A View From The Top

agricultural, Charts, Commentary, News, Technical Analysis

An article in Bloomberg by what we call one of those macro guys says commodities are about finished with corrections and ready to resume a nascent bull market. Mike McGlone, a Senior Commodity Strategist, sees the record $ outflow in 3Q as ending, and this will identify lows across the Board. McGlone says declining commodity prices are inconsistent with a recovering global economy. Copper will be the primary indicator of a CRB bottom.

Mean-reversion is a common theme in the Bloomberg report, suggesting markets have to return to some neutral price level. Crude has reached its mean-reversion at $70, and McGlone sees this as a $60 to $80 range. Copper is down 16% and is a prime candidate for this theory. The copper/crude ratio is also a bullish factor for copper. Gold is a buy due to record spec net shorts and for ETF holdings showing a stubbornness to hold tight. Grains and oilseeds get bullish reviews, while cotton is seen like crude, range trade. If you like bullish research, you will love the Bloomberg article below.

https://data.bloomberglp.com/professional/sites/10/Bloomberg-Commodity-Outlook_Sept_2018.pdf

Varner View

Gordon pretty much missed the Delta so far, but did leave 1 to 2 on the AL Blackbelt, eastern side. The northerly flow from the Gulf will keep chances of daily showers into mid Sep. This same flow creates chances for W TX into Fri. Overall Gordon was a 2 minute quickie, and weather in the States is boring. India has issues with extreme western cotton areas, as does all of Pak. Reports out of Xinjiang indicate a cool start and a cool Aug, slowing down development. Cotton is progressing well, but has fallen behind up to 3 weeks. Warmer weather is predicted in 2nd part of Sep. We remain negative, and like the weather bored.

Technicals

Chart is weekly copper, reputed leader of hard, soft, liquid and edible commodities. Copper reached an exact 50% retrace of the 2011 -2016 bear market at 3.30. It is just above a trend line across 2 highs in 2011, but this may not be an efficient tech consideration. More important is the trend line off multiple major lows shown in lower right, now at 2.18. Near term support lies around 2.50. Weekly momentum is reaching oversold status.


As always, please use protective buy and sell stops when trading futures and options.

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