Despite a few choppy trading sessions last week, the bulls remain in the driver’s seat as made evident by the stock market’s largely uninterrupted ascent. Although price action continues to bolster major equity indexes higher, the economic data front is still mixed; retail sales offered some encouragement last week after beating expectations, while consumer sentiment and industrial production data came in worse-than-expected [for more commodity futures news and analysis subscribe to our free newsletter]. Traders wary of the steep rise in equity prices ought to take a closer look at chemical-manufacturer DuPont (DD), as this basic materials bellwether is sending signals of a potential trend reversal, in which case shorting this stock could pay off big once the next profit-taking wave comes around.
By Nat Stewart of NAS Trading LLC Dear CKX Lands’ Inc. Management and board of directors: Over the years, you have done an admirable job as stewards of the CKX Lands Inc. (CKX) properties. I am impressed by the high level of stock ownership by the board of directors and by the meager salaries both executives and directors draw from the company. I was also impressed by the recent moves taken to improve corporate governance practices by removing potential conflicts of interest. All things considered, you have done a fine job, an admirable job, of leading CKX Lands, Inc [for more commodity news and analysis subscribe to our free newsletter].
With applications in oils, animal feed and in our own meals, soybeans have become a staple crop in the U.S. and many other nations. While soybeans are originally from Southeast Asia, with Chinese farmers among the first to domesticate the crop, the U.S. currently both produces and exports more than any country in the world. But holding the majority of the world’s supply of this legume has made the U.S. extremely vulnerable to a new trend that looks to have a big impact on the commodity’s price [for more commodity news and analysis subscribe to our free newsletter].
When it comes to agricultural commodities, wheat is perhaps one of the most important crops, as this resource is a dietary staple throughout both the emerging market and developed world. Because of this dependence, wheat prices tend to exhibit significant volatility, which can be triggered by a wide array of issues; anything from supply disruptions to extreme weather can easily send the commodity into a tailspin [for more commodity futures news and analysis subscribe to our free newsletter].
Major U.S. equity benchmarks are looking to resume their ascent into uncharted territory following last week’s stretch of choppy trading. Although optimism is high on Wall Street, investors are having to digest mixed data that could encourage more profit taking over the coming sessions; ISM data from May hints of a contraction in the manufacturing sector while better-than-expected motor vehicle sales are resonating well among auto stocks and industrial metals [for more commodity futures news and analysis subscribe to our free newsletter]. Amid the recent pullback on Wall Street, bargain shoppers are on the prowl again in search of trending stocks at attractive levels. As such, below we take a look at three big commodity stocks that are trending higher, but have slipped in the last few trading sessions, thereby offering an attractive opportunity to “buy on the dip.”
Backwardation is the process where near-month futures are more expensive than those expiring later in time, which creates a downward sloping curve for prices over time. It is a natural occurrence in the commodity world, but it’s still a phenomenon that traders need to be aware of. Often, a falling futures curve could mean that the market expects the commodity to take a drop in value or that it is currently overpriced [for more commodity futures news and analysis subscribe to our free newsletter].
One of the most talked-about global trends in recent years has been the rapid growth in population. As emerging markets around the world enter periods of robust growth, their populations have also been on the rise. Though a growing worldwide population will certainly cause a number of issues, it will also present commodity investors with a fair amount of opportunities, as some hard assets represent a great way to profit from the current trend [for more commodity news and analysis subscribe to our free newsletter].
While many traders primarily focus on resources like gold or oil, there are plenty of other opportunities in the commodity space. One such opportunity lies in cotton, which can be found in almost every textile product around the world; but as a soft commodity this constant demand does not always translate into consistent returns. The fluffy crop has enjoyed a strong start to 2013, but is well known for its large movements from day to day and for keeping investors on their toes [for more cotton news and analysis subscribe to our free newsletter].
As the U.S. economy finally picks up its pace, many investors are returning to the corner of the market that was one of the primary sources of the 2008 financial crisis: housing. Across the board, housing stats have been on the rise in recent years, including home prices, housing starts, building permits and construction. As such, interest in the raw materials involved in housing have also benefited from the uptrend, particularly lumber [for more commodity news and analysis subscribe to our free newsletter].
The global energy space has been dominated by discussions about fossil fuel alternatives in recent years, as there are a number of solutions to our addiction to these commodities. One of the most popular options has been the use of corn-based ethanol in crude oil, which decreases the amount of crude oil needed when the ethanol is mixed in. While it is not a one-stop solution, many see it as a sign of weening ourselves off of crude oil and working towards a more renewable resource [for more ethanol news and analysis subscribe to our free newsletter].