When in Doubt Go to Cash

Energy:I do not like the action in Crude so I advised clients to cut their shorts in half. Do not misinterpret me; I am not getting long but rather lightening up on short trades. Though I do not agree with the acceleration of commodities that we are seeing, I refuse to fight it. Hedgers should also start to wade into longs in heating oil and RBOB to protect from upside spikes. My suggestion is a long future against a sale of out of the money calls 1:1. High to low natural gas moved 30 cents. Tighten up stops just below the 18 day MA which should ensure at least a small profit unless we gap down tomorrow. My take is if we break that level we may get a chance to get one more buy below the $2 level…stay tuned.

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Three Commodities Exhibiting Backwardation

Trading commodities in today’s markets has been nothing short of difficult. While the first quarter was relatively stable, Q2 has been anything but, with volatility returning to markets and unpredictable behaviors becoming the norm. Commodity futures are already volatile on their own, but throw in rocky markets and that effect is amplified. Rather than trying to make a speculative bet on day-to-day movements of commodities, investors can look to profit from backwardated futures curves. Backwardation is the process by which near month futures are more expensive than those expiring further into the future, creating a downward sloping curve for future prices over time [see also Invest Like Jim Rogers With These Three Agriculture Stocks].

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China, The 800 lb. Gorilla

A positive GDP number out of China influences commodities today. I think today was an overreaction, but a good sign medium and longer term. Crude picked up 1% today and has quickly pulled away from the very critical $100 mark with prices approaching $104/barrel. I maintain that if we stay below $104 on a settlement basis going into the weekend we will see a sub $100 trade next week. My target remains 97.50 in May futures. I believe, today, the case was the strength in the distillates lifted Crude.

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The Best (and Worst) Performing Commodities From Q1

Now that the first quarter of 2012 is in the books, investors will reflect on their holdings to see if it is time to make any adjustments. While most equities turned in one of the best first quarters in recent memory, not all commodities were quite as lucky. As always, commodity price drivers often vary considerably from general equities, so it should not come as a surprise to see some of the more severe losses that some of these assets have posted. For those looking for the next cheap buy, or commodities that have been on a tear, we outline some of the best and worst performing futures from the first quarter of this year [see also 12 High-Yielding Commodities For 2012].

Posted in Agriculture, Brent Oil, Canola Oil, Energy, Exclusive, Gasoline, Platinum, Precious Metals, Soybeans | Tagged , , , , , , , | 6 Comments

Natural Gas and Company In Steep Contango

Contango is simply an unavoidable phenomenon of the commodity market; at some point almost all commodities will fall into this pattern. For those unfamiliar with the term, contango simply refers to a scenario in which near month futures are cheaper than those expiring further into the future, creating an upward sloping curve for future prices over time. Traders and investors need to keep a close eye on futures curves, as they can have a drastic impact on positions while also presenting opportunities for lucrative trades. Now that the ETF industry has cracked commodity investing wide open, monitoring contango has become more important than ever [see also Understanding Contango Through Natural Gas Futures].

Posted in Agriculture, Energy, Exclusive, Gold, Natural Gas, Precious Metals, Soybeans, WTI | Tagged , , , | 5 Comments

The Five Most Active Commodities of 2011

This past year has been plagued with volatility, as global instability has put a major damper on commodity markets. Thought the first few months looked promising, the latter 30 day periods were plagued by euro-zone woes and choppy markets. As if commodities weren’t volatile enough to begin with, throwing in shaky markets only exacerbates things. It was a tough year for a number of commodity investors, but that doesn’t mean that it was without its gains. Gold, for example, has had a stellar year compared to most investments, bringing solid gains in portfolios that have been hard pressed to find any breathing room. One of the most interesting statistics to look at on the year is where the money was flowing and which assets saw the most investing activity. Below, we outline the most popular commodities of 2011 to help investors find the most liquid options for the coming year … See the full story here

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First Soybeans ETF Debuts: Teucrium Launches SOYB, CANE, WEAT

This article originally appeared on ETFdb.com Teucrium, the company behind the first corn ETF and innovative energy commodity products, doubled the size of its product lineup on Monday with the launch of three new single-commodity funds. Two of the new additions to the fast-growing ETF lineup are first-to-market concepts, while a third will offer exposure to a soft commodity already covered by two iPath ETNs. The new Teucrium products are:

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Five Most-Traded Commodity Contracts Of August

August was a tumultuous months for markets across the board. The first ever downgrade of U.S. debts was handed out by S&P while the Fed announced it would be freezing rates for nearly two years. Markets reacted poorly to the headlines through out the month, swaying back forth by as much as 5%. Volume went through the roof as traders made a play to profit on volatile markets, while others pulled their assets and headed for higher ground and safer asset classes [see also Dividend Special: Top Companies In Every Major Commodity Sector].

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