Today in Commodities: One Quarter Down, Three to Go

|
 |  Includes: BAL, DBA, DIA, EU, FXE, FXF, FXY, GLD, GRU, JJA, JO, QQQ, SGG, SLV, SPY, TLT, UDN
by: Matthew Bradbard

Crude traded to its highest level since mid-January and appears poised to re-visit $85/barrel very soon. We have no long or short exposure with clients currently. Natural gas traded above the 9 day MA for only the second time this month but as of this post is back near its lows, well below $4. It may take multiple attempts at higher ground, but we think a small long position at these levels is acceptable. Those who have bought from higher levels, including some of our clients, should not add until we establish a bottom.

The ADP number seemed low today and I cannot picture a 200,000 plus jobs number Friday, so we could finally see some downside in indices. The line in the sand remains last Thursday’s highs; in the S&P at 1176.50, the Dow at 10894 and in the NASDAQ 1974.25.

Treasuries were higher for the fourth session in a row today; aggressive traders could buy dips on futures in 10-yr notes or 30-yr bonds.

Sugar was down over 7% today and this is why we said hold off until next week. A break above 18 cents or below 16 cents should determine where from here. Cotton acreage is up 15% from last year in line with expectations. Cotton was higher on today’s session but did settle below the 20 day MA; as long as this level holds, stay short on a settlement above exit shorts. Coffee lost 2% today, another 2-3% and we will look at July 10 cent call spreads for clients.

With the USDA report now behind us, Agriculture will focus on the weather. As for the planting intentions, corn acreage came in at 88.8 million acres, up 3% from last year, soybeans at 78.1 million acres, up less than 1% from last year, and wheat acres came in at 53.8 million acres, down 9% from last year. Stay spread in corn; short May and long December until we find a bottom. We have commented on an interest in buying November soybeans from lower levels and the market delivered today as prices in November are approaching $9/bushel. We think they are a buy near $8.80. The KCBOT/CBOT wheat spread picked up 3′4 cents today and should continue to work as long as wheat is moving down.

Silver and gold probed higher in early dealing, still closing higher on the day but back within the previous day's trading ranges. If you are long from lower levels, great, but we would not establish fresh longs as we suspect a move lower could come at any moment.

Bearish engulfing candle in the dollar as it is back near the trend line, losing .55% today. Use 81.00 in the June contract as your pivot point. The European currencies continue to show the most movement against the dollar; this includes the Swissie, Euro and Cable. If you can figure out the dollar trade, these cross as an inverse. The only currency with a defined trend is the Yen: continue to sell rallies.

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