Commodity traders are asked to pay attention to the grains and exotics futures sectors
The exotic futures sector and the grain futures sector may carry the next portion of the commodity bull market to the upside for a multitude of reasons:
o Coffee futures prices recently hit a 10-month high on anticipation of a smaller global crop next year.
o Cocoa futures prices recently hit a 5-month high due to ongoing problems in Ghana and Ivory Coast, where more than 50% of the world’s cocoa supply originates. Government turmoil and swollen root virus (a virus that kills cocoa trees) are 2 main issues that are currently driving cocoa futures prices higher.
o The recent USDA report estimates that Florida’s orange juice crop will be the lowest in 15 years. Florida’s orange juice crops have been decimated in the last 3 years by hurricanes, citrus canker disease, and citrus greening disease.
o The most recent USDA report estimates corn ending stocks at 935 million bushels (an 11-year low). Corn futures prices have corrected from 10-year highs, but rising demand for ethanol and high demand for poultry, cattle and hog feed may cap prices lower. Visit http://www.tkfutures.com/corn.htm for more information on trading corn futures and options.
o Wheat futures prices have recently declined from 10-year highs, but the most recent USDA report estimates global ending stocks to be at 121 million tonnes. This would be a stock-to-use ratio of 21%, the tightest in 11 years. Demand has outpaced wheat production for 5 of the last 6 years.
o Soybean futures prices have risen $1 per bushel due to biodiesel demand, soybean rust issues and anticipated smaller planted acreage due to larger corn plantings next year. Visit http://www.tkfutures.com/soybeans.htm for more information on trading soybean futures and options.
o Any investor weighing the grain commodity trade should also consider El Niño weather pattern predictions for above-average temperatures and below-average precipitation for the grain belt next spring and summer. The weather can cause further problems for an already precarious grain situation.
o The US dollar is also weakening against other foreign currencies, improving foreign purchasing power, which should also stimulate higher demand for US grains and agricultural products.
If you are new to commodity trading, visit http://www.tkfutures.com/basics.htm to learn the mechanics of commodity trading.
For more information on the various futures and options trading strategies, visit http://www.tkfutures.com/strategies.htm [http://www.tkfutures.com/strategies.htm%20]
Commodity futures and options trading is very risky and only risk capital should be used. Go to http://www.tkfutures.com/risk_disclosure.htm to better understand the risks of trading commodities before investing in commodity futures or options. There are no guaranteed good trades.
