Commodity Traders Asked to Pay Attention to the Grain and Exotic Futures Sectors

 


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The exotic futures sector and the grain futures sector may lead the next portion of the commodity bull market higher for a multitude of reasons:

  • Coffee futures prices recently hit a 10 month high based on the anticipation of a smaller world crop next year.

  • Cocoa futures prices recently hit a 5 month high based on the ongoing problems in Ghana and the Ivory Coast where over 50 % of the world cocoa supplies originate. Government turmoil, and swollen root virus (a virus that kills the cocoa trees) are 2 major problems that are currently influencing cocoa futures prices higher.

  • The recent USDA report estimates that the Florida orange juice crop will be the lowest in 15 years. The Florida orange juice crops were decimated over the last 3 years by hurricanes, citrus canker disease and citrus greening disease.

  • The most recent USDA report estimates that corn ending stocks are 935 million bushels (an 11 year low). Corn futures prices have corrected from 10 year highs but increasing ethanol demand and high poultry, cattle and hog feed demand are may limit prices on the downside. Visit www.tkfutures.com/corn.htm to learn more about corn futures and options trading.

  • Wheat futures prices have recently declined from 10 year price highs but the most recent USDA report estimates that world ending stocks are at 121 million tons. This would be a 21% stocks to usage ratio which is the tightest in 11 years. Demand has outstripped wheat production for 5 of the last 6 years.

  • Soybean futures prices have risen by $1 a bushel based on bio diesel demand, soybean rust problems and the anticipated smaller planted acreage because of higher corn plantings next year. Visit www.tkfutures.com/soybeans.htm to learn more about soybean futures and options trading.

  • Any investor pondering grain commodity trading should also consider the El Nino weather pattern predictions for above average temperatures and below average precipitation for the grain belt next spring and summer. Weather may cause more problems to an already precarious grain situation.

  • The US Dollar is also weakening versus other foreign currencies, which enhances foreign buying power which should also stimulate more demand for US grains and agricultural products.

    If you are a commodity trading novice, visit www.tkfutures.com/basics.htm to learn the mechanics of commodity trading.

    To learn more about the various future trading and option trading strategies visit http://www.tkfutures.com/startegies.htm

    Commodity future and option trading is very risky and only risk capital should be used. Go to www.tkfutures.com/risk_disclosure.htm to better understand the risks of commodity trading before investing in commodity futures or options. There are no guaranteed good trades.

    The author is a 13 year veteran of the commodity trading markets and is also the owner and Chief Excecutive officer of T & K Futures and Options Inc.

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