Today in Commodities: Time to Diversify

August crude is down 3.6% as of this post. We advised clients to cover shorts from Friday at a 25% net profit. There may be more downside but we wanted to use the premium from crude to purchase natural gas. We advised clients to buy October $5/6 call spreads; filled today at $2300/per. For traders who wish to stay short we feel this correction could take prices to $64 in August this week.

US dollar and yen are higher today, all other currencies moving lower. (Read our commentary issued this morning, we predicted this). In terms of new entries we’ll be looking to get clients long the Aussie and Loonie from lower levels. IF the September yen breaks through 1.05, expect a trade up to 1.07.

A client suggested getting short the S&P and long Treasuries today and we may follow with other clients, bought August ES 850 puts for $1262.50 and July 10-yr note calls for $1187.50.

November soybeans hit our target today; today’s low was 970′2. We have yet to commit funds but will be looking for some long options/futures plays this week. We’re very close to advising clients to buy December corn again. For now we’re in the September option/futures strategy we spoke to last Friday with customers.

Gold and silver should not have much more downside in the short run so we should be getting long futures for clients sometime this week. For now our featured plays for clients remains in options; buy October $100 call spreads in gold and December $3 call spreads in silver.

Orange juice traded lower by almost 3% today, we are down on the November calls we bought for clients last week but feel this trade is still viable. Sugar is starting to look sweet, we advised clients to buy March 10′ 25 cent calls today for 55 points OR $616.

Comments

[Econ Base:]

"......Gold and silver should not have much more downside in the short run so we should be getting long futures for clients sometime this week."

I don't think this can be applied blanket to all. All depends upon specific situations of a given portfolio whether to buy gold/silver. Stick to a predetermined assett allocation and avoid another bubble in your portfolio.

portfolioforlife.blogs...

Jun 22 08:54 PM

[zzhcct:]

if the situation in Iran becomes worse, the crude oil will be up. i do not know the whether higher oil prices are the signs of a strong dollar. but, i think a peaceful Iran will lead a weaker dollar and thus potential inflation.

Jun 22 11:35 PM

[Kenny G:]

I believe that the situation in Iran will be worse.. and of course, the crude oil will be up as usual.

Jun 23 02:46 AM

[Pauly B:]

It seems that refiners are reducing production too and inventories are rising in distillates. I also found that there are not as many oil rigs in use now because of reduced demand. Can you talk about that in future posts and what you are seeing in that area. Thank you

Jun 23 09:03 AM

[Clive Corcoran:]

Just to give a little more perspective on the nature of mini-bubbles in the commodity related sector, Freeport McMorran (FCX) is down by more than 25% in the last seven sessions.

Jun 23 09:16 AM

[RiskReturnO...:]

DBA still have plenty of room to run on the upside ... look for $30's as the intermediate term target for the next weak dollar / reflation rally ... track treasury yield (TBT) and dollar weakness (UUP) to get trigger for next big move up.

Jun 23 06:39 PM