and more lending ensues, this in turn expands the euro zone money supply, which decreases the value of the base currency (EUR/USD). So in fact, the USD is rising not entirely for the "right" reasons (economic growth, expansion, and or inflation). With the Federal Reserve on deck, we're expecting more "dovish" monetary policy, more talk of low inflation outlook, and a tepid housing recovery, etc. This type of FED commentary has been bearish for the USD for the past several meetings, and I'm expecting more of the same this go around. Near-term dollar resistance comes in at 81.00 for the Sept contract. Sustained action above 80.60, keeps the dollar bulls in charge, a break thru 80.35, should open up selling back to 79.92. Good luck!

If you'd like to learn more about futures trading or the currencies market specifically, please contact John Caruso at 312-373-5286 or jcaruso@rjofutures.com.

Sep '14 U.S. Dollar Daily Chart

Source: RJO Vantage

Equity Indexes

Greg Perlin

The economy the past few months has been positive with many reports showing growth and a much improving labor force. Last Friday, employment came out at 218K new jobs and the unemployment rate came in at a stunning 6.3% which has continued to fall as more jobs are created. The S&P continues to grind higher and yesterday made a contract high basis the June contract at 1954.75. Another positive for the S&P is the stock market in China that also continues to grind higher with help from a weakening Yen.

Technical outlook for the June S&P futures is bullish following last week's acceleration higher and signals for moves to 1970, as well as the potential for a blow off run if trade powers beyond 1982.50. Any corrections should only last 2-3 days at this stage of the drive and likely bounce from last week's minor congestion at 1922. A close under 1916.75 will alert for a reversing turn.

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.

Jun '14 E-mini S&P 500 Daily Chart

Source: RJO Vantage


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