RJO FuturesCast

September 18, 2020 | Volume 14, Issue 38

The Markets

Metals - Mid-Week Metals w/Bob Haberkron - 09/16/2020
Bob Haberkorn discusses the latest in the metals market including the possible impact from the recent FED announcement.
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-1120 or rhaberkorn@rjofutures.com.
Metals - Silver Trading Down

Dec silver is trading 27.09 this morning down about a 1 penny. Silver is in my view in a wait and see pattern. The chart below on weekly continuation suggest there may be upside price action in the coming days. The dollar has been weak all morning but it didn’t give much lift to silver. The 28.00 level is a price that is going to be a jump starter for the bull camp. A break above $28 could get silver quickly jumping over $32.00. a roll below $25.00 is needed to discourage the bulls. The best way to approach this market in my view is using options. Please give me call to discuss a specific strategy.

Silver Weekly 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 Set for Nearly 9% Weekly Gain Despite Grim Demand Outlook

Oil prices are poised for the largest weekly gain since June as a meeting of OPEC+ yesterday urged ‘full conformity and compensating overproduced volumes’ amidst a fleeting recovery in global demand. This comes as Libya is expected to increase production and allow exports to resume as the country is currently pumping just 80k barrels a day while producing 1.2 million a day last year. WTI front month has come back over $41 dollars a barrel buoyed by a softer dollar as well as an unexpected weekly decline in inventories. In addition, Russian Energy Minister noted an expectation of a near full demand recovery by the second quarter of next year. Notwithstanding, recent projections of slowing Chinese demand from June and July add to the already grim outlook for global demand. Oil has now transitioned to neutral trend but look to position with a bearish tilt with today’s range seen between 35.16 – 41.49.

Crude Oil Nov '20 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 Trading on Demand News

Political unrest in Ivory Coast has added volatility to an already erratic market…. but there is a lot going in cocoa futures. Cameroon reported that their arrivals are lower than last year, they were expected to be higher. Indonesia, the 3rd largest grinding nation of cocoa, reported that exports are ahead of last year’s pace. At the same time, Indonesia’s imports are 23% lower than last year, which adds to the demand issues in the Asian markets. Demand is a concern in the US too due to chocolate company’s anticipation of lower sales due to the “cancellation” of Halloween in many regions.

The Euro and Pound short-term reversals provided support to cocoa prices. Supply is also a concern in key cocoa areas, which is also providing strong support. The macro side of the global markets is also somewhat positive, for now, that is helping some commodities.

Expect the unexpected, as well as volatility, as we trade the next month before the U.S. election. Technically, 2700 is resistance in the December contract, a break and hold above this could have cocoa testing the high put in in February – but the holiday season demand and company earring reports will have control of this market for the remainder of the calendar year.

Cocoa Dec '20 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 - 09/18/2020
Stephen Davis discusses the latest news in the grain market including a continued upswing in corn that has put the bulls in a commanding position
Agricultural - Live Cattle Pushing August Levels

October live cattle rallied a bit yesterday to its August 21st highs as it continues to push towards the August monthly highs of 110. Cash prices continue to trend lower but technical action remains bullish. The market is still bracing for the outlook of production to be increasing in the near term. Cash live cattle are firming up a bit this week. In Kansas on Wednesday, 9,967 head were reported at $100-$103 and an average price of $102.86, up from $101 last week. In Texas/Oklahoma 2,119 head traded at $103-$103.5 and an average price of $103.25, up from $101.81 last week. The USDA estimated cattle slaughter came in at 120,000 head yesterday. This brings the total for the week so far to 360,000 head, up from 241,000 last week, and up from 356,000 a year ago. The USDA boxed beef cutout was down $1.01 at mid-session yesterday and closed 71-cents lower at $215.38. This was down from $222.95 the previous week and was the lowest the cutout had been since August 14. The premium the futures have to the cash market is a little concerning even though we have seen some strong technical price action in the near term. Something to consider would be doing a synthetic strategy of shorting a futures and buying a call option with a delta of 50%.

Live Cattle Oct '20 Daily Chart
Equity - Volatility Continuing to Cloud Stocks

U.S. stocks are looking to open todays session mixed after another volatile day that saw tech stocks fall sharply despite another encouraging jobless number.  Facebook, Amazon, and Apple led Thursday’s tumble to the largest down day of the week showing some of the investors concerns as these stocks have been sharply rallying since spring.  The U.S. Department of Labor released data on Thursday showing 860,000 claims filed for the week.  Even though this was slightly higher than the anticipated number it was still below the psychologically important number of 1 million.  On Wednesday the Fed announced it would be keeping interest rates near zero for the better part of three years, this is due to the continuing challenges and risks to the economy from the ongoing pandemic.

Support today is checking in at 331000 and 327500 while resistance is showing 339000 and 342500.

E-mini S&P 500 Oct '20 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 Forecast w/John Caruso - 09/18/2020

I can’t stress the importance of U.S. dollar right here, right now.  The dollar has been signaling “higher lows” in the model, which may suggest a regime change in broader asset classes. We’re coming off of a cycle in which we were BULLISH on commodity assets, BULLISH on tech, BULLISH on foreign currency, BEARISH on the USD. This could all change if the USD reverses it’s 3 month decline in Q4. Did you know….the dollar is carrying a nearly 1:1 inverse correlation to stocks and commodities. In short, Powell and Mnuchin NEED the USD down to pump asset prices. We haven’t fully pivoted to this set up yet, but some of you know that we’re slowly making that turn.  If we’re moving to a Growth/Inflation slowing backdrop in Q4, we’ll be buying dollars, shorting tech (Nasdaq), and shorting commodities. What’s leading to this possible conclusion is the high sustained levels of unemployment and the eventuality that it makes its way into the commerce data, which ultimately hurts growth in Q42020 compared against Q4 2019/2018. We saw the retail sales data this week, which expressed a m/m and y/y decline - Consumer sentiment is released in about 1hr. 

Global Equities:
US firm with the SP500 +0.25 and NQ +0.55%

Europe was down overnight with GER +0.10%, UK -0.42%, SPA -1.44%, FRA -0.56%

Asia, particularly China had a big night with the Shang +2.06%, and KOSPI +0.26% (we remain bullish on China as they experience Scenario 2 economically)

VIX and VXN remain in a “volatile state” >26.00 for the VIX and >32.00 VXN is not a friendly signal to US Equities

Energy- OPEC was out yesterday talking up Oil prices.  Plenty of cheating/non-compliance occurred over the last few months regarding the agreed upon production cuts.  In short, countries were pumping more Oil than they agreed upon.  We’ve also seen strong downgrades to global demand on forward looking basis.  The OPEC oil minister basically warned speculators to not bet against OPEC as they stand ready and willing to further cut production.  Interesting, sounds like they may be a little paranoid of another “risk off” scenario in Q4.  We may short Oil for a trade soon. 

Metals- a washout in Gold and Platinum prices yesterday, we’ll continue to remain bullish of the precious metals complex FROM THE LOW END OF THEIR RESPECTIVE RANGES.  There is a potential for a larger washout in prices, however. 

Actionable Ranges:

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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