RJO FuturesCast

October 29, 2021 | Volume 15, Issue 43

The Markets

Metals - Silver Pulling Back This Week

The silver market pulled back this week after failing to push over last Friday’s high of 24.92 during Monday’s trade. December silver corrected back to support at 24 and has pushed lower to 23.77 to start Friday’s trading session. A decline in the US dollar on Thursday failed to give the silver market much of any strength although today’s recovery has pressured the silver market lower today. Fundamentally the silver market is torn with the metals markets unable to extend gains with fears that a slowing economy will provide pressure to the downside. On the other side, we saw the lowest initial jobless claim since March which would signal the economy is still recovering. Then we have inflation talks with some calling for new all-time highs for the metal markets in 2022. In stocks this week we saw mixed trade with big misses in earnings from both Apple and Amazon have some thinking the stock market could be due for a correction which could cause some more interest in the metals market. The silver bulls need to see December silver close back above the 24 level or at a minimum find a support level and trade sideways for another push higher. The Bear camp wants to see a close under the 24 level with follow through lower next week to extend this move lower. Support comes in below the market with 23.20 and 22.50 being the next levels the market could find support. Resistance comes in at 24 and then last Friday’s high of 24.92. The market isn’t showing a direction it wants to go with any conviction right now but it looks like whichever side of 24 it can hold is going to determine the markets short term trend.

Silver Dec '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or therrmann@rjofutures.com.
Energy - Oil Headed for First Weekly Loss in Two Months

Oil prices are ticking lower early Friday after falling around 1% to their lowest in two weeks on Thursday. This comes as Iran’s top nuclear negotiator stated that talks regarding the 2015 nuclear deal will resume in November with a deal potentially eases sanctions on oil exports. In addition, US crude stocks rose 4.268 million barrels but remain -61.61mb below last year -28.14mb below the five-year average. The large build was due to a jump in imports with refinery rates remaining low. Gasoline stocks drew -5.36mb to their lowest in almost four years. OPEC+ is scheduled to meet next week as 400k barrels per day are set to return.  The market continues to remain bullish trend with today’s range crudeseen between 81.07 – 84.78.

Crude Oil Dec '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-438-4805 or aturro@rjofutures.com.
Softs - Coffee In a Position for More Upside as Supply Tightens

While the market continues to have trouble keeping upside momentum, it has found support well above its October lows and continues to be strengthened by bullish supply developments, along with improving global demand. The Brazilian currency sold off over 1%, which weighed on the coffee market as this extended period of currency weakness could make famers in Brazil more aggressive with marketing their remaining 21/22 coffee supplies. Good rains over Brazilian growing areas was another source of pressure on the market, as that may improve outlooks on their upcoming production. Technical indicators trending lower at midrange will tend to reinforce a move lower, especially if support levels are broken. A close below the 9-day moving average confirms the short-term trend is negative. Support comes in today at 19760 and 19580 while resistance is at 20220 and 20500.

Coffee Dec '21 Daily Chart
If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or tcholly@rjofutures.com.
Agricultural - Grains - Corn Breakout This Week

Last week I advised traders on the following “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.” Refer to neon green line on the daily December corn chart below (that line is $5.41 on the chart). On Monday, Dec corn started to breakout as it traded to a high of $5.42 which triggered the buy signal I spoke about in last week’s write-up and we continued to get follow through to the upside all week. At the time of this writing December corn is trading at $5.67. While I do think the market may hit some resistance at this level, I believe the current fundamentals and technicals still favor the bulls. The market appears to be on track to head towards the upper major trendline (red line on chart). So far today, the market is forming yet another inside day, if this continues and actually forms today, watch for (you guessed it) another breakout!

The “big picture” numbers still 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.
Interest Rates - Impressive Action in Interest Rates

Looking at the December 10- year note, we have a high of 131-01, a low of 130-140, and are currently trading at 131-00. Watching today’s price action is somewhat impressive driven by a softer than expected durable goods number. What we have seen in the last several weeks is continued strength in the economy and better than expected government reports. I don’t believe one weak number changes much for the Fed, who have relayed clearly to the market that they do indeed intend on beginning to taper in November. The market has priced that in already as we’re seeing a weak durable goods number. In my opinion, we caught some shorts and that has exacerbated the move to the upside today.   There are rumors the Bank of England is looking to lift interest rates at their next meeting. Investors are keeping a close eye on the continued supply chain disruptions that are forcing prices in many of the commodities substantially higher thus producing inflation which might make the Fed raise rates earlier than most anticipated. Looking at some key levels in the Dec contract, some resistance lies at 131-06 and support coming in at 130-04-02.  Traders should continue to monitor any verbiage from fed governors as to clues about the feds thinking.

If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-826-2270 or gperlin@rjofutures.com.
Equity - Stocks Mixed to End the Month

Stocks are taking a bit of a breather after printing new all-time highs earlier this week.  Earnings have been impressive, but supply chain issues are taking their toll as evidenced by highly anticipated earnings of both Apple and Amazon yesterday afternoon.  When one also factors in the massive labor shortage we’re facing, it’s easy to see why investors may be wary about piling in at these levels.  Both companies (and many others) have expressed concern over how these issues will affect their ability to operate in Q4 and beyond.  

Consumer sentiment came in at 0.6%, which is down from last month’s 1.0% reading.  We also saw a drop in personal incomes, which is largely attributed to ending of the enhanced unemployment aid.  It’s likely safe to assume that higher costs, decreased income, and lack of supply were behind the decline.  Speaking of higher costs, PCE came in at 4.4% Y/Y.  While that is a staggering number, the headline PCE inflation has decelerated for several months in a row. 

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 800-669-5354 or bdixon@rjofutures.com.
Economy - Futures Market Outlook w/John Caruso - 10/28/2021
John Caruso talks about the latest news moving the markets today as we are seeing a slight uptick in the S&P 500 and another all-time high in the Nasdaq.
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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