After a rather uneventful January, BIG movements in the commodity space are finally taken place. This year is going to be the Year of the Commodities. First of all, if you have shied away from commodities because of the recent deflation, you should know that there are other ways to trade the commodities markets instead of just opening a $ 5,000 account and day trading and hope that you can pay your bills. If you are doing that, you are wasting your time.
Commodities trading is a business and if you have money invested in them, you should treat like a business NOT a HOBBY! .
A few forecasts that I mentioned in January are starting to come true and overall, this will impact the way we trade commodities going into the balance of 2016.
I probably have been one of the only analysts out there calling for a top to the USD. Now, we see a few more analysts get on the bandwagon. Today, I finally got some confirmation as the market is tumbling and has of course further to go. Eventually it will head in my opinion to 89-90, but probably will bounce back and retrace at 93 levels. More important than the USD index is seeing some appreciable strength in the Rouble and the Real, two key commodities driven currencies. Their strength will give durable support to the commodities world, including energies, grains and sugar.
If you follow my services, then you know that I have been talking about a bottoming of the CL market for the last few weeks. The calendar spreads and lack of downside volatility in the options markets are telling us that the CL market has bottomed. Also, the fact that Brent has gone from a 1-2 usd dollar discount to WTI to now a strong premium, tells us that the cash markets are paying attention to a potential further strengthening. Key resistance of 34 usd will be tested and broken and I believe that our near-term target is 40-42 and eventually back to 50-52 basis WTI.
If you want to learn how to trade futures calendar spreads in WTI, RBOB, and HO, just contact me and I will have a further discussion with you on this subject.
The latest break in the market last week was concerning to me especially being the bull that I am of the sugar market. At the end of the day, we have to recognize recent Kingsman's report of bearish turn out in the market that had a major influence. However, if you keep up with the physical markets and the market makers in it, as I do, such as Bunge, Olam and even EDF Man, you see a much more bullish outlook in the market. Instead of including all the articles contained in the cyber world, I can let you do your own research on the subject. The bottom line is that Sugar IS VERY UNDERVALUED at the current market pricing and spreads are showing us good bottoming effects on the charts.
If you want to learn how to trade sugar like a professional, let me know and I can help plot out some strategies for you.
To me, it is no surprise that a country like Brazil which has been a leading exporter of yellow corn for the past several years is now having problems supplying its own markets. In recent weeks, we have learned of Brazilian traders having to import yellow corn from Argentina, which luckily has eased their export restrictions. There was even talk that Brazil would impose export tariffs, which I don't believe will happen. The spread between U.S. and South American corn is shrinking putting a bigger likelihood that U.S. will be relied upon more and more into the South American harvest time frame for key importers to buy their physical corn needs.
Low prices have been a cure for low prices and we see the impact that this will have. Spring planting season is just around the corner, but I don't see these cheap grain prices lasting for much longer. Ultimate target for the next 3-4 months are $ 4.50 to $ 5.00 corn, $ 6.00 to $ 6.50 wheat and $ 10.50 to $ 11.00 soybeans. We are already seeing strong spread activity for the grains. Don't miss out and contact me on how to trade the calendar spreads in the grains in a professional manner. Just day or swing trading grains overall is a CRAP SHOOT, Don't fall into the same trap!
Bonds look very overalued at the current time. We are bullspread the GE spreads currently looking for ZB to head back down to 153 levels. I believe that the equities market's weakness has been leading the ZB to climb higher in a disproportionate manner and eventually it will correct itself.
There have been very significant developments in the coffee markets and not the way you might think. Check with me on how to take advantage of money flows in the coffee markets in the next weeks. You will be surprised on this very simple strategy. Sorry, I can't give away all my secrets online. That wouldn't be fair, would it?!?!?
Alpine Trading LLC
RISK DISCLAIMER: PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. TRADING COMMODITIES FUTURES AND OPTIONS IS SPECULATIVE, INVOLVES RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS.
Disclosure: I am/we are long CL, ZC, SB, GE.