My July Strategy:
In July I am interested in following commodities:
Soybeans - I stick with my past month call to short. COT picture is in not in favor of long position - Commercials are at record short levels. Despite my call to short Soybeans last month was wrong due to heat damaging the crops but generally I expect prices to go south. And as soon as rains start, price drop will happen. I heard that July should bring some rains. Even if they won't happen new soybeans are being currently harvested and supply side should put some pressure on prices.
Cocoa - I continue holding it and I don't think I will sell it until the end of the month. I am watching COT that starts to show first signals of the end of price rally. Also, historically cocoa ends rally in the end of July. There is a rationale - mid-crop harvesting ends in Ivory Coast, Cameroon, Ghana. If current market rally continues it would support the prices and I may want to hold it but I think I better sell it in July and buy it again in August as mid-crop should press the prices down.
Coffee - coffee was beaten hard during last months. I just quit my shorts as I believed that market has reached its bottom and will be buying KC during July and August to hold until winter. COT report and historical price trends support me.
Heating Oil - July is usually the time to buy HO as prices go up in preparation for coming heating season. COT supports this point of view too. However considering recent drop in oil prices and possibility that market rally chokes soon enough, I would not be betting big on it. Also, HO is expensive these days compare to NatGas. Anyway, tentatively I will be buying and holding till mid of October.
Natural Gas - I am waiting for at retreat in prices to 2.5-2.6 to buy more. The NG market is recovering. It will be back to USD3+ or maybe even USD4 soon enough. Especially if the winter will be cold which is quite possible as La Nina is over. Also, rig count for NG keeps falling while there are more news on plants switching from coal to gas. I bet big on NG. Seasonally speaking, July and August are the months when the price for NG is weak.
Feeder Cattle - I am watching COT picture for FC. It is nearly perfect and should it become perfect I will open longs for 1 months or so.
This is my plan for coming July. I am still neutral corn, live cattle and hogs because I do not feel how much growth potential left for them. I don't know what direction prices will take - signals are mixed. I do not mention wheat not because I am not interested but because I hold position there since before and I am happy to see it growing strong. But growth may end should rains begin. I do not have plans about metals either because they all depend on QE news (PMs) and real growth (industrials). And there are no good reliable news on either - today a Fed member gives a positive signal, tomorrow Bernanke mumbles about his readiness to act. Congrats on this readiness, we've heard this since long time ago. Op Twist is another way of QE but not what fin markets desire. They want him to say "OK, boys and girls it is QE time!" But Bernanke does not care what speculators want and he is correct. His job is not to please the markets but to ensure growth. First 2 QEs did little good to job numbers and real recovery of real sector. Same applies to growth numbers - today PMI is down, tomorrow durable orders are up etc. Markets do not know what is a true direction. There are gossips that Chinese lie about their economic data. EU has met and has agreed on something to act. Wow, good timing and another agreement but little real action. Also, ECRI Index is slightly bearish. It is clear that everything is unclear.