RJO Futures eView Newsletter March 31, 2015 | Market Insight | RJO Futures

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March 31, 2015

Volume 9, Issue 7

 

Metals - Gold

Nick DeGeorge

In the early morning trade, June gold is up slightly and currently trading at $1187.4 an ounce. Due to the recent surge again in the US dollar, gold has pulled back more than $4o dollars and is not enjoying a safe haven play from the crisis in the Middle East or the Greek debt situation. However, gold traders and investors alike will be watching closely to this Friday's monthly non-payroll number in order to get a sense for the next directional move.

If you look at a daily June gold chart, you'll clearly see some simple support and resistance levels to trade around on Friday's jobs report. If the overnight low of $1178.2 is still valid by Friday, I would sell below that level on a bullish/positive jobs number. If the report comes out bearish/negative, I would suggest buying above last week's high of $1220.4.

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.

Jun '15 Gold Daily Chart

Source: RJO Futures PRO

 

Metals - Silver


If a guy has to eat his own words, he may as well use a silver spoon to eat them. Since the last eView, the silver market has surged in another short lived rally, topping out this time just shy of 1750. Short lived could be a preemptive statement as we could see another leg up tomorrow. However, assuming this failure of the 1740 push higher isn't tested again, the statement stands. 1525 is the next level of support and one that was established back in November. 1750 is the next level to close above on the bull side, with a continuation of the bull trend confirming a close above 1855. To the downside 1525 needs to hold, this could be the third time it's tested.

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 '15 Silver Daily Continuation Chart

Source: RJO Futures PRO

 

Energies - Crude Oil

Mike-Sabo

My thoughts haven't changed much since the last eView - I think oil appears to be showing signs of a bottom. The US dollar has shown additional strength over the last several session and we have seen risk premium come out of the market as well. Stock piles have continued to grow to an all-time high and yet prices remain stable. After last week's EIA data came out showing a build, the market actually rallied a bit. The ongoing talks between the US and Iran to reach a nuclear deal have suggested more oil may soon be flowing out of Iran onto the world markets. The US State Department has given indication a deal could be reached as soon as today. Conflict in Yemen has cooled a touch, BUT many are keeping a watchful eye as this has the potential to escalate very quickly. Just recently the Saudis launched missile strikes and the oil market responded by jumping over $2. Watch for tomorrow's EIA data - most traders are expecting another build of about 4.25 million barrels, if we see a smaller build than this oil could pop.

Short-term technical indicators are mixed in my opinion but still look a bit bullish to me. The market has pulled off its most recent high of $52.48 down to the 10-day moving average today. If the market is able to hold and close above the 10-day, then the market could still be in store for a bounce higher.

I still recommend positioning for a possible upside move in oil. Using the proper strategy such as a call-fly-spread or bull call spread could help you take advantage of a move higher. Futures traders should consider buying puts for downside protection and could consider selling covered calls. 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.

May '15 Crude Oil Daily Chart

Source: RJO Futures PRO

 

Energies - Natural Gas

Avery Burton

Natural gas prices have been caught in a range-bound trade since the beginning of the month. This range is still very much in effect, despite slightly widening over the last two weeks. The current channel for May natural gas futures exists between 2.62 and 2.95, though the previously mentioned 2.70 and 2.90 levels still mark significant support and resistance.

Although fundamentals related to natural gas are typically quiet during the spring months, last week's EIA storage report announced a very minimal build in inventories (12 bcf). Though the number itself is too small to suggest anything significant, the build marks natural gas' earliest seasonal injection in three years. With a nice head start on building summer inventories and prices repeatedly failing to break above $3.00/mmbtu, it is clear that the bear camp is truly in control.

Going forward, traders should consider continuing to sell rallies and utilizing the 2.90-2.95 area for optimal entry. I recommend placing stops just above the 3.00 threshold. Major support levels to remain aware of exist at 2.70, 2.62, and 2.53.

If you'd like to learn more about futures trading or the energies market specifically, please contact Avery Burton at 866-741-0339 or aburton@rjofutures.com.

May '15 Natural Gas Daily Chart

Source: RJO Futures PRO

 

Softs - Sugar

Joe Nikruto

This week's sugar futures market commentary finds May sugar futures squarely in the "song remains the same" category. Funds are holding an almost record large short position. Fundamentally, there is no lack of sugar on the world market. And, with the harvest in Brazil about to get underway more supplies are coming. Some analysts believe we are on the verge of another leg lower in crude oil as supplies begin to overwhelm storage capabilities. Lower priced crude will weigh on the price of sugar. Yesterday, widely read analysts, the Hightower Group, were speaking of the difficulty lower prices have caused millers in India and Brazil. This is certainly not bearish. As the supply of sugar begins to dwindle because millers are no longer financially viable, the price of sugar should find support. This econ 101 lesson seems to be lost on the May futures chart and the July and October charts as well. The idea that the May sugar futures contract has to bounce in here somewhere to alleviate the oversold technical condition is not without merit. It is just that this idea hasn't been very profitable since the beginning of the year.

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 '15 Sugar Daily Chart

Source: RJO Futures PRO



 

Softs - Cotton

Erik Tatje

Large global cotton supplies continue to dominate the headlines keeping futures prices contained to the downside. February's rally did show some promise, however, the market was unable to retest the 69-70.00 area on the chart and has since pulled back into a consolidation range. The strong USD will likely continue to act as an outside force keeping pressure on the commodity complex as a whole and today's USDA report could give traders a bit more insight as to the future direction of cotton.

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.

May '15 Cotton Daily Chart

Source: RJO Futures PRO

 

Softs - Cocoa


May cocoa has tried to recover this morning but continues to fail around 2710. Long liquidation has pressured the market as speculators exit and bearish weather news throughout West Africa along with negative outside markets have also lead to the recent decline in prices. One-third of the global grindings come from the euro zone and the negativity in the Euro has hurt the demand for cocoa. Technically, after an outside-day down yesterday, we could see consolidation at 2675. We need a close above 2700 to entice the bulls to get back into the market.

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 '15 Cocoa Daily Chart

Source: RJO Futures PRO

 

Softs - Coffee


Since the start of 2015, coffee has seen more than 20% pullback in prices and is sitting near the lowest level in over a year. This has mainly been a result of the fall in the Brazilian real against the U.S. dollar. The weak real has allowed Brazilian exporters to increase their competitiveness to gain market share flooding with exports. Also, rains in Brazil have recently improved the harvest, however, dry conditions in key growing areas may impact new production. Current estimates are expecting production near 50 million bags, but if we see any number below this we may see a reversal take place. Traders may want to consider call spreads in December to give themselves enough time to see the full crop cycle take place.

If you'd like to learn more about futures trading or the interest rates market specifically, please contact Phillip Streible at 800-438-4805 or pstreible@rjofutures.com.

May '15 Coffee Daily Chart

Source: RJO Futures PRO

 

Agriculture - Grain

Stephen Davis

Good afternoon traders. We have some pre-report short covering going on before the crop report in one hour from this writing. Yesterday, the wheat market dominated the trade higher with prospects for continuation of mostly dry U.S. hard red winter weather pattern into mid April. Wheat also enjoys bullish momentum from a Baron's article this past weekend and fears over a large managed fund short position. There are a host of events today with an Iran nuclear deal approaching, strong dollar and lower CRB all improving South American soybean production and potential for a volatile crop report.

The risks of this report today are that 2015 corn planted area is higher than expected, March 1 soy stocks are higher than expected and Mach 1 corn stocks are higher than expected. Once we get this report out of the way, the key price driver will be the unfolding of the 2015 spring weather pattern at the end of the day one million more acres of corn planted or one million less acres of corn planted will set the tone for price discovery in the short-term.

The big picture is that the last two years we have had very normal weather conditions and normal to above normal trend yield for corn and soybeans. If we have normal weather, this would be the third year of that weather pattern�this does not happen that often.

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 '15 Soybean Daily Chart

Source: RJO Futures PRO

May '15 Corn Daily Chart

Source: RJO Futures PRO

May '15 Wheat Daily Chart

Source: RJO Futures PRO

 

Agriculture - Livestock

Jeff Gilfillan

If you have cattle on the ranch or in the feedlot, you are in the driver's seat until supply catches up. We know the front end supply is sufficient but firm replacement costs are keeping the offers high and cheap feed is continuing to create incentive for building weights.

The U.S. dollar touched our breakout targets and retreated but the trend remains strong. Despite the strong dollar, front month live cattle futures staged an impressive double bottom in the first quarter but failed to break previous month highs as of this writing. The charts across many commodities continue the "stop and go" bearish pattern of testing extreme lows, squeezing shorts but failing to sustain or break new highs. It can be frustrating for both hedgers and specs alike but likely very appealing to short and intermediate term quants.

The USDA report will be at 11am CDT today. I expect a momentary bullish reaction but I think the market is probably priced right with an overall bearish outlook.

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 Weekly Chart

Source: GeckoSoftware.com

Weekly Feeder Cattle Futures

Source: GeckoSoftware.com

 

Currencies

John Caruso

RJO Futures Senior Broker John Caruso discusses currency futures markets. The dollar and the yen are both up today while the euro is trading down. The British pound is currently in a bearish cycle. Currency markets are waiting on the numbers from Friday's unemployment report.

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.



Equity Indexes

Jeffrey Friedman

Stock index futures are in a big trading range for the month of March 2015 after making all-time highs for a five-year bull market. Monetary policy remains in question with the question being, when will the Fed start to raise short-term interest rates? This past week, the Fed continued with a go slow approach to tightening. Fed policy is encouraging and still leaves other investment options as largely unattractive. Economic news has mostly been good. Stocks futures have risen largely in the first quarter of 2015, despite skittish news from overseas which should have weighed on stocks futures in the last 90 days. Overall, favorable economic news (including Fed news) outweighed worries about the Europe, Ukraine, China and Iraq.

This coming week's highlight is the consumer sector with the focus being the employment situation report for January 2015, released on Friday. Payroll jobs for March came in stronger than expected, jobless claims have been low recently. So the question is, will job growth remain relatively strong? On the other hand, wage growth has been sluggish and traders will be looking for stronger growth.

Technical outlook for the June S&P futures remain in a long-term bull market. The short-term trend is sideways, with most chart followers targeting 2081 as a pivot number and then 2110 as their target for resistance. The June S&P could go down to 2030 and then 1970 as a downside target. The June S&P is in a big trading range of 2110 on the upside and 2030 on the downside. The market must break out of this trading range to show further direction.

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.

Jun '15 S&P 500 E-mini Daily Chart

Source: RJO Futures PRO

 

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