RJO FuturesCast

February 11, 2022 | Volume 16, Issue 6

The Markets

Metals - Gold Beginning to Embrace Inflation

While gold does continue to trade a big choppy range of $1,775 to $1,850, the rally of the past two weeks is impressive. Gold has based a bottom and it looks like gold traders are finally coming to terms with all the inflation data out there. Rates are moving higher, and gold has been climbing higher also. The next breakout above $1,850 is likely, in my opinion, to move prices back to challenge $1,900. I also believe that once gold moves above $1,850 that it will begin basing a higher low. In the range of $1,850 to $1,900.

Platinum is coming back to life also. A move above $1,100 is in the cards. It seems to be a good value between $1,010 to $1,020 April basis. Platinum will have an easier path forward than silver, but once silver starts to move it will be very fast, probably a $1.00 at a time.

Energy prices are very strong. Interest rates are moving higher and there’s still too much cash out there. It’s about the money supply and gold and other precious metals have to move higher too!

Gold Apr '22 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-4124 or fcholly@rjofutures.com.
Energy - Oil Poised for Weekly Loss

Oil prices are moving higher as of Friday morning but are poised for their first weekly loss after seven consecutive weekly gains as the IEA noted that global supplies continue to remain tight, while simultaneously noting that OPEC+ production came in 900k barrels below their target for January. Moreover, the IEA noted that Saudi Arabia and the UAE could help combat higher prices by providing more supply as they have excess productive capacity. OPEC+, in turn, had an upward revision to demand for the coming year. Nuclear talks between the US and Iran were revived this week with a deal potentially lifting sanctions on Iranian oil, which would ease supply tightness. Crude stocks fell -4.75 million barrels with the deficit narrowing -58.627 million barrels below last year with the five-year average widening to -50.12 million barrels, according to the EIA. This now puts US crude stocks at the lowest since October 2018. Oil volatility (ovx) continues to remain elevated in the mid 40s with the market remaining bullish trend with today’s range seen between 85. 32 – 92.19.

Crude Oil Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-438-4805 or aturro@rjofutures.com.
Softs - Cocoa Recovers as Macroeconomic Data Continues Stronger Patter

Cocoa futures’ prices have recently rallied more than 10%. Recent global data is indicating that this trend higher may continue. As an individual commodity, the demand for cocoa is increasing. Key areas of the world for cocoa purchases - Europe and North America, have begun removing Covid restrictions which appears to be boosting the demand in chocolate. The equity markets in Europe and the U.S. have also been strengthening, although still very volatile.

Weather patterns in West Africa have been very dry due to high temperatures, causing some concern in production numbers which could help support prices to stay above 2800. Weather will be a key factor in prices for the short-term. If production is affected later this season, prices could touch new contract highs in the coming months.

Grinding data in the future will also be telling for the outlook of cocoa this year. For now, supply and demand are working together to move cocoa prices higher. Traders should monitor the 2850 level and consider buying calls in further out months if the bullish trend continues.

Cocoa May '22 Daily Chart
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.
Agricultural - Grains - Upside Breakout - New Contract Highs

On February 4th I advised traders on the following: “As one can see by looking at the chart below on Jan 24th March corn broke out above $6.18 ½, a level I mentioned several times in my articles.  By January 31st March corn reached a contract high of $6.42 ½ which took out another key level, in my opinion, of $6.39 ½ a level I have been advising on for months. With the small pullback to current trading / consolidation levels (inside day forming so far today).  If today forms an inside day I would advise traders buying on a breakout above today’s high.  I remain bullish for now, but traders should be prepared for additional volatility at these prices especially with the recent breakout.”  Last Friday which was February 4th, the market did form an inside trading day as I thought it could (see chart below) on Monday the market broke out to the upside indicating a buy signal. I still remain bullish but would advise traders to be cautious as we could see short term selloffs to push the weak longs out of the market.

For months I have been advising traders on the following in my articles: “The “big picture” numbers remain the same and probably will for some time.  I firmly believe a break below $4.96 could give the bears control of the market and a break above $6.39 ½ on the upside may have enough bulls behind it to propel corn to all-time highs." FINALLY, after months of corn consolidating in a rather large trading range, March corn broke out above $6.39 ½, made a small pullback to a low of $6.10 ¼ and then quickly made a move to $6.62 ¾ on February 10th printing a new contract high!  Call me directly at 1-800-367-7290 for more in-depth discussion on these numbers and to discuss trading strategies specific to your situation.

I would suggest using an option strategy to manage the risk on a futures position or a 3-legged option strategy for producers looking to forward market their grain. A strategy like this gives producers an opportunity to take advantage of further upside while protecting a sizable price area of downside risk. Implied option volatility is currently up, when compared to the historic volatility levels, so now may be an excellent time to implement strategies like this. Call for specific entry levels and strike prices. I have 26 years of grain trading experience, feel free to call or email with any questions you may have and be sure to check out my archived weekly grain market insight articles posted on our website.

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This 55-page guide is packed with indispensable market information.  It has a complete commodity calendar that lists the dates and times of Market Reports, option expiration dates, futures first notice dates, futures last trade dates, etc.  It readily serves as your commodity market encyclopedia giving you an in depth look at each commodity, there is market almanac for all actively traded commodities and much more!  To receive your complimentary Commodity Trading Guide, send me an email at msabo@rjofutures.com with the following information: your full name, mailing address and a preferred phone number so we can confirm your request.  Once confirmed I will have it sent out.

Corn Daily Chart
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.
Equity - Stocks Flat After Thursday's Sell-Off

U.S. stock futures were relatively flat Friday morning after Thursday’s sharp sell-off initiated by the high inflation number and an announcement of a 100-basis point increase to the Fed Rate by July.  The Labor department released data on Thursday that showed a 7.5% increase in the consumer price index, a composite of the cost on everyday good, as opposed to the expected 7.2%.  This was the highest reading since the first quarter of 1982.  James Bullard, the St, Louis Federal Reserve Charmain, called for a 100 pt increase during the three regularly scheduled meetings before July with the first being in March.  Most economist are predicting an aggressive 50-pt hike during that first meeting in March with a total of 150-pts for the year to curtail the rising inflation.

Support today is checking in at 443150 and 441000 with resistance showing 454000 and 461400.

E-mini S&P 500 Mar '22 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 888-861-1656 or jyasak@rjofutures.com.
Economy - Futures Market Insight w/John Caruso - 02/10/2022
John Caruso talks about the latest news moving the markets including a metals market that appears to be on fire, learn what John makes of this movement and more.
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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