Today in Commodities: Ramifications

Well, it looks like we only loss 190,000 jobs last month but the unemployment rate ticked above10% to its highest level since April of 1983. What recovery? I don’t see a recovery; just because prices of stock and commodities have moved up we’re NOT back on track. As for the markets, with more people out of work I guess the demand for Crude oil is perceived to shrink?? Oil fell almost 3% today. Who know from here; I’m getting mixed signals. Natural gas prices ended lower by 4% today and 8.5% on the week. We hold January call spreads for clients and expect a push higher very soon. We have yet to pick a bottom in futures but are getting close.

Stocks could go either way though I was impressed by this week’s action. If forced to pick a direction I would say up but it will be with out my clients. Gold did print above $1100 but we will settle below. I feel there is much more upside but do not rule out a healthy correction in the short run. Clients remain long silver; we would like to see a probe to $18 next week. On a pullback that holds $16.20 on a closing basis we would suggest adding to the position.

March sugar is getting close to the trend line, next week's action will be key. We suggest long exposure. Corn gave up nearly 3% in the last 3 sessions which hurts, being client’s profits are gone and we’re back to where we started. Farmers should get an opportunity to get in the field but I have a tough time imagining the recent wet weather will not impact yields. We like being long March and May 10′ contracts. USDA next Tuesday. Clients are carrying a slight profit on their KCBOT/CBOT wheat spreads but we feel there is more in the trade.

10-yr notes are gaining on 30-yr bonds.. not what we were looking for, if this persists we will need to re-evaluate the December NOB spreads.

Live cattle got hit today trading to a 3 week low, we suggest staying long and buying more on signs of a bottom. This move is likely attributed to cash prices trading lower but over the next 2 months being a bull on cattle should pay off. Currencies were mostly sideways with the exception of the yen strengthening on signs of risk aversion.

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

[Aricool:]

unless the consuming region has a bitter cold winter starting from now until end Jan, you will likely lose your bad on Nat gas. The pipes are literally bursting w/ High pressure. The low injections are not bullish in my eye b/c they are even less than the '02 rate, which was a bitter cold year. The model you should go by is '04, which max'ed storage like now and had avg winter- Nov and Dec crashed. You should not go long until Nat gas drops to 3.5 or until Feb. I've been short since Oct. and it is only b/c of the darn cold snap and damn whimpy bulls that I'm only up 10%.

Nov 07 06:26 PM