RJO Futures Website

September 27, 2016

Volume 10, Issue 20

Featured Article

Webinar: Trading Agricultural Futures - Register Now!

Wednesday, October 5 2016 at 4pm CT

Trading Ag Futures

Trading grains and various agricultural products requires knowledge of the underlying asset class and our goal in this webinar is to introduce new agriculture futures traders to the contracts available in this market. Knowing when to be out of the market is just as critical as knowing when to be in the market and we will introduce technical analysis basics to identify potential market entry points in conjunction with our fundamental knowledge of the agricultural markets.

In this webinar you will learn:!

  • Keys to understanding the agricultural markets
  • Benefits of trading the grains
  • What to consider before trading this market
  • Basic technical analysis techniques on the ags

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Exchange Info

Now Available from CME Group: Wednesday Weekly Options on Futures

Now Available from CME Group: Wednesday Weekly Options on Futures

Trade today and benefit from:

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  • European-style expiry with no pin risk, no contrarian assignment or abandonment 

CME Group Wednesday Weekly Options

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Metals - Gold

Gold Still Range Trading

Nicholas DeGeorge

In the early morning trade, December gold was well off its overnight high and currently trading at $1330.3. Gold was not able to catch a bid off of Deutsche Bank shares hitting all-time lows, or last night’s presidential debate. Furthermore, gold has probably sold off due to a comeback in the US dollar. There was also sluggish gold export news from Hong Kong to mainland China which fell in August by roughly 40,000 tons.

December gold has been in a $50 trading range for the entire month of August, and it currently looks like the bears have the clear advantage at least down to the $1300.0 an ounce handle. If December gold can break above the monthly high of $1357.0 which I highlighted on my RJO Pro daily December gold chart, then look for a rally up to $1400-$1425 an ounce.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or ndegeorge@rjofutures.com.

Dec ’16 Gold Daily Chart

Source: RJO Futures PRO

Gold Chart

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Metals - Silver

Would $19.00 Silver hold?

Eli Tesfaye

No post-debate love for the metals this morning. The December silver is trading $19.12 down 47 cents. The strength of the US dollar is putting a great deal pressure on silver, since the news broke last Friday of the US Fed possibly increasing capital requirements for large banks for holding physical commodities. 

As I stated in previous eView’s, the Fed would move gradually into raising rates. I still think there is a strong possibility that they would act in the December meeting. The markets are always forward looking, and it is more likely that a rate hike would be priced in sooner than later.

The Commitment of Traders with options report (COT) that was measured last Tuesday, September 20th shows that the non-reportable and non-commercial positions are pretty much unchanged.

From Technical perspective, the $19.00 is being put to the test. As I stated in previous articles, little enthusiasm will come to the silver market on the upside until a close above $20.00.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or etesfaye@rjofutures.com.

Dec ’16 Silver Daily Chart

Source: RJO Futures PRO

Silver Chart

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Energies - Crude Oil

Crude Oil – threat of OPEC cut and oil rally fizzles out!

Michael Sabo

Since the last eView, crude oil attempted a rally on OPEC’s threat of a production cut but has quickly fizzled out, and for good reason. The fundamentals have not changed that much since the last eView. Stockpiles of oil remain more than ample, rig count has increased according to Baker Hughes, equities look mixed and have been going basically sideways, and demand remains questionable. Be sure to watch tomorrow’s EIA Report for a possible build in stockpiles, which should continue to favor the bear camp.

Short term technical indicators still look bearish in my opinion, and the market should continue its downward descent. My comment in September 13th’s eView, “Today the market is currently trading an inside day – if this continues, I would look to play a breakout tonight. Overall I remain bearish BUT would play the breakout.” On September 14th, Nov crude oil broke out to the downside (see chart) and continued lower for several sessions. At this time, I still remain bearish and would recommend using an option strategy to play the downside.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or msabo@rjofutures.com.

Nov ‘16 Crude Oil Daily Chart

Source: RJO Futures PRO

Crude Oil Chart

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Energies - Natural Gas

November Natural Gas Consolidating

Jeff Ratajczak

November Natural Gas is consolidating beneath its nearby highs. The recent up trend has slowed, and the path of least resistance seems to be favoring the bear camp. Above average temperatures are giving way to more seasonable readings, which should keep a lid on demand and natural gas prices. Weather forecasts over the coming week have very little to change the November contract’s current trading range. No major storms show any near term threats. Accuweather says Tropical Storm Matthew is forming and may threaten the Caribbean by the weekend, and move into the Gulf later next week. We need to keep an eye on the storm’s severity and track carefully. 

Technically a close above 309.0 may signal a run to September 22’s high of 316.6 or beyond. A close below 298.0 can trigger a change in trends and challenge 297.0 and the next near support level in the 286.0 area. Momentum studies are at midlevel and declining. If the market starts to show a peaking and turning over, cautious exposure to the bear side of the market can be considered.  

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-874-8110 or jratajczak@rjofutures.com.

Nov '16 Natural Gas Daily Chart

Source: RJO Futures PRO

Natural Gas Chart

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Softs - Cotton

Dry Forecast Could Stunt Strength in Cotton Prices

Dry conditions are in the forecast for at least the next five days in West Texas, proving an ideal environment for this years’ cotton crop.  With almost 50% of open bolls in Texas, rain at this time of the year can adversely affect crop conditions and yields. Recent dryness is seen as a bearish factor for price.  That being said, the Texas crop conditions are rated at 48% good to excellent vs. 50% this time last year.  The upcoming dryness across Texas is well received by farmers in the area, as concerns of water damage from prior rain continues to be priced into the market.  That being said, dryness should help to ease concerns over crop deprivation and could temporarily stunt the underlying strength seen in cotton prices.  Yesterday’s action appears to have respected the 69.63 level of support originating from the 9/8 swing highs and this level will likely prove to be significant if indeed the market is going to mount a further correction.  Initial resistance on the upside can be seen around 71.68 in the December contract and a confirmed close above this level could set the stage for a retest of the early August swing high.  Given the recent weather outlook in key growing areas across the country, I would anticipate neutral price action for the next 3-5 days.  News of dryness may be sufficient to temporary stunt the recent strength in prices; however, the intermediate term trend remains positive above the August 31st low of 65.41 and corrective pullbacks into support above this figure remain valid long entry opportunities. 

If you’d like to discuss potential trading strategies in the cotton market, I encourage you to contact me directly at 866-397-8195 or etatje@rjofutures.com.

Dec ’16 Cotton Daily Chart
Source: RJO Futures PRO

Cotton Chart

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Softs - Coffee

December Coffee Recovery

Adam Tuiaana

In my last article I had mentioned that a potential Head & Shoulders reversal up pattern could be viewed on the daily chart of December coffee. It looks as if this pattern is in fact holding true. The top of the head in this pattern is measured at 13785, slightly above the critical low of 13760 from June 27th. As I also mentioned in my last article, “a simple measuring objective from the neckline to the tip of the head gives us and upward measuring objective of 15755, which would put this rally (if the pattern holds true) very close to the high from July 15th of 15765.”
Subsequently, we have reached our measuring objective and rallied past 15755 and 15765, putting in a new high of 16090 in the process.

Largely, expectations of dwindling production in Brazil, along with world output falling by 2% (the lowest since 2012/13), have played a major role in strengthening coffee prices. Columbia has helped to contribute to this strong recovery in the price of coffee. Time for the bulls to hold strong. Look for continued higher prices in coffee.

There are several strategies that traders can apply in this situation. If you have any questions or would like to discuss the markets further, please feel free to contact me at 866-536-8601 or atuiaana@rjofutures.com.

Dec ’16 Coffee Daily Chart
Source: RJO Futures PRO

Coffee Chart

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Softs - Cocoa

Cocoa Production and Technical Trading

Peter Mooses

Twice this calendar year cocoa has found a technical bottom under 2750 – most recently this month. At those levels, the December contract tends to recover nicely, breaking above the 200-day moving average and reaffirming the bullish trend. This recent move looks like more of the same. Recently, we have reached over 2925, but failed to move towards and above 3000. Today we are looking at a decent trading range between 2831 and 2876, trying to break resistance at 2885.

The fundamentals are needed to help this new move higher. Asian production has dropped so the world numbers look to other areas of the globe for support. While Asian production is down to 10%, Africa is still the leader at 74%. Latin America currently accounts for 16% of cocoa production, which is on the rise. Supply and demand tends to create and run cocoa’s market value predominantly. Grindings and weekly COT data will also be watched closely in the coming weeks.

Look for 2925 as the near-term target while a break and hold above 2975 is needed to give this rally any real strength.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or pmooses@rjofutures.com

Dec ‘16 Cocoa Daily Chart
Source: RJO Futures PRO

Cocoa Chart

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Agriculture - Grains

Slightly Slow Harvest Progress

Stephen Davis

The corn market opened higher overnight on harvest progress in modest volume, after USDA reported a slower than expected harvest activity number. Corn harvest through last Sunday was estimated at 15 %   versus trade ideas of 20 %.This compares to 16 % last year at this time and 19 % on average. Harvest activity is expected to improve with this week’s drier weather forecast. Chances for rain are expected to resume next week. There is still some debate that the warmer evenings and excessive rain this year harmed the corn yields. We shall find out more in the October 12 crop report. The next fundamental report is this Friday’s USDA September 1  Grain Stocks and 2016 Small Grains Summary  released at 1100 am CST

The soybean market traded higher overnight on harvest progress in modest volume. Harvest pressure is expected to pick up this week with drier conditions expected for much of the Midwest. The USDA estimated soybean harvest at 10 % complete versus 17 % this time last year and 13 % on average. With the old adage big crops get bigger I am expecting a bearish soybean report on October 12.It is difficult to find some bullish, positive outlook for soy at this writing I like to say sometimes you buy soybeans when they look the worst and they look pretty bad right now. Certainly October is a friendlier, bullish month for soy than September is. The wheat market bounced higher overnight after yesterday’s selloff. Underlying support comes from U.S. demand, though it is not all U.S. demand.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7181 or sdavis@rjofutures.com.  Also be sure to check out my weekly grain market update posted on our website.

Dec ‘16 Corn Daily Chart

Source: RJO Futures PRO

Corn Chart


Nov ‘16 Soybean Daily Chart

Source: RJO Futures PRO

Soybeans Chart

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Agriculture - Livestock

Supply still weighing down cattle

Fed cattle futures continue to drift lower after a brief short-covering run. News of cash cattle trading in the low 100s last week reversed the momentum. COF report was relatively neutral. Heavy cattle weights were higher in the feedlots but markets were up.

I do not see much strength in the charts, but we may see some seasonal demand and the long-term charts show strong value around 92-93 in live cattle futures.

Please follow RJO Market Insight’s Technical Blogs in our Learning Center. Dave Toth offers excellent insight for RJO clients. If you would like direct access to RJO's extensive in-house and independent insight and my personal client newsletter, contact me directly for a trial.

Contact me at 888-861-0382 or jgilfillan@rjofutures.com. You may also follow me on Twitter @RJOJeffGil.

Live Cattle Daily Continuation Chart

Source: Track'nTrade

Live Cattle Daily Chart


Live Cattle Monthly Chart
Source: Track'nTrade

Live Cattle Monthly Chart

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Currencies Video Update

John Caruso

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-669-5354 or jcaruso@rjofutures.com.

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U.S. Stocks Traded Modestly After Presidential Debate

Greg Perlin

U.S. stocks traded modestly higher Tuesday, partially boosted by the outcome of the presidential debate between Democratic candidate Hillary Clinton and Republican contender Donald Trump, and a number of better-than-expected economic reports. 

However, a slide in crude-oil prices put a cap on the gains, as energy shares sank. Crude-oil prices dropped more than 2.6% after both Iran and Saudi Arabia played down expectations for a deal to freeze or cut oil production at the closely watched informal OPEC meeting on Wednesday. 

The boost in stocks and futures overnight may be interpreted as supportive for U.S. equity markets because Trump is perceived by some as being more unpredictable. The S&P 500 index was up 6 points, or 0.3%, to 2145. Consumer-discretionary and technology shares led the gainers, while the energy was down 0.8% thanks to a slide in oil. It's clear that U.S. stock futures got a boost after Clinton's superior performance at the debate, managing director of sales and trading at Themis Trading. 

Overseas, investors are worried over troubled Deutsche Bank and a drop in oil that kept investors cautious. Deutsche Bank was down big yesterday and is being watched closely today. Some investors are wondering if Deutsche Bank troubles may turn into a Lehman scenario which is putting pressure on European equities.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or gperlin@rjofutures.com

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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.


The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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