RJO FuturesCast

May 21, 2021 | Volume 15, Issue 20

The Markets

Metals - Gold Continues to March Higher

The gold trade seems to be a little too easy recently, incrementally working its way higher since putting in a low of $1,677.30 on March 31st. Or is gold finally behaving the way one would expect in an inflationary environment? Who cares? Go with the trend! Use the chart and track the US Dollar. I fully expect the rally in gold to continue even as I would expect that the treasury yields in the ten-year notes to rise. The shock of the sharp rise in rates is over. There has been a necessary pause and much debate about rising rates and the prospects of inflation. Inflation is real and gold likes inflation. Gold should not have too much difficulty breaking out above $1,900, especially as the Dollar looks capable of testing .8900.

So, yea, it looks like an easy trade right now. It’s a friendly trend. Remember the adage, “Don’t confuse a bull market for genius”. More importantly, remember to practice good risk management when trading commodity futures. Use options or stop loss orders. Work with a professional.

I’m bullish metals and commodities in general as we have too many dollars chasing too few goods. Gold is assuming the leadership roll once again. Keep it simple!

Gold Jun '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 fcholly@rjofutures.com.
Metals - Silver Struggling to Advance Higher

Silver struggles to advance higher and hold as the Fed is signaling that they will taper off. The timetable is not very clear, but enough news to keep the bulls on edge. In the wake of a weaker dollar, silver is struggling to maintain any gain.  The technicals still hold positive, but further chart damage could hurt the bull's chance of having gains. Other commodities are cooling off a bit this week in the form of correction. Overall, the trend is your friend; unless silver trades below $25.00, there is a good chance that weakness will be bought rather than sold.  

If you want to trade these markets either using futures or options, please let me know.

Silver 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 etesfaye@rjofutures.com.
Energy - Oil Prices Rebound but Set for Weekly Loss

Oil prices are rebounding off a three-session low as reports that Iranian oil is set to come back online by as much as 500k barrels per day (pending sanction relief) as well ongoing demand concerns from Asia (India). This comes amidst reports that Indian oil imports rose by the most since Nov 2019 as global oil supply/demand is expected to settle out for the rest of the year. OPEC+ compliance came in at 113% for April just as production restraints are set to be lifted at the beginning of June. A supportive development comes from the EIA this week as implied gasoline demand readings came in at the highest since the onset of the pandemic. Oil continues to signal bullish trend on the back of falling volatility (OVX) with today’s range seen between 61.73 – 67.72.

Crude Oil Jul '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 - Cocoa Futures - Road to Recovery? Or Groundhog Days?

July cocoa continues to move lower the past few sessions. Traders have experienced a choppy few weeks of trading after a small “V” in the chart. Demand is slightly on the rise as more easing occurs in the U.K. and the U.S. As more vaccinations are administered, there appears to be an increase in demand for many commodities. Cocoa in particular, should see a rise in prices, especially later in the year as we head into Q3. Inflation is also a huge question for the U.S., this will have an impact on commodities and how they react to their natural day-to-day fundamentals.

For now, continue to monitor the Pound and Euro and see the correlation work its way into the cocoa market. Weather premium is also something to watch in the near term, mainly the lower than normal dry spell in West Africa. There is already a robust supply from last year and with a weak demand tone, prices may move a little lower before we see the real recovery take place.

Cocoa Jul '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 - Futures Market Update w/Stephen Davis - 05/21/2021
Stephen Davis discusses the latest news moving the roaring grain markets as we head into the heat of the summer season.
Agricultural - Live Cattle Should See Support in Short-Term

June cattle continued to trade lower yesterday with expectations for beef demand to drop considerably after the holiday. This year may be a little different in the fact that Argentina is banning exports next month and consumer spending is expected to increase over the next couple months due to an increase in consumer disposable income. These factors should keep the market supported for the next couple weeks. I suspect June cattle finds support at the 115 level before moving higher. Cash live cattle appear to have softened a bit in the plains. In Kansas on Thursday 1,391 head traded at 119 versus an average of 119.35 last week.In Nebraska 4,352 head traded at 118-120 with an average price of 119.90 versus 120.32 last week. In Texas/Oklahoma 665 head traded at 118-119 with an average price of 118.81 versus 119.32 last week. The early selling yesterday drove June cattle all the way down to 115.70 before a strong recovery. US beef export sales for the week ending May 13 came in at 56,947 tonnes, up from 13,196 the previous week and the highest weekly total on record back to at least 2002. Packer profit margins are extremely high and the continued advance in beef prices this week could encourage a firm tone to the cash market next week. The USDA boxed beef cutout was up 14 cents at mid-session yesterday and closed 80 cents higher at $324.18. This was up from $316.78 the previous week and was the highest the cutout had been since June 1, 2020. It has increased for nine straight sessions and in 23 out of the last 24. 

Equity - Stock Futures Looking to Continue Rally

U.S. stock indexes are looking to continue the rally heading into the final session of the week.  The markets saw a recovery yesterday after the jobless claims data was released showing that the labor market was continuing its recovery.  According to the Labor Depart Thursday’s data had the number of Americans filing first-time jobless claims at a pandemic low.  For the week ending May 15th 444,000 people filed for unemployment which was below the analyst’s prediction of 450,000.  This drop in claims shows continued improvement in the labor market as more Americans are getting vaccinated and returning to work.  Even with the positive new data there still are 8.2 million fewer jobs than there was pre-pandemic.  The most recent jobs report had the U.S adding 266,000 nonfarm jobs while the unemployment rate increased to 6.1% missing the 5.8% and 978,000 predictions.

Support today is 411000 and 406000 with resistance showing 419600 and 422500.

E-mini S&P 500 Jul '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 Recap w/Peter Mooses - 05/21/2021
Peter Mooses discusses some current opportunities in the futures markets like metals and grains as we head into the weekend.
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.
Economy - Futures Market Outlook w/John Caruso - 05/21/2021

Stocks: A steady melt-up in the equity space yesterday right off the opening bell – the NASDAQ led the way +2.0%.  US Initial Claims hit a pandemic low mark of 444K vs 474K in the prior week, and the some members of the Fed began to open up the “QE taper” discussion.  Off the open all of the major indices are going to open up in immediate OB territory, with neutral and negative momentum.  All of the >6 mos. trends, except for Nasdaq (Neutral trend) remain bullish.  If markets continue to stretch, we may see another shift in momentum on Monday or Tuesday, but the probabilities suggest a pullback off the open – we’ll have to wait and see.  IVOLs remain at a PREMIUM in stocks. 

Energy/Oil: Energy including oil and natural gas signaled immediate OS at the close of business yesterday. The market told tales of US/Iran agreements, cease fires, and pipeline construction – all of which may be true, but the math said “Buy” yesterday.  So we allocated a small position long in Crude and Natural Gas. I think that’s why some struggle with my decision making process – because most investors jump from headline to headline and chase the market action. The facts in the model suggested that oil was bullish trend, AT the low end of the range, bullish inside of Scenario 2, and immediate OS. That’s really what the call boiled down too. 

BONDS/Yields: Bonds are going to open up immediate OB/Yields immediate OS. What’s the next catalyst for a jump in yields? Perhaps the US Non Farm Payrolls due out in 2 weeks. We had a big surprise miss in the headline number (missed by approx. 700K jobs), I’d expect differently this go around AND perhaps some sharp revisions. We remain bullish of US Employment from here.  UP in Yields, could also translate into DOWN Gold as well.  There’s a trade here I think. 

We’ve got some PMI and Housing data due up here shortly.

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.

Coming Up Next Week...

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