RJO FuturesCast

March 12, 2021 | Volume 15, Issue 10

The Markets

Metals - Look for Gold to Consolidate Around $1,700

Last week I told you that I think that gold is near a bottom now. So far that $1,675 level is holding. After a $50 bounce this week, today we are seeing some back and fill action and it’s certainly possible to see a re-test of that swing low or even that $1,650 level. Today’s action is discouraging to the gold bulls. Rising yields this morning are my explanation for weakness in gold. Higher yields pressure everything right now, This huge rotation will run its course and gold will stabilize soon. We are very near, if not at the bottom.

Platinum on the other hand has a more positive tilt to the daily chart and has seen some positive ETF inflows this week. I remain a “long term” bull on metals in general as I’m one who does believe that we are in the early stages of a super-cycle in commodities. However, I think platinum will likely be the best bull market in metals this year.

Look for gold to consolidate in a range that pivots are $1,700, while platinum should easily resume its uptrend.

Gold Weekly 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.
Metals - Silver Signaling Long-Term Higher Price Action

Fundamentally, President Biden just signed the 1.9 trillion dollar Covid-19 relief bill into law today. Silver is looking to benefit from the passage of the 1.9 trillion dollar stimulus package. The benefit to the silver contract will come in the form of infrastructure spending and speculative buying interest. Rest assured, other countries worldwide will take similar actions to shore up their economy and potentially drive up the silver price. The reality is that at some point in the future, the excess liquidity around the world could have a long-term impact on inflation, triggering higher price actions.   

From the technical perspective, attached is the long-term silver chart worth looking at from time to time. It seems like silver will trade above $30.00 again before it trades below $20.00. Near term, silver could pop above $26.50, and trade below $25.00 could trigger a wave near $24.00.  If you want to look at ideas to trade this ranging market, please let me know.

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.
Energy - Oil Continues Higher Inflation

Oil prices are taking a breather after surging more than 2% on Thursday as the vaccine rollout initiative continued to improve the economic outlook, coupled with a sharp drop in weekly US fuel stocks indicating strong demand for end products. US gasoline stocks fell 11.9 million barrels, compared with expectations of a 3.5-million-barrel drop. This was largely offset by a surge in inventories, which rose by 13.8 million barrels, according to the EIA, bringing the total to 46.6 million barrels above year ago levels. Notwithstanding, refinery rates jumped, and refinery margins continue to improve which should help to ease supply and enhance demand prospects.  Prices were further supported by reports that Chinese demand for Iranian oil continue to exceed forecasts despite ports now getting backed up, which in turn may dent demand for US supplies. The market remains bullish trend with today’s range seen between 60.76 – 67.95.

Crude Oil Apr '21 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 - A Year Later: Covid, Cocoa, and the Coming Months

Just about a year ago the world braced itself for some unknown virus that was slowly disrupting the world as we knew it. People who were feeling ill were being isolated and tested, businesses and offices began to send employees home until the situation would be “under control” and the National Basketball Association suspended play as it’s first player tested positive during live play. WHO declared Covid a pandemic - the world knew at that point we may be dealing with something we hadn’t seen in our lifetime.

Now, the world is hopefully headed in a positive direction. Vaccines appear to be rolling out at a successful pace in some areas - infection rates, hospitalizations and death rates seem to be getting better during this process. As more of the population accepts the vaccines we will know more about the economic recovery as well. Will the public follow procedures long enough to allow the progress made with vaccinations to work? Will certain states reopening early hurt the entire US economy and recovery? Will spring break travel stall the positive data we are receiving thus far as these potential super spreader events take place? All these unknowns will be answered over the next few months.

As for cocoa, a global economic recovery and reopening of businesses and events can only help the market. A soft commodity like cocoa is heavily reliant on demand. Demand has slowed as people have changed their routines and purchasing habits. Some of the fundamentals for cocoa have stayed steady, production concerns could help or stabilize prices and with a little help from the demand side of the equation May cocoa prices should head back above 2650.

Cocoa May '21 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 - Grain Futures Update w/Stephen Davis - 03/12/2021
Stephen Davis discusses the latest news moving the grain markets and what we can expect going forward.
Agricultural -

April cattle had a push down to its lowest level we’ve seen since Jan 2019. Compare that to the June cattle, which looks to have some strong demand coming from a passing of the 1.9 trillion-dollar stimulus package plus an increasing number of vaccinations leading to the country to start opening up more and having more opportunity to spend. Another factor in the support of June cattle prices is the possibility of a major winter storm into the feedlot regions which could bring up top 3 feet of snow and slow down beef production while also bringing down weights. In Iowa/Minnesota, 505 head were reported at 112 versus an average of 112.25 on 5,843 head on Wednesday. In Nebraska, 632 head were reported at 112-112.50 with an average price of 112.11 versus an average of 113.38 on 9,673 head on Wednesday. The USDA estimated cattle slaughter came in at 118,000 head yesterday. This brings the total for the week so far to 481,000 head, down from 485,000 last week and 491,000 a year ago. US beef export sales for the week ending March 4 came in at 20,873 tonnes, down from 22,615 the previous week but up from 8,470 the week before that. The average of the previous four weeks is 17,874 tonnes. Average dressed steer weights for the week ending February 27 came in at 899 pounds, down from 909 the previous week but up from 897 a year ago. The 5-year average weekly weight for that week is 883.4. The USDA boxed beef cutout was up 18 cents at mid-session yesterday but closed 62 cents lower at $226.67. This was down from $233.88 the previous week and was the lowest the cutout had been since March 10. Cash live cattle were a bit lower on Thursday, but the traded volume reported as of the afternoon was quite light, perhaps not enough for an adequate test.

Live Cattle Jun '21 Daily Chart
Equity - Stocks Decline on 10-Year Yield Jump

U.S. stock futures were trading lower Friday morning after a record gain in the Dow and S&P 500 as treasury yields continue to trek higher. Thursday saw the S&P and Dow make both record setting highs in intraday trading and the close with information technology and communication stocks leading the way. The S&P lost .04% with the tech heavy Nasdaq falling 1.4% while the 10-year yield rallied back to its high of the year of 1.61%, up 8 basis points over night. This increase in bond yields will put pressure on tech stocks as it reduces the value of their future profits. “Higher rates, less dovish central banks are now considered to be the single biggest threat of risk assets,” Ralf Preusser, Bank of America’s rates strategist, said in a note. With the passage of a US fiscal stimulus package and the blistering progress in vaccinations in the US, a number of key risks are falling by the wayside.”

Support today is 390500 and 386500 with resistance showing 397000 and 399700.

E-mini S&P 500 Mar '21 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 Outlook w/John Caruso - 03/12/2021

Good morning,

2 important macro shifts I’m seeing this morning:

The US Dollar is capturing my attention here – we’ve seen consecutive day’s of higher lows in our range, and it’s momentum signal has shifted to positive. If we’re embarking on shift in macro markets, the dollar is one of the first places you’ll begin to see it.  91.05 to 92.41 is our range to manage. If we’re seeing a shift/transition from weak to a firm(er) dollar, this will likely create lower highs in many commodities that we’ve going forward. 

NASDAQ- its as clear as day the tech stocks are falling out favor…. the NQ -1.50% vs RTY UNCH and SPY -0.38%. The tech sector’s IVOL has been signaling a transition from multiple weeks of carrying premiums to now threatening a series of discounts. XLK -10% and QQQ -10% IVOL discounts. Big tech were the “pandemic/stay at home stocks” last year and are carrying some very difficult y/y comps for revenues and eps. 

That’s all for now…

Good luck,

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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