MBWealth's Commodity Blog » soybean oil

Will you be my Valentine? 2/14/11

Matthew Bradbard — Mon, 14 Feb 2011 21:02:21 +0000

An early rally failed in Crude today taking prices lower. We advised clients to roll out of May and go out until July. We recommended liquidating bullish positions in options and futures and give yourself two more months of time. Our recommended play is purchasing July $5 bull call spreads. Aggressive clients started to buy May natural gas today; they bought 50 cent call spreads but once an interim bottom is in they will start scaling long into futures…stay tuned. A fresh new high in indices?? A correction is long overdue but all my bearish plays for clients have gotten hammered…thank g-d they’re small allocations and only in options. The green back should see a little more upside but the easy money has been made on longs and likewise shorts in other crosses. We advised clients to take off their bearish plays in the Euro today. We advised clients to lock in profits on their longs in live cattle at the advice of a seasoned cattle trader. We will be eager to buy back June contracts on any set back as we feel new contract highs are likely…stay tuned. We took the remaining profits on silver longs today with clients thinking we could see a 3-5% break in the coming sessions. We will re-establish longs ideally from lower levels but on a trade above $31 we would be willing to get long from higher levels than our exit…as is trading. This would likely signify a leg higher so we would be OK buying high and likely selling higher. As for gold the 100 day MA continues to cap rallies…trade accordingly; that level is $1366 in April. Cotton appears to be rolling over…it has been our recommendation for several weeks to fade rallies here…continue to do so. Coffee was higher by 2.5% today…this is against our clients as we’ve been establishing bearish positions in July options. For now stay the course. In agriculture today we advised clients to exit their longs in corn and to get short May soybean oil. We did so with futures and options and are targeting a break back near 55.50/56.00. We hinted at getting long Treasuries last week and today we started initiating NOB spreads; buying 30-yr bonds against a sale in 10-yr notes. We’re anticipating a 2.5-3.5% appreciation in the price of 30-yr bonds in the coming weeks…trade accordingly.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results

The Line in the Sand November 08, 2010

Matthew Bradbard — Mon, 08 Nov 2010 14:53:27 +0000

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Market Hangover 3/18/10

Matthew Bradbard — Thu, 18 Mar 2010 19:39:53 +0000

Too many shots, too many pints, too much corn beef and cabbage…markets did a whole lot of nothing today. $83-83.50 is still acting as stiff resistance on the May Crude futures; use that as resistance and $79.50 followed by $77.50 as support. Though there is far more profit potential being short or long futures in oil at the moment we prefer sleeping at night and have advised clients to trade options until we get a clearer direction if they intend holding overnight. We are still thinking a set back of $4-6 is likely in the coming days/weeks and have not ruled out a trade back to $70/barrel. Could a 5% down move today be the capitulation low that natural gas needed to find a bottom? Being prices are this close on the front month it is likely to challenge a trade below $4. Prices have not seen that handle in 7 months. Clients were advised to put in limit orders to buy back the top leg of their June call spreads today. It would take a slightly lower trade to get filled. Sugar has put in 2 consecutive positive showings for the first time in 1 month. Lets try this again…as long as prices do not close below 18 cents on the May contract we like being long very lightly as we’ve been burned before. Assuming this low holds a trade back to 23 cents could happen quickly. A safer play could be to trade spreads or options as opposed to futures. OJ traded a nickel lower intra-day but managed to close above a trend line that has held since last fall. We would like to see more downside and should if we can break the aforementioned trend line. Clients exited their May soybean oil puts at a loss of $90/per. Corn is back above the 20 day moving average and as we indicated yesterday we like being long. We are looking for a trade back to the previous resistance in the coming weeks to month; about 60 cents above today’s close. Live cattle a gainer by another 1.5% today to fresh highs; though it is tough hold off selling until we see signs of a top. Gold and silver remained range bound again today with silver off a touch and gold inching higher. The dollar raced higher today taking all other crosses lower with the Euro getting hit the hardest. Roles have once again shifted and now the Euro and Pound are a sale on rallies as opposed to a buy on dips. Our lone currency play is short the Loonie; an interim top perhaps yesterday?

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Luck of the Irish 3/17/10

Matthew Bradbard — Wed, 17 Mar 2010 19:44:59 +0000

I have found that the harder I work and the more research I do the luckier I am. Crude is back near the recent highs having gained nearly $4 off yesterdays lows. The previous 2 attempts above $83 in the last week have failed will 3 times be a charm. We continue to advise clients to be a seller above $81 and a buyer near $77 given the opportunity. Clients hold puts in May contracts and are currently under water. Natural gas has lost its footing again today losing just over 1% as of this post. Clients are lightly long futures and hold June calls and are under water. Energies have not be kind to us of late but in time we think that will change. New highs in stocks today…DO NOT fight the Fed is the saying! The higher prices get on the indices the more room they have to fall. Now that the S&P is above 1150 could 1200 be challenged? We suggest getting out of the bulls way as for futures and will be advising buying more June puts on evidence of a top. Sugar traded below 18 cents/lb for the first time since July of 2009 today though prices settled almost 4% off its low. We want to see more evidence before picking a bottom as we’ve already tried unsuccessfully in recent weeks with clients. We expect further downside in cotton but as we’ve suggested we need to see a close below the 20 day moving average for confirmation; in May 80.85. OJ closed down for the third consecutive day but we want to see a trade closer to $1.30 before we would shop longs for clients. Let the debt market continue to work higher before establishing shorts. Both 30-yr bonds and notes were gainers today but we expect more to follow. If it grows in the ground most likely it was higher today; corn 2%, soybeans 1.5%, wheat 1.85%, oats even joined the party gaining 3.2%.Look for our specialty article on corn published today. Clients are long corn via futures and options thinking a move to $4.50 and beyond. If in fact Ag continues north clients will be advised to take off the May soybean oil at B/E or a slight loss. They own 40.00 puts and are intrinsic but prices have started to move up, gaining 1.17% today. Much like equities the higher cattle get the better sell opportunity I see in the futures, stand aside for now. Prices have gained 12% in the last 2 1/2 months and are in our opinion close to an interim peak…stay tuned. April gold was higher for most of the day but started to break lower in late dealings. We favor the sidelines or selling rallies still anticipating a trade below $1100. May silver remains stuck between $17.10(50% Fibonacci level) and $17.60 (38.2% Fibonacci level) with prices closing smack-dab in the middle. We have July call spreads on with clients but are looking for an exit door as we fear there is more downside risk than upside potential currently. We are right back to where we were 2 weeks ago in copper as prices were higher by 10 cents the last 2 days. We expect downside in the months to come; this is more of a long term trade. The dollar is below the trend line but failed to follow through to the downside. The Pound did rally as expected but the Euro did not…go figure. Our clients Canadian dollar options have moved against them as we’ve yet to get pressure in energies and metals as we anticipated. That is why we played with June options and not futures. They are still alive to fight anther day. We feel it is still doable to see the Loonie come apart but a move down needs to develop from here or we will be cutting losses.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Ides of March 3/15/10

Matthew Bradbard — Mon, 15 Mar 2010 19:37:11 +0000

Downward momentum is gaining as Crude has lost 2.9% in the last 2 sessions. We are expecting this move to drag prices in May to $76/77. As we voiced in our commentary this morning exit ALL longs in distillates until this correction runs its course which should pressure heating oil and RBOB 15-20 cents. Natural gas is still searching for a bottom but we like buying at these levels. We advised new entries to scale into May futures and we still like 50 cent call spreads for June thinking a trade back above $5 will play out in the next 3-5 weeks. We’ve been fooled before as most followers know but the indices are looking heavy. We’ve yet to redeploy money short futures on a position trade but if the Fed meeting leads to selling we will most likely get short once again with clients. Some clients still hold their June ES and SP puts and are down but we are confident that these positions will be profitable. Sugar was off by just over 1% but we are operating under the influence that the lows last week will hold. The intra-day sell off in OJ was nice but not enough to get us interested in longs. We feel May needs to trade closer to $1.30 to be a buyer for clients. We expect cotton prices to trade lower but we suggest waiting for a close below the 20 day MA at 80.35 in May for confirmation. We suggest waiting for more upside in Treasuries to be a seller…maybe the Fed will aid in that. We advised clients to add to their July call options and long s in December futures in corn today. May soybean oil lost an additional 2% today; clients will look to exit tomorrow or the next day on a move closer to 38.00. We suggest waiting for an interim top before jumping in front of the freight train we call live cattle; prices made new highs again today. Gold and silver were marginally higher but “Doctor Copper” was off almost 2%. On a settlement below $3.29 (today’s low) look for an additional 10-15 cents. Monitor the action in the dollar to help trading the other currencies. The line in the sand is the trend line at 80.00 on the June contract.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Spring Break 3/12/10

Matthew Bradbard — Fri, 12 Mar 2010 20:51:09 +0000

This does not feel like Spring Break to me as I need to be glued to the screens. The good news being I live in Ft Lauderdale it may feel like Spring Break at the beaches this weekend. A small victory today as we had a bearish engulfing candle in oil. As of this post prices are $2 off their intra-day highs. We were lucky enough to buy back our bottom legs this morning when oil was positive and now clients own May $75 puts and should be able to profit on the trade as prices make their way closer to $77/76. $5 put spreads that were bought within the last few session stay put looking for lower trade. It has been a long 5 weeks as natural gas lost another 15 cents this week. We are lonely in this trade as most people doubt we can turn around anytime soon but clients remain long via future and options as they believe as do I that we will be back over $5 within a month. Clients still hold June puts in the ES and SP but as prices closed at a fresh high yesterday we advised them to cut losses on futures. We still think we could get a nasty correction but until the markets tops there is no reason to fight the tape. Next week will be key in sugar to see if the almost 35% correction was enough to attract fresh buying. We think it was and expect a grind higher from here. Cotton rallied about 2% today; it was too good to be true down all 5 sessions this week. Clients are short still looking for 75/76 cents in May. Corn has been down for the last 7 session but it has only dropped 20 cents in that time frame. We like being long via options and futures and have advised clients to lift all their short hedges. I would favor July options to May and if interested in futures we would trade the new crop December futures. May soybean oil is down 3.5% in the last 2 sessions; another 1-2% and we would look to book profits on shorts. Stay out of cattle’s path; April made a new high today lifting prices to levels not seen since the fall of 2008. We feel we are close to a top but like stocks there is no reason to jump in front of a freight train. There will be a time and place to get short and we will advise when but not yet. April gold traded below $1100 but closed just above that level. We think more down side is likely and currently own NO gold for clients. Likewise with silver we feel we could get some pressure short term. Assuming the recent H/L a 38.2% Fibonacci retracement is $16.40 and 50% is $16.10. The closer prices are to $15.75 the more aggressive of a buyer we would likely be for clients. Copper prices really did not go anywhere but we did close down all 5 sessions this week. We are thinking if we see another leg down here or overseas copper could get hit 10-20%. The dollar closed down for the third consecutive week and ended below the 34 day moving average for the first time since mid-January. If the dollar continues lower look for all the currencies to temporarily gain. We are using the volatility to scalp intra-day for clients in the Pound and Yen. Clients remain short the Loonie via June puts and took some heat today but should be fine in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Where from here? 3/11/10

Matthew Bradbard — Thu, 11 Mar 2010 20:36:08 +0000

Markets seem to waiting for some type of catalyst to determine the direction of the next leg. Inside day in Crude oil as prices hover around $82/barrel. For new entries we still like the idea of $5 put spreads but we would start looking at the June as opposed to May contract. If currently in the May we would try to buy back the bottom leg; we have suggested for clients to buy back their $70 puts and that would leave them long the $75 puts. A disappointing day for longs in natural gas as yesterday could prove to be just a head fake. Clients remain long via April futures and June call spreads as prices were off 2.4% today. As of this post indices are at the high of the day; we think we are close to an inflection point but we’ve been wrong for the past 2 weeks. If the S&P closes above 1148 exit short futures at a loss. Fourth consecutive down day in sugar but we are assuming yesterday’s low at 18.82 in May will serve as support. May cotton has lost 3.8% in the last 5 session and closed below the 20 day moving average for the first time since February 8th. We are expecting another 2-4 cents and will then be advising clients to lift shorts. Corn was flat on the day while wheat was a small loser and soybeans giving up almost 3%. A larger crop from South America could pressure soybeans another 30-50 cents. Clients are long July soybean meal and down but we are looking for prices to rebound within that time frame, we may average in next week. Additionally they own puts in May soybean oil and should be able to book a profit next week on a move under 39.00 in May. Trail stops down if you are short lean hogs; if the 9 day MA gives way we should see a trade under 70.00 cents in April. Mixed bag in metals; we are still anticipating a trade lower in gold, silver , and copper before we see any substantial upside. The Commodity currencies (Kiwi, Aussie, Loonie) look vulnerable; clients remain short the Loonie expecting a trade under .9500.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

1 year later-Are we any better off? 3/9/10

Matthew Bradbard — Tue, 09 Mar 2010 20:42:28 +0000

1 year ago today equity markets bottomed and a vicious rally ensued but are we any better off than we were at that time? The lack of new buying above $80 hints of a correction to come. Yesterday we made a new high and failed and today we saw a lower high and lower low so I smell correction. Clients own $5 put spreads thinking a trade to $76/75 in the coming weeks. We hate to talk our position but we think natural gas is a BUY. Clients own a light long in April futures and June $5/5.50 call spreads. It is my opinion that this trade is too crowded for the shorts and if we do start to trade higher a short squeeze could happen. The NASDAQ intra-day was above the January highs but the S&P and Dow have yet to reach those extremes. The next few days will be critical to determine where we go from here. Our negative bias remains but as we said yesterday on a close above the January highs in the S&P we would suggest exiting short futures at a loss. CNBC talking about sugar heading lower to me means we are likely close to a turning point; prices in May were lower by 5.80% today. May cotton lost just over 2% today; clients are positioned short July via a fence expecting another 4-6 cents. Grains were lower ahead of the USDA report tomorrow. Clients are holding small option positions long corn, long soybean meal and short soybean oil. We advised clients long December corn futures to sell May against their December so they will be flat into the report. April gold traded down to the trend line that has held since the first week of February but I do not trust the action and think that we are headed even lower. I see support below today’s lows at $1098 followed by $1086. The trading range in May silver today was 55 cents and thought the action was impressive I still see a trade to $16.50 by mid month. We like the idea of having exposure short copper; depending on your risk tolerance would dictate how you attack it but we think a 10-20% correction could happen at any moment. The Euro and Pound continue to be the weak sisters in the currency market but the swings are too wild for me to be interested in trading. Our lone currency trade for clients is short the Loonie expecting a trade below .9500.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

March Madness 3/5/10

Matthew Bradbard — Fri, 05 Mar 2010 20:47:27 +0000

This phrase is coined for the college basketball tournament but I think it is an accurate description of what to expect as a trader this month. At its highs today oil was less than $3/barrel from making new highs on the year. Being bearish for the last 1-2 weeks has made our clients NO $ but we still feel a trade to $75/76 is imminent. We are not disputing a trade in summer is likely up to $90 but first a correction. We still favor $5 put spreads. Natural gas should finish down 3.5-4.0% lower on the week. That is not too bad! Clients have a small long position in April futures and June call spreads and at the moment are all under water. We expect the next 2 weeks to be better to us in energies; that means crude down and natural gas up. Are you kidding me that we only lost 36,000 jobs and unemployment did not change? The equity market is being propped up by the powers that be and if the free market determined prices we would be at least 10% lower. Clients are down on their June ES puts but will stay the course being they have over 3 months time. Sugar closed up 2.4%; we suggest being long May and July via options looking for a move back to 26 cents. For the first time in 4 weeks cotton will finish lower; clients are positioned to take advantage of a set back to 75/76 cents in May. Treasuries were hit hard today and we do think more downside is likely in the coming months but we still feel one will get the opportunity to put on shorts from higher levels. If the recovery is underway which I question and there is more talk of the Fed raising rates traders should re-visit the idea of short Euro-dollars. The charts look like in the next few sessions Agriculture will trade lower. Aggressive traders could use that to get short while I would prefer getting long from lower levels. USDA report out next Wednesday. Our current positions for clients in Ag include long corn, long soybean meal and short soybean oil. We have no positions in lean hogs with clients but it appears a double top could be forming around 74 in the April contract; that level acted as stiff resistance in mid-January as well. Live cattle finished about 1 penny higher on the week; clients remain short expecting a trade back near 89 cents in April. We caution any exposure in gold as we could see a$50 move either way. If lower we would suggest buying the dip. May silver closed at the 100 day moving average today about 15 cents off its highs. We like being long but would prefer to open fresh longs on a set back to $16.50. If we do see a retracement that holds we would think the next leg up would lift prices to near $18.50 mid-summer. Clients were advised to take profits on their Yen shorts today as prices have peeled off 3 cents in the last 2 sessions. We advised those still interested in currencies to get short the Loonie. We are looking for a move in the Loonie back under 95 cents. We are operating under the influence that stiff resistance comes in at .9750/.9800.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

The Sidelines is my TOP trade 3/4/10

Matthew Bradbard — Thu, 04 Mar 2010 20:57:01 +0000

Sometimes traders can make money by not being in a trade. It is ok to be in cash when you cannot find a trade that you are comfortable with. That is not to say we are not trading we have just been trading more options than we typically do and scaling down our size. $81/81.50 continues to act as a ceiling for April crude but that fact that prices have not broken down more we could see one more gasp at higher ground. We suggest refraining from short futures unless you are willing to ride prices up $1.50-3.00. We prefer a top to be set before we re-visit shorts for clients. That being said we still like $5 put spreads as they allow a bit more flexibility without the inherent risk of a potential overnight loss. Whenever I trade natural gas I am remembered how unforgiving this market is; today prices were lower by almost 4%. Clients have a small long position in futures and are willing to stomach it with plenty of margin if need be. The June $5.50 call spreads we started buying at $2000 are now closer to $1200. We still like the trade and expect it to be a winner but the same position can be bought at a 40% discount. Until prices break above 1125 or below 1111 in the S&P we have no new trade suggestions. Our bias remains down and clients continue to sell rallies and buy puts. Sugar closed below the 200 day MA today; that being said we would refrain from long futures and buying calls until an interim bottom is made. Clients that are already long via calls could take some heat in the short run but we still think a violent trade back to 26 cents in May is viable. Cotton looks like a sell at these levels; we are thinking a move to 75/76 in the May contract this month. Could the Euro-dollar be rolling over? We’ve been fooled before but this trade should remain on your radar. Agriculture turned south today with corn down almost 1%, soybeans 2.25% and wheat 2-2.50%. We advised clients to spread off some of their corn exposure by shorting May against their December. Being they have a large corn long position we also wanted to get short something in agriculture in case of a larger break. What we opted to do was buy in the money May soybean oil puts. If soybeans continue lower and Crude oil comes off as we’ve been anticipating there is no reason why we cannot see soybean oil retrace back to 38.25-38.75. Live cattle were higher but failed to get above yesterdays highs. The Goldman roll starts tomorrow so being we have record open interest in cattle we think that April could come under pressure in the coming sessions. Clients remain long puts and short futures looking for 89.00 in April. April gold was down just over $10/ounce today, we are operating under the influence that yesterday and interim top was made and a set back to $1085-1100 is in the cards. Clients have no long or short exposure in gold presently. With silver taking the January high and February low a trade to $17.35 serves as the 61.8% Fibonacci retracement level in May silver. We like silver in the medium to long term but a correction back to $16.50-16.85 is not out of the question short term. The reason we choose to trade spreads often in gold and silver is because the flexibility it allows in case a trade moves against you. Likewise if you are right out of the gate on direction you still make money just less than an outright. Continue to fade rallies in the Pound though we do not suggest trading without stops. We are using the 5, 15, 30, 60 minutes charts for entry and exit. The Yen was lower by almost 1 point today; clients hold June puts expecting a trade near 1.10 in the coming weeks. As for central banks both the ECB and BoE kept rates as is; the ECB at 1.0% and the BoE 0.50%.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.