Archive for the ‘Food and Fiber Futures Trading’ Category

The first week of this month, cotton futures were in a down-trend and I had been in a short position with it, but then…something happened.  Cotton futures have climed a wall these past three weeks making this current move the biggest in two years.  Investors and demand from textile mills are reportedly behind this 19% monthly climb.

The CFTC regulatory body’s committment-of-traders report shows large speculators and hedge-funds increasing their bullish posturing as of recent for the first time in seven weeks.  Also reported was a record number of cotton bales exported since the fiscal year beginning August 1st.

New York’s ‘Delta Brokerage’s’ owner, Tom Reardon has this to say, “We’ve got kind of a perfect-storm scenario going on…the trades and speculators are trying to buy the market at the same time.  They have been actively buying cotton in the cash market, and our crop is on the small side.”

Two years ago, the cotton harvest reached 19.2M bales.  Today, our national harvest has dropped to 12.4M bales according to our USDA figures.  How’s that for bullishness…?

Since the low earlier this month the trend for cotton has rolled over to UP, however, there has been absolutely NO PULL-BACK since – and that is what I’m patiently waiting for…

After reaching the highest price in nearly three decades, sugar futures took a dive to their lowest levels in 10 weeks after Egypt canceled their planned purchase.  Just this past Sunday, the North African nation cited ‘high prices’ and canceled their 50K metric ton order of raw sugar.

Just yesterday the front month sugar futures contract spiraled more than 7% which is the biggest loss for the market since nearly this time last year.  After sugar prices reached multi-year highs earlier this month, it’s now down a total 21% for the month.

Newedge USA’s senior V.P., Michael McDougall, said today in a report, “We’re in the process of unwinding the ‘fluff,’ or speculative excess, or risk premium.  It would appear the bloodletting is not finished.” 

He went on to say he expects the sugar market to drop another full-cent in price.  Could this just be a mere correction in the overall up-trending sugar market…?  I think we need to watch how the action plays out once this selling spree has found support!

Renewed concern for consumer, or investment, demand to decrease after sugar prices doubled late last year sent sugar futures to an eight-week low. For this last week, sugar prices have remained below it’s 10-week moving average.

The CFTC reported recently that index-fund managers and the group of ‘large speculators’ (including hedge-funds) have abandoned their long positions on the view the up-trend in sugar is over. This is a change of status in the last two months.

Senior market strategist at Lind-Waldock, Phil Streible, puts it this way, “The (sugar) market is pulling back. Once we started to break through last night, it seemed like a lot of liquidation.”

Late last year, adverse weather hindered sugar production in both Brazil and India – the world’s number one and two top sugar producers. This year so far, sugar is down just over 5%.

Yes, there are other reasons for sugar spiraling downward today, like Pakistan’s ‘rumor’ to cancel it’s order to purchase, but I smell blood in this market and all the right conditions are set for the commercial sugar users to catch the market by surprise. This is my bet. Until May Sugar futures take out 24.87, the trend remains UP in my work.

Continuing with the global sugar deficit from yesterday, it is reported that China – the worlds second largest sugar consumer – may have to import sugar after April just to maintain their stock piles (according to the National Australia Bank, Ltd.).  The director for commodity sales for the Melbourne bank, Mick Pitts, reported today, “They (China) will likely still have to come to market, if only to maintain reserve (sugar) stocks prior to their new crop late in 2010.”

Could China’s demand send sugar prices spiking beyond recent highs…?  Just yesterday a research report from Beijing’s customs office stated the country may have to buy more sugar to fill a shortage caused by adverse weather (exactly what we have been reading about here).  China is reported to have sufficient (sugar) stockpiles to hold them over until the second quarter, but after that…the demand will begin.

The ‘open interest’ for the May Sugar futures contract has now surpassed that of March Sugar.  For that reason, we’ll start trading the May Sugar futures contract tomorrow…

We are in the midst of an all out global sugar shortage, for those of you new to this blog. Currently, sugar prices are as high as they have been in three decades and we can expect prices to remain at these levels, or higher, into the third quarter this year. Sugar demand is expected to remain steady to strong in North America and the Asian sub-continent.

Hedge-fund manager Sean Diffley said today, “As we enter the second quarter, we enter the inter-crop period for South Brazil when export (sugar) supply is minimal. Countries like Russia will return to the market in force. The acutest part of the deficit may not be apparent until the third quarter.”

Many countries are planning to buy physical sugar to help keep their domestic prices under control – which is expected to worsen the sugar deficit to almost 12M tons by the end of April. That’s 50% MORE of a deficit than earlier predicted at 8.33M tones last October. In this industry, that’s serious!

What could possibly hinder sugar supplies from here…? The very same reason that sugar prices spiked late last year, and that is weather problems. Here’s Diffley once again, “The forward sugar curve already reflects the assumption that Brazilian production will rebound significantly. If we see another rainy harvesting period we may not see the surplus in 2010-2011 that analysts are assuming is a given.”

If sugar breaks out above its recent highs, the sky is the limit. I’ll keep you posted…

If the economy stalls, will there be any less demand for cotton…?  That’s the concern shared by those trading cotton futures at the ICE Exchange in New York City today, as well as a higher dollar weighing on cotton demand.

Today’s cotton prices are the lowest since November, while the US Dollar spiked to its highest levels since this past summer.  Cotton prices are actually DOWN 13% from January’s 18-month high.

Mike Stevens, an independent analyst and trader located in Louisiana, had this to say about cotton today, “People are scared from yesterday…I have low confidence on saying anything fundamental is going to affect this market right now.  Cotton can’t go anywhere by itself.”

Very soon the National Cotton Council should be publishing the US cotton planting intentions to its website.  Since cotton prices jumped 54% last year with adverse weather damaging crop quality, we can expect more farmers planting the cash crop.  The US remains the world’s biggest exporter of cotton.

We’re still short this market, with NO BOTTOM in sight just yet…  Keep abreast of my current trades each day at SchadFutures.com | Track Record

The worldwide sugar supply shortfall than we have been writing about lately will be higher than originally estimated. The revised outlook now has global sugar production trailing ample demand by about 8M metric tons this harvest season.

The managing director of Trendphonic Futures Trading, Hank King, puts it this way, “Sugar is a fundamentally strong story. The numbers just keep coming out a little bit worse than before.”

But what goes up, must eventually come down…Brazil is already taking steps towards supply meeting demand. It’s reported that the 2010-2011 sugar cane harvest in Brazil, the world’s biggest grower of the sweet stuff, will rise by 40-45% than the expected 35M metric tons because current high sugar prices are prompting farmers to increase their plantings.

We’re currently long the sugar market, and the roller-coaster ride ride at these high prices do indeed feel as if though a high is near.  Keep abreast of my current trades each day at SchadFutures.com | Track Record

Once each week, usually on Friday evenings, I update my 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 my 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, I monitor them on a weekly basis. Although the futures markets themselves will ultimately provide the most accurate illustration of trend, these (weekly) charts that I have identified, serve to forewarn us of the next possible bigger move.

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

UP Trending Futures Markets: Sugar, Lean Hogs, Russell 2000, Cotton (New this week.)

DOWN Trending Futures Markets: Soybeans, Wheat, Silver, Soy Oil, Corn, Kansas Wheat, and Euro-currency – these last five all new this week.

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

Once each week, usually on Friday evenings, I update my 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 my 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, I monitor them on a weekly basis. Although the futures markets themselves will ultimately provide the most accurate illustration of trend, these (weekly) charts that I have identified, serve to forewarn us of the next possible bigger move.

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

Currently UP Trending Futures Markets: Sugar, Lean Hogs, Russell 2000, and removed this week – 10yr. T-Notes: They’re off and running, and we’re long with the new trend!

Currently DOWN Trending Futures Markets: Soybeans, Wheat – both new this week. Japanese Yen is removed this week because the trend has turned UP just ‘this’ week.

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

We’re just three weeks into January.  Let’s  highlight this week’s three BEST trades…and the worst three.

Here they are…The winners:

Sugar - $996.80 per contract score!

Live Cattle – $950 per contract score!

mini-Silver – ($75) per contract loss.

…and the losers:

Lean Hogs - ($280) per contract loss.

Soymeal- ($110) per contract loss.

mini-Silver- ($75) per contract loss (as above – only five ‘closed’ trades this week).

Follow my trades each and everyday at SchadFutures.com | Track Record – See you there…

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Informational purposes only…Not intended for solicitation of securities.