The lean hog futures’ volatility has provided tremendous opportunities for both the hog farmers and the packers this year. Their assessment of value fuels their collective trading requirements. This leaves the farmers selling production at the top and packers paying for consumption at the bottom. We use both of these groups in our discretionary trading at COTSignals.
You can see the results of the discretionary signals in the chart below.
Commercial traders have been selling Eurodollars at an amazing rate. The Commitment of Traders report shows that they’ve sold more than 1,000,000 contracts since mid-September. You can see on the chart below that this selling has shifted their momentum to the sell side for the first time in sixteen months. We took a closer look at this for our piece in Equities.com.
The Commitment of Traders reports showed that commercial corn producers sold more than 350,000 contracts equal to 1,750,000,000 bushels or, about 12% of this year’s crop as estimated by the October 10th USDA WASDE report between February and April. The average price for these forward hedges was around $5.00 per bushel. The summer’s perfect weather has led to record production and this has caused the market to sell off all the way down to $3.20 per bushel. This sell off has brought out the consumption side of the commercial trader equation and our math suggests that they’re just getting warmed up as you can see on the chart below.
We’ve been tracking the commercial traders’ actions via the CFTC Commitment of Traders report for years. Over the years, we’ve determined that their anxiousness to buy or sell matters every bit as much as their total buying or selling in raw numbers. The current situation in the S&P 500 futures is a great example of this.
Orange juice futures sold off this summer as is normal during the primary growing season. Fundamental analysis in this market by the commercial traders via the weekly Commitment of Traders report clearly shows that long hedgers are locking in future input prices as they believe that OJ is a buy under the $1.45 area. You can see their excitement kick in once the market fell below $1.45 in mid-June.
We went into more detail including orange juice futures seasonal and expiration analysis in our piece for Equities.com.
Thursday’s landmark vote to return Scotland to its own sovereignty is becoming a tighter race with each passing day. The interesting part in the analysis is that the money has been flowing into the British Pound and Euro Currency and out of the U.S. Dollar Index. This places the commercial traders’ actions directly at odds with the currency markets’ collective movement over the last two to three months leading into the Scottish secession vote.
We cover the analysis of the following charts in Equities.com.
Commercial corn traders have played this year’s market like the veteran traders they are. They collectively sold more than 370,000 contracts during planting season and have now come in as active buyers in the corn futures. recently repurchasing more than 120,000 contracts.
We discuss the impacts of the commercial corn traders via the CFTC’s Commitment of Traders report in this morning’s feature for Equities.com in , “Corn Market Finding Support.”
Commercial coffee traders take advantage of speculative short covering in the July contract to create new short hedges in the December contract. The strength of their selling clearly states that coffee farmers are thrilled to sell their crops at these prices thus, hedging their forward risk.
This is a very similar setup to the False Breakout in Gold and Silver. These are examples of why we track the weekly CFTC Commitment of Traders reports as we have determined that their actions, based on their fundamental sense of value in their own markets are the most consistent predictors of future market movement. Find out more and register for a free 30 day trial at COTSignals.