Very unusual for me to send 4 updates during the week, as this is usually reserved for major hedge funds paying me a premium for weather services.
Anyway, in these markets, it is important to act quickly and read all of my reports. (IE)–my special update yesterday about selling soybeans call options yesterday after the bullish USDA planting intentions report on Thursday as well as corn. Do not press the short side of soybean futures on this big sell off.
Longer term, I am bearish many commodities, as expressed in my recent reports and BLOOMBERG interview and my comments on Weather Wealth, 8-10 days ago.
However, this extreme heat in the western belt next week may extend for most of July, While perhaps not enough to cause widespread crop problems over most of the belt, it could be enough to put the brake on corn prices.
The corn market may have sold off enough for now. I am not sure. I have been talking about great Midwest rains for a week and one reason why 10 days ago, I said if you were long the all grain ETF TAGS or CORN to take a 5-8% loss and get out. The market has collapsed a lot more since then. That trade, however, was not so bad if you happened to sell the Wheat ETF (WEAT) close to 2 months ago, as a hedge. The wheat ETF (WEAT) has collapsed 30%, though we advised booking about a 15% or so profit, a week ago but staying short wheat call options, longer term, which are way ahead.
Great rains or the Midwest the next week or so then the potential for crop problems later, as I expressed off and on for weeks.
Again, I have been bearish cocoa prices for months. This is the one market where I have had a “consistent” bearish spider of about (-2), since March. The stronger dollar, recession fears and more importantly; good West African weather has pressured this market 20%.
Coffee prices have sold off again. There was talk that hot weather is hurting the Brazil crop. No, not this time of the year. That is hogwash. Outside factors are affecting this market, as well as wet weather in Colombia. I have no interest recommending short term trading in this market but have mentioned for months my longer term bearish attitude being short deferred call options for December coffee. Only if we have a dry fall (their spring) would I recommend exiting this position in a few months.
Again, my biggest winning trade has been my bearish longer term attitude in wheat and though we are bullish December cotton on the weather, recession fears are offsetting the drought in Texas.
Finally, hot weather is helping natural gas rally. I mentioned on Wednesday that a bearish EIA was likely Thursday and if prices fall to look to buy this market for the summer. Well, I never expected prices to break $1.20 in natural gas and there is too much geo-political stuff going on, etc. Nevertheless, hot weather from the Midwest to the south and Texas is not a bearish factor in natural gas
Bottom line: A lot to digest for both longer term and short term traders in very difficult markets right now, so please go back and re-read my recent reports
Have a nice July 4th
Jim Roemer
