Orange Juice Futures
Orange juice futures in the January contract settled last Friday in New York at 116.85 while currently trading at 116.60, basically unchanged for the trading week looking for some fresh fundamental news to dictate short-term price action.
I am not involved, but I do have a bullish bias towards the upside, especially as we enter the highly volatile winter season, producing a frost in the State of Florida, sending orange juice prices sharply higher. That situation has happened on multiple occasions, historically speaking. If you take a look at the daily chart, the uptrend line remains intact. It looks to me that the 110 level will hold, and I will be looking at a bullish position in the coming days ahead as the chart structure will improve; therefore, the risk/reward is becoming more in your favor.
Orange juice prices are trading right at their 20-day moving average as the trend is mixed at the current time with average volatility. Still, that situation will not last much longer as the volatility during the winter months can become extremely violent, so look to play this to the upside.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: LOW
Silver Futures
Silver futures in the December contract settled last Friday in New York at 25.10 an ounce while currently trading at 24.45 down about $0.65 for the trading week as prices are still stuck in a 3-week consolidation pattern.
I do not have any precious metal recommendations, however, I'm keeping a close eye on a bullish silver trade here in the coming days ahead. I still think prices will break that $30 level, which was hit back in August. The chart structure is starting to improve daily; therefore, the monetary risk will start becoming more in your favor next week. I will be recommending a bullish position if prices close above the 25.71 level while then placing the stop-loss under the Sep 24 low of 21.81 as an exit strategy.
Silver prices are trading above their 20 and 100-day moving average as the trend remains to the upside. I'm also keeping a very close eye on the gold situation as I think that commodity also has bottomed as prices stalled out here because Congress cannot come up with some type of stimulus program for now. However, that situation probably will come to fruition after the U.S. election, so look to be a buyer.
TREND: MIXED
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Sugar Futures
Sugar futures in the March contract settled last Friday in New York at 14.23 a pound while currently trading at 14.28, slightly higher for the week as prices have now hit a 7 month high. I am not involved, but I do believe prices are headed higher. I'm waiting for some type of price pullback, which has not occurred. I am certainly not recommending any type of bearish trade, as I think this commodity has more legs to the upside.
Fundamentally speaking, prices have rallied sharply over the past month on concern about future Brazil sugar output. Archer Consulting Sep 29 said that dry weather that sparked fires in Brazil's sugarcane growing regions could curb Brazil's 2020/21 sugar production by -2.8 MMT. Also, Maxar said that Brazil's sugar-growing regions have only received 5%-25% of average rain in the past few months, leaving crops "extremely dry." Sugar prices have been supported by concern a La Nina weather pattern could lead to prolonged excessive dryness in Brazil that cuts sugarcane yields.
At the current time, my only soft commodity recommendation is a bullish coffee trade. Still, I believe cotton and orange juice are also headed higher, and if you are long, a futures contract stays long as the next level of resistance stands at the 15.00 level.
TREND: HIGHER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE
Coffee Futures
Coffee futures in the December contract settled last Friday in New York at 111.55 a pound while currently trading at 109.00 down over 250 points for the week as prices are stuck in a 3-week consolidation pattern.
I have been recommending a bullish position over the last several weeks from around the 109.55 level, and if you took that trade, continue to place the stop loss under the contract low, which stands at 96.90. The chart structure will not improve; therefore, the stop loss will not be raised as the monetary risk will remain.
Coffee prices are trading right at their 20-day but still far below their 100-day moving average as prices topped out slightly above the 135 level in early September. That is how far prices have dropped as there are still major concerns about the Coronavirus curbing demand coupled with the 7/10 day weather forecast having some rain on the horizon keeping pressure on prices.
I believe the long-term bottom in coffee has finally been cemented. I have a bullish bias towards all commodity sectors in 2021 as we could see big trends to the upside due to all of the stimulus and demand coming back worldwide, so stay long as I think the downside is minimal.
TREND: MIXED - LOWER
CHART STRUCTURE: SOLID
VOLATILITY: AVERAGE
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Wheat Futures
Wheat futures in the December contract settled last Friday in Chicago at 5.93 a bushel while currently trading at 6.26 up about $0.33 for the week higher for the 3rd consecutive session as prices are at a 5 year high.
I have been recommending a bullish position from around the 5.40 level, and if you took that trade, continue to place the stop loss on a hard basis only at 5.79 as an exit strategy. However, in Tuesday's trade, that will be raised to 5.87 as the chart structure will improve daily. The entire grain market continues to climb higher, so continue to play this to the upside as I thought the $6 level could be broken as that has happened, and there's a possibility we could go all the way up to $7 in the coming weeks ahead.
Volatility will start this week as we are now in the very volatile Autumn season as wheat is one of the most volatile grains of them all and can experience tremendous price swings daily. I still don't think we've seen anything yet, as I see no reason to be short wheat or the grain market.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Soybean Futures
Soybean futures in the November contract settled last Friday in Chicago at 10.65 a bushel while currently trading at 10.52, ending the week on a sour note as prices are still hovering right near a 3 year high.
I have been recommending a bullish position from around the 9.14 level over the last couple of months, and if you took that trade, continue to place the stop loss under the 10-day low standing at 10.21 as an exit strategy. In Tuesday's trade, that will be raised to 10.31 as the chart structure will continue to improve. Strong demand from China, coupled with the fact that yields continue to decline throughout the harvest, I see no reason to be short even at these elevated prices.
Soybeans are trading far above their 20 and 100-day moving average as this trend is strong. However, if you have missed the bullish trend, move on as you have missed the boat and look at other markets that are beginning to trend as chasing markets is a terrible way to trade over time. Presently I also have bullish recommendations in wheat and soybean meal as the grain market continues to move higher as trading with the path of least resistance is the most successful way to trade with time.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
Soybean Meal Futures
Soybean meal futures in the December contract settled last Friday in Chicago at 363 a ton while currently trading at 367, up slightly for the trading week as prices hit a 29-month high continuing its bullish momentum as strong demand continues for this commodity.
I have been recommending a bullish position over the last couple of months from the 299 level. If you took that trade, continue to place the stop loss under the 10-day low, which now stands at 345 as an exit strategy. However, in Tuesday's trade, that will be raised to 352; therefore, lowering the monetary risk. I also have bullish recommendations in soybeans and wheat, which also continue to hit a yearly high as the grain market has entered a longer-term bullish secular trend, in my opinion.
Soybean meal is trading far above its 20 and 100-day moving average as this is a strong trend at the current time. I do believe there's a chance prices could trade up to the 400 level in the coming weeks ahead as fundamentally and technically speaking, this commodity has everything going for it at the current time. Traders are keeping a close eye on weather conditions in Brazil, which is the 2nd largest producer of soybeans in the world, as the volatility will continue to remain high.
TREND: HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: HIGH
What do I mean when I talk about chart structure and why do I think it’s so important when deciding to enter or exit a trade? I define chart structure as a slow grinding up or down trend with low volatility and no chart gaps. Many of the great trends that develop have very good chart structure with many low percentage daily moves over a course of at least 4 weeks thus allowing you to enter a market allowing you to place a stop loss relatively close due to small moves thus reducing risk. Charts that have violent up and down swings are not considered to have solid chart structure as I like to place my stops at 10-day highs or 10-day lows and if the charts have a tight pattern that will allow the trader to minimize risk which is what trading is all about and if the chart has big swings your stop will be further away allowing the possibility of larger monetary loss.
If you are looking for a futures broker feel free to contact Michael Seery at 630-408-3325 and he will be more than happy to help you with your trading or visit www.seeryfutures.com
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