Today in Commodities: Holiday Volume

Do not read into market activity today as volumes were light on the Jewish holiday of Yom Kippur. As long as crude holds Friday’s low we will remain long with clients; November contract $65.05. October expires today in natural gas with November becoming the active contract. Recognize this market still trades in deep contango so overnight prices will appear to jump $1 and this is not the case. We have suggested a 50 cent correction before establishing longs for clients. At this juncture $5 appears to be stiff resistance; a 31.8 Fibonacci retracement takes prices to $4.40 in November.

Softs were quiet with the exception of sugar gaining almost 5%. We did suggest lightening up on Friday. Hindsight being 20/20 we would do the same being we did not know which way the breakout would be. The S&P had its best performance in 2 months today, we got short for clients. This may be contrarian but we advised clients to buy December 1075/1025 put spreads for just over $1000.

We reached our objective in the KCBOT/CBOT wheat spread for clients today at 20 cents premium to KCBOT. Corn was a gainer of a nickel, on a move thru recent highs we should see 10/15 more cents. If so we would advise taking partial profits on longs and tightening up stops.

Gold and silver were marginally higher, we still feel lower levels are coming. December 30-yr bonds were higher by 20 ticks as of this post, clients remain long. As previous posts suggest on a trade above 122 we will start looking for an exit.

Live cattle futures were relatively quiet but take a look at the spreads; December and February are gaining on April.

The Euro-currency gave up 70 ticks, stay short. The US dollar was higher by 25 ticks, use the 20 day moving average at 77.35 as your pivot point. The yen overnight traded to 1.1341 in the December contract, we remain long with clients looking for higher pricing. Today’s settlement should be closer to 1.1150 so expect volatility.

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

[woodennickels:]

U.S. Northeast May Have Coldest Winter in a Decade

www.bloomberg.com/apps...

ironically... I commented to my wife over the weekend that I suspected it would be a long and cold weekend as I've noticed the frantic and ranvenous activity of squirrels recently... going long natural gas and oil accordingly

Sep 28 04:09 PM

[Hedged In:]

"U.S. inventories of distillate fuels, which include heating oil, are at their highest since January 1983, the U.S. Energy Department said Sept. 23. Stockpiles of 170.8 million barrels in the week ended Sept. 18 are 28 percent above the five-year average."

Source: bloomberg.com/apps/new...

Sep 28 04:34 PM

[BullnBear:]

It’s my feeling that many aspects of the energy markets are oversold at this point and if we stay with a weak dollar we may see strength return to energy in short order.

Sep 28 04:42 PM

[Belome:]

A rally in the dollar is brewing and will soon accelerate all the bearish fundamental commodity stories...ie crude oil, nat gas, grains, meats. Agree with the bias to short equity rallies the secular bull market is almost over but managers have to prop up the market for Q3 bonuses on thin volume days.

Sep 29 03:07 AM

[Larry House:]

Anything can happen in the short term, but commodities are necessities; they aren't a fad--they don't come and go in popularity. Emerging economies want more of them, population is increasing, the world is not stable--it all means commodities of all types are long-term holdings.

Sep 29 02:59 PM

[Ricard:]

Commodities do not grow. 10 years from now, I would not expect my cup of orange juice to grow into two cups, let alone offer a dividend.

Also, as technology improves, there's always the chance that supply could outstrip demand. There's plenty of risk here too.


On Sep 29 02:59 PM Larry House wrote:

> Anything can happen in the short term, but commodities are necessities;
> they aren't a fad--they don't come and go in popularity. Emerging
> economies want more of them, population is increasing, the world
> is not stable--it all means commodities of all types are long-term
> holdings.

Sep 29 07:17 PM