Today in Commodities: Whole Lotta Nuthin'

The dollar rally stalls as international currencies rally. Clients will lose on their September Aussie puts as expiration is tomorrow. The good news: that was only a hedge in case of a commodity correction which to date we have not had. In terms of rolling to the next contract, we will not advise that, as currencies seem to be range-bound/directionless.

Oil prices close virtually unchanged trying to figure out where to go from here; clients own December $75/80 bull call spreads from a little higher level. $66.90 serves as the 50% Fibonacci retracement and $65 would be a 61.8% retracement on the October contract. A double bottom at $2.86 in natural gas… it is too early to say.

Gold and silver spike higher today on increased fund buying, and as a technician, to me it looks like a breakout on the charts. With increased interest $1000 and $16 should not be too far off. 1015 should be the top on any rallies and 975 the bottom in the S&P until Friday’s jobs number. We favor the short side but have clients on the sidelines currently. The Treasury complex may continue to move higher, we may re-visit NOB spreads in coming session; buying 30-yr bonds and selling 10-yr notes.

The October 2500 cocoa puts most likely will be a total loss ($370) unless we get a meltdown by week's end. Sugar appears to be taking a breath for another leg up, remain long.

Grains were a non-event today but we do have a USDA report next week. For the time being weather is in the driver's seat. We may place some gtc profit orders in December lean hogs on a further advance. Cattle looks strong, could this be the first inning of the coming cattle bull move?

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Comments

[aureus]

Hi Matthew,
I basically share your opinion on natural gas. But recently I read the story of the Amaranth downfall. As an experienced commodity trader, you surely know all about this. And don´t you have a slight fear that in our quite difficult environment today, there could be a couple of big hedgefunds out there, beeing long in natural gas, that suddenly could be forced to liqudate all their positions due to margin calls - with great downward consequences for the natural gas market.

I would be very glad for a comment on this!

Regards
Aureus

2009 Sep 02 08:17 PM

[Maxe Paul]

"A double bottom at $2.86 in natural gas… it is too early to say."


You know i have accused you of bottom calling on NG, now your calling DOUBLE BOTTOMS?

BTW the price now is 2.68, so your not even close!

2009 Sep 02 10:59 PM

[Matthew Bradbard]

I am qouting November because that is the month I'm trading not October. Get a hobby!


On Sep 02 10:59 PM Maxe Paul wrote:

> "A double bottom at $2.86 in natural gas… it is too early to say."
>
>
>
> You know i have accused you of bottom calling on NG, now your calling
> DOUBLE BOTTOMS?
>
> BTW the price now is 2.68, so your not even close!

2009 Sep 03 08:28 AM

[Matthew Bradbard]

Amaranth went all in on a futures calendar spread so what they were doing was much more risky than what I'm attempting to do. In terms of a hedge fund ..that is speculation?? Who knows. I expect natural gas prices to be higher within the next 30/90 days and then potentially $6/7 1 yr from now.


On Sep 02 08:17 PM aureus wrote:

> Hi Matthew,
> I basically share your opinion on natural gas. But recently I read
> the story of the Amaranth downfall. As an experienced commodity trader,
> you surely know all about this. And don´t you have a slight fear
> that in our quite difficult environment today, there could be a couple
> of big hedgefunds out there, beeing long in natural gas, that suddenly
> could be forced to liqudate all their positions due to margin calls
> - with great downward consequences for the natural gas market. <br/>
>
> I would be very glad for a comment on this!
>
> Regards
> Aureus

2009 Sep 03 08:31 AM

[Maxe Paul]

After todays news it could be even lower than that by November, not a double bottom in sight im afraid.


On Sep 03 08:28 AM Matthew Bradbard wrote:

> I am qouting November because that is the month I'm trading not October.
> Get a hobby!

2009 Sep 03 11:24 AM

[aureus]

Thanks!

terje


On Sep 03 08:31 AM Matthew Bradbard wrote:

> Amaranth went all in on a futures calendar spread so what they were
> doing was much more risky than what I'm attempting to do. In terms
> of a hedge fund ..that is speculation?? Who knows. I expect natural
> gas prices to be higher within the next 30/90 days and then potentially
> $6/7 1 yr from now.

2009 Sep 03 11:51 AM