RJO Futures Website
June 24, 2014 Volume 8, Issue 13

 

Feature Article

Upcoming RJO Futures Webinars

Crop Report – June 2014 Webinar

June 26, 2014 at 2pm CT

Register now! We are proud to announce this exclusive Crop Report Webinar presented by Dave Hightower of The Hightower Report. Join us as Dave dives into the much anticipated June 30th USDA Stock/Acreage Report. We'll look at trends and strategies around this report so you can be better prepared with your trading plan.

Will the rough winter and late planting affect the Planted Acreage?
How will current crop conditions effect price for the 2014/15 season?
What risk management tools do you use in a downtrend?
Will new crop soybeans start trading their own fundamentals?

Get your answers to these questions and many more!

 

Metals - Gold

Nick DeGeorge

In the early morning trade, August gold is currently extending its recent rally and trading at $1321.5. Ever since Fed Chairman, Janet Yellen's comments last week that interest rates are here to stay, prices have surged the most since September of 2013. The move higher in August gold this morning should give the bull camp the edge after positive Chinese news, chatter of an end to Indian gold import duties, and a little bit of a weaker US dollar.

If we take a look at the daily August gold chart, you'll clearly see that last Thursday, June 19thit broke some major resistance levels and rallied with great momentum, nearly $50. The next major resistance area is the April 14th high of $1331.0. If the shiny one can break above and hold that level, look for it to make its way back up to the March 17th level of $1392.0 in the coming summer months. I have highlighted all technical levels on my daily August gold chart 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.

Aug '14 Gold Daily Chart

Source: RJO Vantage

 

Metals - Silver


While the trend has been considerably bearish since March, the tide appears to finally be turning. Based on the charts I have been bearish this market, but when new developments come into the market, traders need to adjust their thinking. Thursday's price action in the July silver market saw this market up over 100 points at the high with gold rallying 46 points from its low. As shown on the red horizontal lines on the first chart below these are significant closes above resistance. The next strong level for this market is 22055. Considering the events that are unfolding in Iraq it is possible traders wanted to put their funds into a safe haven before the weekend. As much as I'd like to close my eyes and be bullish, I see the last time this market rallied 100 points in a day and shortly after a high, this market sold off. I'm not a fan of calling tops so I'm not trying to do that, but there are some thoughts to keep in mind. The secondlonger term chart below shows the silver market has spent almost a year below 2500. So while Thursday's move is significant, we must keep in mind that there is still a long way to go for the longer term bull to continue. In the interim, selling calls against long positions could be a way to try to take advantage of a market's slow ascent higher. Mini contracts can be a way to get 1/5th the exposure of a full sized contract and a potential way to limit the risk. Keep an eye on the weekly economic news and anyoverseas developments for a shorter term direction in the market.

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 Futures PRO

Jul '14 Silver Weekly Long-Term Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

Recent events in Iraq have caused a surge of fear premium to flow into the crude oil market. This coupled with the equities market continuing its march higher has helped pushed oil prices higher. At some point though cooler heads should prevail and I believe oil will have a small pullback. August oil has moved from a low of $100.93 on June 5 to a high of $107.45 on June 23rd which appears it may not be able to hold. Current oil stock piles are still running high for this time of year, but last week we did see a smaller draw than expected of .579 million barrels. The 5-year average stands at 372.8 million barrels and the total stocks at 386.3million. I mentioned the OPEC meeting in the last eView the coming, well no surprises out of there – production levels to stay on track and Saudi Arabia vowing to step up production levels to make up for lost oil out of Libya. The situation in Russia and Ukraine remains but is not center stage. Interesting to note that On May 9, Gulf Coast crude oil inventories reached a record level of 215.7 million barrels and remain near historically high levels. This mainly stems from oil flowing more freely from the Cushing, Oklahoma storage hub to refining centers on the Gulf Coast. If or when this starts to slow and oil again begins to build up in Cushing's – prices could come down sharply.

Short-term technical indicators appear overbought. Yesterday August oil appeared to fail with a breakout to the upside and the market had follow-selling through most of this morning. If we see a close today below yesterday's low, it's possible to see additional selling pressure.

While I still recommend looking to play oil on the downside, the recent geo-political events have made it difficult. Using the proper strategy such as a put option ratio spread could help you position to take advantage of it. 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.

Aug '14 Crude Oil Daily Chart

Source: RJO Vantage

 

Energies - Natural Gas

Bill Moore

Natural gas prices today are bouncing off of a six day sell-off with a last traded price of 4526 on the August contract. If you read my last article, you may remember that I mentioned the range between 4350 and 4850 that has developed throughout 2014. With relatively mild weather this spring we have had to rely more on technical indicators than anything. Air conditioning usage has certainly been low for the month of June. Storage concerns are declining with strong 100 + BCF injections for the last few sessions. Last week's injection came in at 113 BCF, bringing total storage to 1719. Seasonal trading patterns will be important in the coming weeks. Please contact me to discuss one specific trading idea I have in mind.

We are a bit oversold in this market, but the short-term trend here is downward. The 4300 area has proven to be major support this year. Any sort of breakout below there should be seen as a major bear signal as the 200-day moving average is lurking right in that range. Resistance is at 4625 and 4850 above that.

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.

Aug '14 Natural Gas Daily Chart with RSI, Moving Averages and MACD

Source: RJO Vantage


Softs - Sugar

Joe Nikruto

"It's like déjà vu all over again." One of Yogi Berra's finest quotes. I can't help but feel that way watching the sugar futures market. Sugar has been churning from near 19 down to 17.50 basis the now front month October contract since March. Interestingly, the July sugar futures chart shows more of a downward sloping flag formation while the October chart has moved in a horizontal fashion. This demonstrates what in my opinion looks like longer term support for further out months as the trade anticipates a reduction in available supply. Much like Yogi, I can't help but feel that I have been here before. And to complicate the picture it looks like 'hot money' also known as hedge funds or managed money is making bullish bets on fundamentals. Fundamentals? This is not the first time we have seen a commodity with even a modicum of supply disruption story get goosed by hot money. In hogs and cattle the story is real and has the potential to endure. In terms of actual supply of sugar it is hard to see how intermittent dryness in Brazil trumps ample availability of sugar globally. Plus, and this is key in my mind, sugar production continues to be incentivized at these prices. However, China has put in a floor in the sugar market and that sends a clear signal to producers. Again, over the years this is not the first time I have typed those words in this space while talking the short side of sugar. And, like times past, after having talked the short side I am then treated to watching the five minute chart develop to the upside with 1,500 contract bars going off repeatedly as managed money paints a bullish technical picture. What does it all mean? It is likely that now, after 3.5 months of up and down price action and the fact that I have finally discerned that sugar is a trading affair we could maybe be on the verge of a breakout. Technically, we are at the top of a horizontal channel and chewing into resistance. Aggressive short-term traders could take a shot at the short side with hopes the market could drop right back down to 17.50 yet again. And, traders with less tolerance for risk could use puts to position for a move lower as well. Fire up your five minute chart too and if you see 1, 500 lot bars driving the market lower that could be a tell that those who bought low are now selling high. Use your stops though as managed money has more firepower than you or I and if they continue to support October sugar futures it is more than likely it will go higher.

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.

Oct '14 Sugar Daily Chart

Source: RJO Vantage



 

Softs - Cotton

Erik Tatje

After the May "free-fall" in cotton prices, the market looks to find support around previous lows at 76.00. Last week's low of 76.10 confirms an initial test of support and has temporarily stunted the bearish near-term momentum. The price action throughout June has been predominantly sideways to negative, so further digestive action above the 76.00 level of support could be anticipated. This could present valid swing trading opportunities for those individuals looking to play the range in cotton. As it stands, the bias in December cotton remains negative and selling corrective rallies into resistance appears to be a favorable strategy to implement in the current market. If you'd like to discuss potential strategies to apply in the cotton market, or any other market, please contact me.

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.

Dec '14 Cotton Daily Chart

Source: RJO Vantage

 

Softs - Cocoa


September cocoa fell again this morning, trading below the 9- and 20-day moving averages. Long liquidation and bearish supply news is pressuring prices in the short-term. In the chart below you can see we are hitting a trend-line that could provide some support. Fundamentally, Ivory Coast cocoa port arrivals are ahead of last year's pace by 21%. The market will also turn its attention to the weather in Ivory Coast. Any concerns of bean damage may be eased as warm temperatures and scattered rain in the forecast can help crops that were hit hard by heavy rain earlier this season. If we stay above 3040, look to buy on pull backs as consolidation may be building back up around 3100 if we bounce up from today's lows.

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

Traders still await solid numbers from the Brazil harvest, but we can clearly see the expectations (from a price action perspective) are bearish to neutral. So far on the day, we've seen a massive move to the downside, but we still have yet to violate the 16310 critical low from 6/19. This area will be the area to monitor for the time being.

This trading advisor will still await (like most traders) more news from the Brazilian supply outlook in order to jump into the market from the long side. It's hard for me to remember anything positive coming out of a drought, but would advise that those trading from the long side use options to monitor the risk. There are several ways to approach this market wisely, but use caution! Call or email for specific strategies.

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

We have favorable Central US and world weather forecasts along with better than expected weekly US crop condition ratings that have pressured corn, wheat and soybeans overnight. Chicago wheat has declined to new seasonal lows, while December corn is challenging its contract lows. The soy complex has given back all of Monday's gains as Chinese pricing against July is nearly completed.

Although some short covering and bottom picking is noted early this morning, the potential feature of record large world and US corn and oilseeds crops is hard to ignore. There is still another 6 to 8 weeks of important weather to come. However, at the midpoint of the crop year [July 1] crops are looking very good

The only real weather worries are with some regional dryness over Kazakhstan and the slow to develop Indian Monsoon. For the first time this season there are hints of improvements in the Indian Monsoon after July 1st which would still be timely to preserve India's summer row crop potential.

Monday is June 30th and the all important June stocks report. Corn feed will be closely watched followed by the carryover stocks in soybeans. There is talk that the USDA will find more soybeans in last year's US production. This report can be very unpredictable and bring intense volatility to our markets.

In summer markets, rain makes grain and there is no place in the Corn Belt that is hurting for rain. There is no extreme heat in the forecast as well.

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.

Dec '14 Corn Daily Chart

Source: RJO Futures PRO

Nov '14 Soybeans Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

As mentioned in previous articles, high prices in the feeders are eventually going to rollover into what packers can and do charge. Pretty safe to say we are there and should stay here until herds are rebuilt (1-2 years). This said, front-end fed cattle marketings are current but to remain current prices all along the chain should remain firm.

Last week's Cattle on Feed and Livestock Slaughter reports continue to reflect lower COF, Placements, Marketings and Slaughter. There are strong economic incentives to rebuild herds. Lower feed costs, improved pasture conditions and firm dairy prices are contributing to the tight supply.

Demand is here and has been aided by gradual price increases at the restaurants and counters and flexible retail marketing. Exports are strong and not expected to slow down as there are signs larger trade partners (China/Japan) are loosening restrictions/barriers. There is some psychological resistance at the $6.00 / lb price for choice beef, as well as a possible seasonal softness in prices post July 4th into the end of August. However, this seasonal softness is only slightly visible in the Aug/Oct spread.

Look for long-term support in live cattle futures to continue to hold at 139.00with resistance at 167.00. Feeder resistance hangs at 222.00 with support at 181.50. Short-term live cattle support at 145.50 August and resistance at 151.50.

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. Our current research page includes a recommendation on the Aug/Oct live cattle futures spread and an outright lean hog futures short.

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.

Aug '14 / Oct '14Live Cattle Futures Daily spread

Source: GeckoSoftware.com

Feeder Cattle FuturesMonthly Chart

Source: GeckoSoftware.com

 

Interest Rates

Eli Tesfaye

September bonds, notes and Eurodollar are all in positive territory late this morning. The US Treasury auction is offering $107 billion of supply in the coming sessions, starting with $30 billion today. Two Fed members, Dudley at 2pm ET and William at 6:30pm ET today and tomorrow's GDP and Durable Goods orders should provide additional guide to the market.

Equities are trading positive,with the S&P 500 September contract making new highs. The consensus view is that the FOMC will increase its fed funds target rate sometime mid to late 2015. In my analysis, the Fed is data dependentin that they will probably bump up the fed fund target earlier than forecasted provided we continue to get healthy dose of positive economic news.

Technical prospective:As discussed in my previous articles, using Fibonacci technical analysis from the May 2013 high of 149.21 to the Dec 2013 low of 127.23the 50-60% "the box" retracement ranged between 141 to 138 areas. The bonds reached that target area and dropped from that level. The bonds seem to be in a three week congestion technical pattern and would probably break out. My analysis tells me that farther downside in price is possible. Give me a call or email me to discuss specific trading strategies.

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.

Sep '14 30-Year T-Bonds Monthly Chart

Source: RJO Futures PRO

 

Equity Indexes

Jeffrey Friedman

Stock index futures were mostly up this past week and have a positive start yesterday climbing to a record high. Some traders have started expressing concern that economic growth may not be strong enough to support stocks futures near record highs. The second quarter rebound continues for manufacturing and housing. But monetary policy remains loose, boosting stock index futures.Fed policy is encouraging and still leaves other investment options as largely unattractive. Economic news has mostly been supportive. Stocks futures have risen despite skittish news from overseas which weighed on stocks futures all week. Overall, favorable economic news (including Fed news) outweighed worries about the Ukraine and Iraq.

For the year-to-date, major stock indexes futures are up as follows: the Dow, up 2.1 percent; the S&P 500, up 6.1 percent; and the NASDAQ, up 4.4 percent;

Technical outlook for the June S&P futures remain in a long-term bull market. In the short-term, the S&P futures are in a up trend, with most chart followers targeting 1971 and then 1993 as their target for resistance. The S&P could go down to 1932 and then 1914 as a far target. The market must stay above1914 if the uptrend is going to stay alive.

If you'd like to learn more about futures trading or the equity indices market specifically, please contact Jeffrey Friedman at 800-826-4124 or jfriedman@rjofutures.com.

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

Source: RJO Vantage

 

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