Feb 13, 2018 - Commodity Weekly: Suffering commodity space offered nice trade opportunities

A great week for traders is behind, the volatility finally arrived to the commodity markets and more sectors had nice moves during this period. The biggest movers were in the Energy sector were oil and distillates joined the falling natural gas as the updated 2018/19 predictions of increasing US production surprised the markets. The Agri sector had on the other hand nice upside moves caused by weather worries.

Oil

The EIA last week surprised markets with increased estimates of oil production for 2018 and also 2019 by 320 and 330k bpd respectively. According to the updated estimates the US reached 10M bpd oil production already in the first week of February. This was more than 300k bpd more than a week before. The news triggered intensive selling but from the COT data covering positioning until end of Tuesday trading the reduction of speculative longs wasn’t significant. However the second half of the week probably brought some additional long covering. Technically the H&S pattern on daily WTI crude chart worked perfectly brining 5 dollars per barrel profit for short sellers. WTI closed the week below the psychological $60 level and now markets are eying the weekly inventories and the IEA monthly report (to be released on Tuesday) for more direction.

Corn

The grain sector got support from the drought in Argentina, significant for soybeans and corn while the wheat prices surged on the news of insufficient rains across the Great Plains made winter wheat struggling. Only 14% of Kansas wheat was in good or excellent conditions. For corn the USDA estimates lower production, higher consumption and lower stocks which is a perfect mix of bullish factors, however for the rally to be confirmed some key levels have yet to be broken. Last week the biggest obstacles were technical selling and farmers increased hedging activity. The levels to watch ahead are 365 and 370 for the closest corn contract.

Sugar

The two main Brazilian sugar producers announced last week that they are going to focus on ethanol production as much as possible given the fact that sugar is traded at 30% discount to ethanol. This kind of news usually should give boost to prices however the follow up was completely missing and the raw sugar prices were stuck in a tight range. The huge sugar production from India and the increasing European refined sugar supplies are still weighing on the market of the sweetener. However the huge speculative short positioning limits the space to open additional shorts and the market is currently ahead of the decision which direction to go: back into the broken trend-line or droping toward new lows.

Good Luck and remember to watch your risk and be consistent

Mr. Tech Man

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016-2018. 

Contact: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

Read More

Jan 8, 2018 – Weekly Commodity – Commodity Index rebalancing may bring corrections this week

The second week of the year is usually about Commodity Index rebalancing. During this process Commodity Index funds adjust their portfolios to those indices they follow. This often results in buying the worse performing commodities and selling the high performers. Some commodities may see a short term bounce or drop but without fundamental support any correction will be short lived

Oil

The main topic on the ooil markets is the increasing compliance of OPEC members with the extented agreement to cap oil production, although this is in some cases forced by external factors as in case of Venezuela. How ever the effect is the same, at the ned of the equation containing less supply and rising demand the result can be only hogher prices. The positive mood is also supported by overall rise of manufacturing activity. The Energy sector overall maybe not loking that bright due to low Natural gas prices but the oil bulls seem to be driven by strong fundamentals. However WTI is currently testing a key resistance (or rather the top of resistance zone) which could be hard to break as technical sellers will increase activity – also dont forget about rebalancing as crude had a very good year in 2017 and positions need to be adjusted.

Weekly Chart WTI Crude

Corn

Grains in general had a bad year despite several attempts to bounce, no real trend reversal took place. The high ending stocks and concerns about weak US exports pushing prices down. There are fears that the USDA Wasde report will bring another weak export data although on the spot market the export premiums seem to move despite missing any support of freight prices. After corn prices drop again below 350 this opens the room for testing 340 or even 330 in the coming weeks.

Weekly Chart Chicago Corn Futures

Sugar

With the cancelled European sugar quotas the market doesn‘t have a bright future ahead. The prices in Europe are still strongly diverging from the global sugar markets altough the move will have to come after the minimum sugar prices in Europe where also ending with the quota system. The prices tested 15.50 twice and recently dropped back. Give the oversupply and missing any short term weather threats, sugar will probably revisit the bottom of the uptrend channel which could be also broken on the way to tes new lows this year however the prices at or below production cost will bring drop in supplies in the long run.

Weekly Chart Sugar No 11

Good Luck and remember to watch your risk and be consistent.

Mr. Tech Man

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016.

Contact: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

Read More

June 5, 2017 - Market Update

Short recap

Asia mixed

Europe opening higher

Saudi Arabia, Egypt and Bahrain cutting diplomatic ties with Qatar over support of Iran (Islamic Brotherhood and Hamas)

Pushing oil more than 1% higher

All of that coming after Trump’s visit and security threats (banning travellers or notebooks on the planes)

Russia sees oil down to USD 40

UK – attacks and risk of no majority government increasing

It may weight on GBP as UK heads towards weaker government mandate

ECB’s Visco – Italy down most in 10 years

High debt because of low growth but still the average Italian household is wealthier the German one

Fed on track for June hike after weaker Friday’s NFPs but further hikes in question

Unless we see a pick up in inflation and Trump coming with positive fiscal news

Trump to come up with Dodd Frank revamp on Tuesday

But the reality is he doesn’t have enough votes in Congress to push it through

Equities

Investindustrial and Alibaba likely to submit a join bid for The Body Shop from L’Oreal

Blackstone selling Logicor to China Investment Corp (EUR 12.25 bln)

KKR raised USD 9.3 bln in new Asia buyout fund

Exxon misleadig about climate change impact of its business

Pfizer to hike prices of some drugs in US by 20%

Goldman Sachs eying to trade Saudis stocks

Home Capital to face regulators on June 26

Bonds

10-yr Trys yield at 2.17%% (2.16% critical level, on Friday closed below 200 DMA)

10-yr Bund yield at 0.27%

EURUSD

Resistance at 1.1284, 1.1300 (big level), 1.1355/65and 1.14/15/1600 range

Should see lots of hesitation ahead of 1.1300

Support at 1.1213 (10 DMA), 1.1200 and 1.1179 (23.6% Fibo)

New trading range 1.1000-1.1500 ?

Morgan Stanley switching from end year 0.97 level for EURUSD to 1.1800

On strong data, political stability, valuations and equity market inflows

A very nice switch…

USDJPY

US yields taking the cross lower

Support at 200 DMA at 110.34, 110.10 (Ichimoku) and 109.60 (76.4% Fibo)

Bids sitting ahead of 110.00, with stops below

Resistance at 110.50 (61.8% Fibo), heavy level

New trading range 108.00-112.00 ?

GBPJPY - With GBP under pressure and strong JPY double whammy  possible here... looking for lower levels

AUDJPY - Are bears controlling the market?

Weekly Commodity: Oil and Sugar under pressure, Grains in a vacuum Link 

Upcoming Data/Events

June 8 – ECB meeting – Draghi being alone but inflation data from US and JP suggesting ECB to carry on with ultra-loose stimulus

ECB likely to adjust the risk to economy wording but no change to asset purchases

June 8 – UK elections including Scotland, if SNP/Sturgeon wins the independence referendum likely to follow

June 8 - Former FBI director James Comey to testify before Senate

June 11/18 – French Legislative (Parliamentary) elections (a big question mark for Macron to gain majority)

June 13/14 – FOMC meeting – Jun hike probability at 95%, Sep at 28% and Dec at 40%. After Friday’s NFPs Sep hike may be skipped if data doesn’t come strong.

June 15/16 – EcoFin meeting to discuss Greece

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

Read More