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Welcome to the Agricultural Futures Trading’s agricultural / commodity futures trading blog. Each day our veteran AG Futures Trader provides unique insights into the commodities markets with over 20 year’s experience.

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Shortages to Ensure Recovery in Prices Still Not Enough for Sugar Futures

Sugar futures is in a unique situation with “price discovery” with supply and demand, according to the Int’l Sugar Org. They are of the opinion that before sugar prices can recover significantly, global sugar consumption needs to be more than three to four times what the projected supply will be.

The senior economist for the I.S.O. claims the global market should have a surplus of only 1.3M tons starting in October and a small deficit the following year. In October, it will start the fifth-year of a world-wide sugar glut.

Sugar supplies are so high that for sugar prices to recover in any significant way we will need close to a 3-4 million ton deficit in consumption versus supply,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, sharing his insight regarding the current sugar futures situation.

The technical trend for sugar futures remains down with no bottom yet in sight. This has become a tricky market in the fact that in can be weeks before sugar futures retraces enough to “sell the rallies.”

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Coffee Production in Brazil Set for Longest Decline in Almost 50 Years

Coffee futures are once again poised for more upside action as prolonged drought in Brazil is claiming much of that nation’s coffee crop. Coffee farmers are preparing for the worst as Brazil heads for its first three-year production decline since 1965.

Production from the world’s top-grower of the Arabica Coffee variety is expected to drop as much as 18% (from last year at this time) when the harvest ends next month – this coming from a 3.1% decline only last year according to Brazil’s National Coffee Council’s estimates. The Council also estimates coffee farmers collecting less of a harvest next year which would be the longest slump since the mid-’60’s.

Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, shared his insight regarding the current coffee futures situation by stating, It appears as if the only way out of the coffee situation in Brazil is a miracle of much needed rain.”

The trend for coffee futures has resumed up since late last month. The initial margin requirement for coffee futures is $5,700 per contract so I must choose the trades wisely. I have coffee futures higher (in my work & studies) into the end of the week. With coffee futures up 940 points today, our target is about 700 points higher.

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AgFutures Trading Weekend Report: An Insider’s View of the Next Big Market Move

Once each week, usually on Friday evenings, we update our personal weekly commodity trading charts and review them for changes in “net long” or, “net short” holdings between the big commercial commodity traders, large speculators, and the usually uninformed public. This is our professional analysis of “the bigger picture” and current dynamics for each market which provide a spyglass view of the BIG commercial traders and what they are currently doing to influence the futures markets.

As you may already know, insider trading with stocks on Wall Street is very illegal. However, in the commodity trading industry, large/commercial traders MUST report their positions EACH WEEK to the CFTC regulatory body, hence, we monitor them on a weekly basis. Although the futures markets themselves will ultimately provide the most accurate illustration of trend, these (weekly) charts we’ve identified, serve to forewarn us of the next possible bigger move.

Here are the commodity markets which illustrate the changing bigger picture for them:

UP Trending Futures Markets:  None this week.

DOWN Trending Futures Markets:  Soybeans, Wheat, Cotton, Lean Hogs, Kansas Wheat, Sugar, Corn, British Pound, Crude Oil, Euro-currency, Soy Oil and Japanese Yen (New this week.)

To see “An Insider’s View of the Next Big Market Move,” find your way to http://AGFuturesTrading.com | Contact Us and fill in the form on the right-hand side. What are you waiting for…? It’s FREE!

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Corn Futures Up on Outlook of Domestic Yields Not Topping Estimate

Corn futures are up today on the outlook that yields are looking more and more as the USDA estimates for this year’s harvest. The United States is the world’s biggest grower of corn and one of the top four most valuable crops.

Within the last two weeks, the USDA estimated the domestic corn crop to be 167.4 bushels per acre. An analyst from this year’s Pro-Farmer Midwest Crop Tour was quote yesterday saying “national yields probably won’t top 170 bushels per acre” – right in line with estimates.

Devin Brady, President of Progressive Trading Group in Sherman Oaks, CA, shared his insight regarding the current corn futures situation by stating, After the huge move lower corn seems to have found some temporary support. Traders are still concerned about dry conditions in Eastern Iowa as the past week’s storms didn’t drop any rain on the region.”

Corn futures trend remains down with contract lows made just last week. Although I feel more short corn futures trades are ahead, my instinct tells me we may have some type of retracement higher to go first before new lows are made closer to harvest time.

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India Set to Pass China as Biggest Cotton Producer

The Cotton Association of India claims their country is boosting cotton production to near record levels as farmers there are planting the biggest area ever dedicated to cotton. Cotton futures have already fell 24% this year on the news of US and Chinese reserves increasing to global record stockpiles.

To further pressure cotton prices, the Indian harvest (beginning in October) is expected to be more than 6M tons previously estimated for India by another agency, and adding to the nearly 6.25M tons of Chinese output. However, Chinese output can fall 24% next year as their government ends direct purchases from farmers.

Barb Levy, chief director for The Fox Group’s futures division in Chicago, shared her insight regarding the current cotton futures situation by stating, With the Chinese prioritizing their crops, cotton production is expected to be lower, but India’s cotton can more than make-up for China’s shortfall should their weather remain favorable.”

The trend for cotton futures remains technically down at this time. On the first day of trading this month, cotton futures set new contract lows, so I view today’s action as a retracement higher until a clear picture unfolds.

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Cattle Futures at Crossroads with Greener Pastures Signaling Beef Rebound

In America’s heartland, there are developments signaling a changing situation with US beef supplies as the grazing pastures turn greener. The recent rains may be attributed to turning the cattle futures markets into full retreat – but only time will tell.

Drought and cattle selloff at markets all around the nation have put the domestic-herd at a 63-year low, but pasture conditions are said to be mostly recovered from the 2012 originated drought that forced ranchers to sell-off their inventory of animals. Cattle futures are already showing signs of “topping” after reaching record highs highs just last month.

Laura Taylor, a senior commodities broker at RJO Futures in Chicago, shared her insight regarding the current cattle futures situation by stating, “…packer profit margins improved on the recent break and this might slow or stop the steep decline in cash prices see over the past several weeks.”

Although cattle futures trend is technically “up,” I am seeing the first signs of divergence at these levels. If feeder cattle futures continue downward and take out last week’s low (2.1107), I will have to reverse my thinking.

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AgFutures Trading Weekend Report: An Insider’s View of the Next Big Market Move

Once each week, usually on Friday evenings, we update our personal weekly commodity trading charts and review them for changes in “net long” or, “net short” holdings between the big commercial commodity traders, large speculators, and the usually uninformed public. This is our professional analysis of “the bigger picture” and current dynamics for each market which provide a spyglass view of the BIG commercial traders and what they are currently doing to influence the futures markets.

As you may already know, insider trading with stocks on Wall Street is very illegal. However, in the commodity trading industry, large/commercial traders MUST report their positions EACH WEEK to the CFTC regulatory body, hence, we monitor them on a weekly basis. Although the futures markets themselves will ultimately provide the most accurate illustration of trend, these (weekly) charts we’ve identified, serve to forewarn us of the next possible bigger move.

Here are the commodity markets which illustrate the changing bigger picture for them:

UP Trending Futures Markets:  None this week.

DOWN Trending Futures Markets:  Soybeans, Wheat, Cotton, Lean Hogs, Kansas Wheat, Sugar, Corn, British Pound, Crude Oil and Natural Gas, Euro-currency & Soy Oil (These three new this week.)

To see “An Insider’s View of the Next Big Market Move,” find your way to http://AGFuturesTrading.com | Contact Us and fill in the form on the right-hand side. What are you waiting for…? It’s FREE!

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Gain for Year Paring as Commodities Fall to Six-Month Low

Effectively erasing most of this year’s gains, commodity futures markets (as a whole) have fallen to a six-month low with energy & grains declining on signs of ample supplies and a slow-down in China – the world leader in consuming energy and industrial metals.

According to the highly regarded Bloomberg Commodity Index, cotton, grains, and oilseeds have been the worst performing commodities this year. Brent crude oil is currently heading for a second monthly decline, which is the longest losing streak since May of last year.

Nicholas Medina, a futures and options specialist for Capital Trading Group in Chicago, shared his insight regarding the current commodity futures situation by stating, Most major commodity sectors (energies/grains) have continued to feel selling pressure due to robust supplies in the face of declining demand. Discounting unpredictable weather or world events, expect markets to continue to seek out demand inspired lows.”

Most of our agricultural commodity futures markets we trade are in established downtrends and we have been taking advantage of these down moves the best we can. The only commodity futures markets in uptrends now are: mini-gold and coffee. When these down-trending markets turn around, watch out!

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Wheat Futures at a Crossroads as US Raises Export Forecast Amid Harvest Upgrade

Wheat futures initially rallied in early morning trade once the USDA revised its outlook for domestic exports of wheat and global demand – effectively negating the increased production realization in yesterday’s report. Wheat futures have since reversed direction and are down for the trading session having made lower lows from yesterday.

The USDA said in its report yesterday the US is expected to export 25.5 M metric tons of wheat during the 2014-2015 fiscal year – revising its earlier estimate by 500,000 tons. The USDA’s estimate for domestic inventory was little changed even after raising its wheat harvest forecast.

Kevin Riordan, director of research at Capital Trading Group in Chicago, shared his insight regarding the current wheat futures situation by stating, The expected increase in US wheat exports has offset the increase in production. This balance is keeping the ending stocks the same as they were last month.”

The trend for wheat futures remains down, but with a possible bottom – or bottoming action – taking place presently. Hard-red winter wheat futures are within .04c of their January low, and soft-red winter wheat futures appear to be putting in a strong base and “head-and-shoulders” formation.

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