RJO FuturesCast

September 24, 2021 | Volume 15, Issue 38

The Markets

Metals - Path of Least Resistance Remains Down in Gold×

The gold chart is short term negative especially after this week’s recovery bounce and then sharp reversal down to $1,7375. A close under yesterday’s low of $1,7375 would open the potential for a washout back towards $1,700. However, while the Evergrande default has moved to the “back burner” for now, they did miss their interest payment due this week. The gold market is going to need something negative or risk off type event to rebound back above the $1,785 level. Until that time I remain bearish.Platinum had a huge rally this week from $900.00 to $1,0107 kissing that 200 DMA and then quickly retreating towards the $960.00 range.

Silver also experienced a bear market bounce this week and is again testing support at $22.00.

While precious metals temporally remain out of favor, metal traders cannot continue to write off prospects of longer-term inflation. Metals will find support. Remember that it is usually as simple as just finding a level on the chart that brings the buyers back!

Gold Dec '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 Down on The Day×

December silver is trading 22.455. down 25 cents for the day. It is a surprise as to why silver is so weak in light of weakness in the US dollar contract. It's important to note that we are getting close to seasonal lows. I would be cautious about initiating a new short position from this price point. However, the weekly chart below does show that the bear trend is in full force.

From a technical perspective, although silver is oversold, the market remains, and a breach below 22.00 would further erode the price. A close over 23.50 is needed to negate downside pressure. Give me a call or email me to discuss trading or hedging strategies from these levels.

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 Poised for Third Straight Week of Gains×

Oil prices ramped up to 2-month highs as of Thursday afternoon and are poised for a third straight week of gains amid the prospect of an improvement in fuel demand as well as a larger than expected draw in inventories, which comes in the face of China’s first selling of public crude oil reserves. Stocks drew -3.481 million barrels for the seventh consecutive week with the deficit increasing to -80.422 million barrels and are now -36.637 million barrels below the five-year average, according the to the EIA. India recorded a 14.2% increase in refinery processing last month, suggesting perhaps a turn in domestic demand. This was strengthened by reports that Indian oil imports came in at a 4-month high with a year over year gain of 3.1%. Oil volatility (OVX) continues to fall to cycle lows (low 30s) with the market remaining bullish trend with today’s range seen between 69.89 – 73.78.

Crude Nov '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 - Evergrande Debt Situation, Commodities, and Cocoa×

Commodities have been controlled by the Evergrande debt situation the past week or so - adding to an already volatile market. Each commodity has been affected by this situation in its own way. Cocoa has pulled back due macro uncertainty from China. Asian demand has a big affect on cocoa this time of year. As we head into the final quarter, cocoa demand has slowed in recent years. The slowdown during Q4 has mainly been due to the pandemic, there has been less chocolate consumption due to shutdowns and slowdowns.

A few key things to watch - N. American and European demand and weather in West Africa. If production and supplies continue to look like an issue, cocoa prices could end the year around 2800. The next few weeks should be telling, we’ll get more information about the current state of the global economy and see how Covid numbers look as vaccine rollouts continue and people try to continue to the new normal.

Cocoa Dec '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 - Grains - Corn, Inside Week Forming×

With a major Chinese property development firm on the possibly verge of collapse, December corn had a rough start to the week like most commodity and equity markets but has since rebounded very nicely. Yesterday we set the weekly high at $5.31 and at the time of this writing we are “knocking” on that door trading just a few cents under. Below is a weekly December corn chart, as one can see, this week December corn is trading inside last week's price range. If it closes out the week this way (and I think it will) next week’s key short-term numbers to watch will be $5.38 ½ on the upside and $5.06 ½ on the downside. I would recommend traders take their cue from the breakout. According to the Crop Condition and Progress Report that came out Monday, not much has changed. Good to excellent levels remain around 59% with about 10% harvested. With the wild, mixed weather patterns we saw this year in the corn belt I think yields will be the wild card going forward and traders should watch intently as numbers start to come in. Based on what I have heard to date I think we may see the USDA revise yields lower which should be supportive for corn as we head into fall.

 Watch December corn at $4.96 on the downside vs $4.99 and $6.39 ½ on the upside – basically a breakout on the May monthly chart. There are several minor areas of support and resistance inside that range that can help with short term market direction if violated as I mentioned above. Call me at 1-800-367-7290 for more in-depth discussion on these numbers.

I would suggest using an option strategy to manage your futures position risk or an outright option strategy. Implied option volatility recently came down but is still relatively high compared to historical vol levels. You may want to incorporate some short options into your strategy in a calculated risk manner such as bull or bear option spreads. I have 25 years of grain market experience, please feel free to call me at 1-800-367-7290 for more details or to discuss in depth trading strategies. Also be sure to check out my past weekly grain market updates posted on our website.

Corn 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 msabo@rjofutures.com.
Equity - Stocks Slide After Evergrande Misses Payment×

U.S. stock futures are slipping this morning after two strong days from the Federal Reserve’s statements on Wednesday. The rally stemmed from traders welcoming the Feds delay of tapering of the central bank’s bond purchase despite the anticipated rise of interest rates in 2022. However, as of Thursday evening bondholders have not received payments from China’s Evergrande. Evergrande, a private-sector Chinese property developer, will now enter a 30-day grace period to meet the payments. If payments aren’t received during that period, they could trigger a default which many are comparing to the Lehman Brothers collapse. There is a general feeling out of Beijing that the government will step in at some point to intervene despite the massive $300 billion in debt that is owed. The ruling party does not want to see a lack in stability it needs to maintain the power they have achieved. Support today is 440500 and 436000 with resistance checking in at 447500 and 450000.

E-mini S&P 500 Dec '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 Insight w/John Caruso - 09/22/2021×
John Caruso discusses the latest news moving the economy today, including this afternoon's Fed announcement and what a tapering signal could mean for the economy.
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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