Corn Futures
Corn futures in the December contract settled last Friday in Chicago at 3.53 a bushel while currently trading at 3.54 unchanged as traders are awaiting the WASDE crop report with estimates around 2.683 billion bushels as the carryover level. Any number below that number will be construed as bullish. In contrast, any amount higher than that number would be construed as bearish as the weather will now be the short-term dictator of price action. The 7-10 day weather forecast still has above-average temperatures. However, the crop at the current time has estimates around 71% good/excellent condition.
I am not involved as I do have a bullish soybean recommendation.
However, if you are long a futures contract, I would place the stop loss under the contract low standing at 3.22 as an exit strategy. I’m keeping a close eye on this market for a bullish position as I want the chart structure to improve, and that will take another couple of days or a replacement in price.
Corn prices are still trading above their 20 and 100 a moving average as the trend is higher as prices are still hovering right near a 3 month high with the next major level of resistance at the 3.60 area and if that is broken, I think we can head up to the $4 level as I see no reason to be short.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Soybean Futures
Soybean futures in the November contract settled last Friday in Chicago at 8.96 a bushel while currently trading at 9.01, basically unchanged for the week. I have been recommending a bullish position from around the 8.97 level. If you took that trade, continue to place the stop loss at 8.56 as an exit strategy as the chart structure will improve early in next week’s trade, therefore lowering the monetary risk. Traders are awaiting this afternoon’s WASDE crop report with estimates around 414 million bushel carryover as that report will certainly send volatility back into this market.
Soybean prices are trading above their 20 and 100-day moving average as the trend clearly is to the upside as the last report stated we only planted 84 million acres which was construed bullish as the 7-10 day weather forecast does have some rain, but above-average temperatures in the Midwestern part of the United States.
Fundamentally speaking, China is starting to come back into the U.S market, which is bullish as the 7-10 day weather forecast has some rain, but above-average temperatures are bullish. The chart structure will start to improve next week’s trade as the risk will be lowered, so stay long as I am bullish in most commodity sectors, especially with all the Federal Reserve stimulus programs.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Coffee Futures
Coffee futures in the December contract settled last Friday in New York at 103.20 a pound while currently trading at 98.25 down nearly 500 points for the trading week as coffee witnessed another false breakout last week as prices remain stuck in the mud.
Coffee prices are trading right at their 20-day but still below their 100-day moving average. I still believe prices are in a bottoming out pattern as we have not experienced a true trend in quite some time. I am sitting on the sidelines, waiting for a true break out to the upside to occur. I do think the downside is limited.
Fundamentally speaking consulting firm Safras & Mercado reported on Thursday that Brazil’s coffee farmers sold 40% or 27.44 mln bags of their 2020 coffee crop as of July 7 well above the 5-year average of 30%. Arabica prices remained lower after Citigroup cut its second half of 2020 arabica-coffee price forecast to 90 cents a pound from a previous forecast of $1.20 a pound. When you trade the commodity markets, you look for a strong trend as choppy trading markets such as coffee are very difficult to be successful in my opinion, so avoid this market while keeping a close eye on prices.
Historically speaking, prices look very cheap as we are still hovering right near a 14 year low. If the Coronavirus vaccine ever comes about, that would be a very bullish fundamental factor for higher prices.
TREND: MIXED – LOWER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE
Wheat Futures
Wheat futures in the September contract settled last Friday in Chicago at 4.92 a bushel while currently trading at 5.30 up nearly $0.40 for the trading week up for the 5th consecutive session as prices are near a 2 month high.
Fundamentally speaking, there are major concerns about the European and Russian crops that have sparked the rally coupled with the fact of short covering. I am currently sitting on the sidelines as the risk/reward is not in your favor to take a bullish or bearish position, in my opinion. If you have read my previous blogs, I had talked about wheat last week thinking that a possible bottom had been in place, but prices have rallied too quickly as I will wait and see what the WASDE crop report states later this afternoon.
Wheat prices are trading above their 20 and 100-day moving average as the trend has turned to the upside as the volatility certainly has come back to life as historically speaking, wheat is one of the most volatile grains of them all. Weather in the Great Plains part of the United States remains dry as that will be the main dictator of short-term price action going forward, so be patient as we could be involved in a bullish position once the chart structure improves.
TREND: MIXED – HIGHER
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Live Cattle Futures
Cattle futures in the August contract is trading higher for the 2nd consecutive session up another 55 points at 99.80 after settling last Friday in Chicago at 99.40 up slightly for the trading week experiencing a relatively non-volatile trading manner.
I have been recommending a bullish position from around the 99.80 level, and if you took the trade, continue to place the stop loss under the two week low standing at 95.07. However, in Monday’s trade, that would be raised to 96.15 as the chart structure will improve daily starting next week. Therefore, monetary risk will be reduced. If you take a look at the daily chart, the 101 level has acted like cement as that level has been touched on about a half dozen occasions only to fail every single time. If that is broken in next week’s trade, I think we could trade significantly higher, so place the proper stop loss as the risk/reward remains in your favor.
Cattle prices are still trading above their 20 and 100-day moving average. If you take a look at the daily chart, a possible rounding bottom chart formation may have occurred as that is a bullish technical indicator for higher prices ahead.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
Natural Gas Futures
Natural gas futures in the August contract settled last Friday in New York at 1.73 while currently trading at 1.83 up about 10 points for the week hitting a 4-wheel high on Tuesday before profit-taking ensued. Above-average temperatures in the Midwestern part of the United States have pushed up prices significantly from the spike low, which was created on June 25 as a possible long-term bottom might be at hand.
Currently, I’m sitting on the sidelines as the chart structure is terrible; therefore, the risk/reward is not in your favor to take a position. However, the downside might be limited as you have to remember prices are almost at a multi-decade low.
Natural gas prices are trading slightly above their 20-day but still far below their 100-day moving average as the trend is mixed and choppy, so be patient as we could be involved in a bullish position in the coming weeks ahead. If you take a look at the downtrend line, it has been broken for the 1st time in months. That is a bullish technical indicator coupled with the fact that the volatility has certainly increased, adding the probability that a bottom has occurred.
TREND: MIXED
CHART STRUCTURE: POOR
VOLATILITY: HIGH
Platinum Futures
Platinum futures in the October contract experienced a wild trading week settling last Friday in New York at 831 while currently trading at 851 up about $20 and traded as high as 892 before a massive sell-off occurred. I have been recommending a bullish position from around the 868 level, and if you took that trade, continue to place the stop loss under the 2 week low standing at 815 as an exit strategy as the chart structure will improve daily starting next week.
Platinum is still trading above its 20 and 100-day moving average as the trend is higher. I also have a bullish silver recommendation, and I think the entire sector will continue to move higher as I see no reason to short the precious metal. The next major level of resistance is between 890 / 900, and if that is broken, I think the trend could accelerate tremendously to the upside.
Fundamentally speaking, this market has a lot going for it, including the fact that the Federal Reserve is throwing trillions of dollars into the economy as that will spark higher prices over time, look at what happened in 2011 when we started quantitative easing so, stay long.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Cotton Futures
Cotton futures in the December contract is currently trading higher by 26 points at 64.15 after settling last Friday in New York at 62.95 as prices are right at a 4 month high continuing it’s slow grinding bullish momentum to the upside.
I have been recommending a bullish position over the last several weeks from around the 62.80 level, and if you took the trade, continue to place the stop loss under the 10-day low, which stands at 58.85. However, next week’s trade will be raised daily as the monetary risk will be reduced significantly. The next major level of resistance is between 65/66, and if that is broken, I think we could trade up to the 70 level as hot and dry conditions persist in West Texas as that could possibly hurt the yield come harvest time.
Cotton prices are trading far above their 20 and 100-day moving average, telling you that the trend is to the upside. If you look at the daily chart, the uptrend line also remains intact as fundamentally. Technically speaking, this market remains bullish, so continue to play this higher as I will be looking at adding more contracts once the risk/reward improves significantly.
TREND: LOWER
CHART STRUCTURE: POOR
VOLATILITY:
What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market allowing you to place a stop loss relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure as I like to place my stops at 10-day highs or 10-day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loss.
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
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