Today in Commodities: Dollar Sets the Tone

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Includes: COW, DBA, ERO, FXC, GAZ, GRU, MOO, NIB, SGG, USO
by: Matthew Bradbard

Natural gas prices were higher by 7% today, we advised clients to take their positions off and book a profit on the overall trade. This time the hedge hurt instead of helped, but sometimes being conservative makes you less money, other times it saves you money. Clients booked a profit of $1200 on their January $6/7 call spreads and a loss of $400 on their November put protection; a total gain of $800 on roughly $3100 invested.

Change of plans on the Crude - we were expecting a dip to get clients positioned long but instead we’ve decided to get short buying January $80/75 put spreads today. A 23% appreciation in less than 3 weeks seems too much too fast.

Sugar prices were lower by 2.5% today. On a further break we will be looking to get clients long again. Cocoa should break in the next couple days if the dollar can garner a rally. As for currencies today it is far from a victory but the Loonie was lower by 2 cents today; we are short with clients looking for .9400 on the December contract. The Euro is showing signs of a top, ideally we would see a trade down to 1.47 in the coming sessions.

Equities were lower but still it is way too early to call a top. Clients remain short put spreads at a slight loss.

Grains were uneventful, still looking for an entry from lower levels in corn and wheat. Gold and silver could go either way so we will continue adapt to the ever changing market conditions. For those of you who are not clear, markets are volatile and I do reserve the right to change my mind if that’s what we feel is in our client’s best interest. We think gold and silver will be much higher 12 months from now but 12 days - who knows? There are just too many variables.

Treasuries were higher and although a bit shy of our objective; we advised clients to exit their NOB spreads at roughly a $850 profit per spread.

Live cattle were sideways but we did get a second consecutive close over 86.00 in the December contract. Continue to buys dips. Lean hogs broke lower as we anticipated; our objective is 51.00 on the December contract.

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