RJO FuturesCast

October 22, 2021 | Volume 15, Issue 42

The Markets

Metals - Can Gold Finally Breakout to the Upside

It is still too early to say for sure, but gold does look like it’s about to breakout above the 200-day moving average. A close above $1,800 would be very positive for the gold bulls and considered a technical breakout. Of course, we will need to see a confirmation with another day or two of follow thru to the upside. It’s important to note that the treasury yields have been trending higher as inflation becomes undeniable and longer lasting. So, one could conclude that gold’s rally is a sign of inflation fears. Gold is the “inflationary hedge” and it is just a matter of time before gold moves higher due to inflation really heating up. I’m surprised that it has taken so long. But, again, I must stress the importance of a confirmation that the breakout is real. At the time of this writing (Friday morning) December gold is trading at $1,808. It’s early and I need to see a close up here. Followed by another close above $1,800. It will be inflationary fears that drive the next big bull market in gold.

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 -

December contract silver futures are up 15-cents, trading around $24.30. The trade is turning up as per the weekly chart below. From my analysis, pulling back from these levels would be seen as buying rather than selling. The Hightower report this morning mentioned those Fed members are expressing concerns over inflation. If you have been to grocery stores recently, you could sense that things are a touch more expensive than they used to be, even from six months ago. More on this another time. From the technical perspective, markets are turning up. Give me a call or email me. I have recommendations in March silver that I would be happy to discuss over the phone. Have a great weekend!

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 7th Consecutive Weekly Gain

The price of crude oil has risen above $85 a barrel and the commodity is set to make its 7th consecutive weekly gain. Crude oil hit a 3-year high on Thursday and continued to ride the escalator up making a 92-cent gain early Friday morning before settling around $82.78 for the December contract at the time of this writing. The gas shortage in Europe is a huge influencer on this current run, and with winter coming, it doesn’t appear it will end anytime soon. Investors seem to agree that as global energy demand is high, there is little reason to be short on crude oil. Crude is seemingly on a one way trip to the top and there doesn’t appear to be signs of it slowing down. Stay tuned for further updates.

Crude Oil Dec '21 Daily Chart
Softs - Cocoa Demand and Production Outlook

Cocoa prices in the December futures have pulled back, dropping below 2500 recently. Longer-term demand is strengthening is most areas of the world. Asian grinding data came in weaker than expected -bringing prices down to support levels but prices should recover in Q4. Weather is a big question for Ivory Coast. Will too much rain hurt production? Will there be enough cocoa to support the increase in demand for 2022? These factors all come into play while positioning the longer-term trade.

For the short-term, look at 2580 for near-term resistance. A pop above this should send prices back to 2650 on bullish news. For now, traders should continue to watching demand for key regions of the world – North America, Europe and Asia. Weather patterns in West Africa will also affect the trade. Trader’s should take a cautious approach for now as prices in Q4 for cocoa has been anyone’s guess the past few years as demand has been unpredictable.

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 Watch for Another Breakout

Last week I advised traders on the following “If we see corn close in the upper 1/3 of the daily trading range we may see some follow through to the upside early next week.” We started out the week on a positive note before hitting a weekly high of $5.40 on both Wednesday and Thursday. The last 2-days the market has been consolidating. Traders should watch for a breakout above $5.41 or a break below $5.27 for short term market direction.

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. There are several minor areas of support and resistance inside this range that can help with short term market direction if violated. 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 your futures position risk or an outright option strategy. Implied option volatility has come down quite a bit from its most recent highs mainly due to the consolidation and tighter trading ranges. I have 25 years of grain market experience, feel free to call or email with any questions you may have.  Be sure to check out my archived weekly grain market insight articles posted on our website.

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Corn Dec '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7290 or msabo@rjofutures.com.
Agricultural - Slow Go in Cattle

Cash cattle seems to be a slow-go recently with the futures market still holding a large premium over the cash. One of the main reasons has been disappointing export sales the past couple weeks. For the USDA Cattle on Feed report today, traders see placements for the month of September near 101.4% of last year in the 97.5-104 range. Marketing's are expected near 97.5% of last year, 97-98.9 range. Total Cattle-on-Feed for October 1 is expected near 99.4%, 98.6-100 range. US beef export sales for the week ending October 14 came in at 7,809 tonnes for 2021 delivery and net cancellations of 196 tonnes for 2022 for an overall net of 7,613. This was down from 15,449 the previous week and lowest since last November. The average of the previous four weeks is 16,492. Cumulative sales for 2021 have reached 920,100 tonnes, up from 797,500 a year ago and the largest on record. The five-year average is 735,500. The USDA boxed beef cutout was up 44- cents at mid-session yesterday and closed 63 cents higher at $280.66. This was up from $280.32 the previous week. Cash live cattle prices appear to be holding about a 50-cent premium over last week. There was some light trade on Thursday at or inside the ranges from Wednesday's heavy-volume day. As of Thursday afternoon, the 5-day, 5-area weighted average price was 124.27, up from 123.82 a week ago. Fourth quarter production is expected to decline from last year's fourth quarter, but the decline is less than 1%. The USDA estimated cattle slaughter came in at 120,000 head yesterday. This brings the total for the week so far to 482,000 head, up from 480,000 last week and 479,000 a year ago.

Live Cattle Dec '21 Daily Chart
Equity - Stocks Mixed After Record Close

U.S. stock futures are mixed this morning after the S&P 500 recorded a record close on Thursday. That index fell 0.2% on the open while the tech heavy Nasdaq Composite dropped 0.4% and the blue-chip Dow Jones Average was up slightly.  Even with the concerns about inflation and supply-chain problems that are threatening the post-pandemic recovery, stocks have a way to keep rising on strong earning reports.  Nine out of 10 U.S. companies had reported earnings that beat Wall Street expectations. Leading the way was American Express at 3.5%. Thursday also showed that jobless claims numbers improved to their lowest levels since March 2020, falling more than expected as layoffs, firings and work separations slowed in the labor market.

Support today is 452000 and 446650 with resistance showing 455000 and 456500.

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 Outlook w/John Caruso - 10/21/2021
John Caruso discusses the action moving today's market as we've seen a rather slow day in the equities and a decent sized sell-off in the oil market.
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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