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As 2019 draws to a close, the volatility of the year’s futures markets forces us to define what 2019 has taught us and to look ahead to 2020. Price Futures Group sat down with its team of market analysts and futures trading experts to answer the top futures market questions of 2019 – from trading to tariffs, and funds to foreign oil – our experts shed some light on tips for what’s to come.

 

Daniel Flynn
Futures Analyst & Product Specialist
View Dan’s latest reports

Q:  Why are the funds continuing to step on the Corn market (Grains) even with  (GMO) Genetically Modified crops. We have not seen this bad of a year since the 1970’s.
A:   Mother Nature and traders alike did not foresee the flooding of the Mighty Mississippi, not to mention growing areas flooded where they were far from any riverbed. The rains and unpredictable weather have farmers guessing and they are boots on the ground. Also, throw in the U.S.-China trade talks on again/off again kicking the can down the road makes investors edgy. 2% of the Corn crop is what can be human consumption, we are also used to having a carryover that has not been this low in decades. U.S. – China talks gaining traction, Funds seem overly short future with weak cash sales, which could spark a rally in futures and a more even playing field for exports.

 

Phil Flynn
Futures Analyst & Product Specialist
View Phil’s latest reports

Q:  Where is oil going?
A:   76, I expect a year of strong demand

Q:  Are we going to get a US-China Trade Deal?
A:   Yes, very bullish for commodities. This year will be the year for Futures.

QIs Shale oil going to peak?
A:   There are signs that indeed that shale oil will not live expectations. Big     bankruptcies and rising costs.

Q:  Will OPEC Cut production?
A:   I think they will due to Saudi Aramco IPO. They will extend cuts all year.

 

Selo Kraja
Futures Analyst & Product Specialist

Q:  How can I protect my position from being stopped out on these wild headlines to headline market swings?
A:   It’s important to not be overleveraged in these volatile conditions. Use options, if available the shorter-term weekly options, to protect your core position. For long positions, buying puts and/or selling calls would provide protection through a quick headline sell-off and allow you to stay in the position for an eventual recovery. It would limit your profit potential, but also reduce risk.

 

Ron Mark
President, Director of Risk Management

Q:  How will the US China Tariffs affect the markets?
A:   If and when there is an agreement the markets will rally hard. Watch the futures spread for direction.

 

William Moore
Futures Analyst & Product Specialist
View Bill’s latest reports

Q:  Why is the market doing what it’s doing?
A:   Due to two factors 1) Major USDA Reports  2) the uncertainty surrounding the possible signing of Phase One of the US/China trade deal – later in November. The Grain market is hovering over 10 year lows – probably cheap enough but needs a catalyst. 1) Phase 1 Grain eal signed 2) South American weather issues.

 

Tony Raia
Futures Analyst & Product Specialist

Q:  Platinum is priced at a $550 plus discount to gold and $800 discount to    Palladium, when historically platinum has traded at a premium.  Is platinum undervalued?
A:   Platinum is undervalued to both Gold and Palladium.  Based on the demand  prospects for Platinum, it is likely that metal gains significantly on Gold and Palladium.  We expect to see expansion of platinum usage in the auto industry as a catalytic property while the industry converts back from palladium. There are 5 grams of metal in a catalytic converter, which is $140 for platinum  and $270 to use palladium.  This was the reverse pricing when palladium began    replacing platinum in new cars, palladium will be a victim of its own success. Electric cars are using platinum to catalyze hydrogen based fuel cells, not palladium, which is a growth sector for platinum demand. Gold and platinum are popular in the jewelry sector and  ETF (flight to quality) vehicles.  Platinum has set a record for ETF holdings in 2019.  The future is bright for Platinum.

Q:  Why is Kansas City Wheat discounted 85 cents to Chicago Wheat and is there a value play in KC/Chicago deferred spreads?
A:   Though this spread rests at historical discounts, the spread does not offer an opportunity for the remainder of 2019. The disparity in ending stocks is far too great to ignite a quality gain of KC to Chicago Wheat. Weather had an impact on soft red wheat pushing the stocks/usage ratio to its lowest level since 2007, while hard red winter ending stocks are at 491 million bushels, the 4th highest level in history. KC/Chicago will continue to trade in the minus 75-100 range.

 

Jack Scoville
Futures Analyst & Product Specialist
View Jack’s latest reports

Q:  What is the yield potential for Corn and Soybeans given the adverse weather seen early and late in the growing season and demand, mostly Chinese demand and when the trade war might end
A:   I told my clients to anticipate lower yields than a year ago given the wet Spring at planting time and the delayed planting of the crop, but to remember that GMO crops have shown that the yields can hold together pretty well even under extreme weather conditions.  So far, this part has been OK, the yields are not as bad as they would have been in the non GMO days. Chinese demand I expected to be slow and the resolution to the trade war would be slow.  The resolution has in fact been slow, but China has been a bigger buyer than I anticipated.  Swine Flu became a big topic later but not so much for me. China has bought a lot of pork here tariffs or not as the prices in China have been so high for pork that the importer can pay the tariff and still make a lot of money.

 

We’re optimistic that 2020 will hold some unique futures market opportunities and we invite you to stay tuned to the markets by learning about and following the short and long-term insight, posts, and videos from the Price Futures Group analysts at our Markets Insight Blog to supplement and better inform your personal futures trading journey.

Looking for a partner on your futures trading journey? Connect with Price Futures Group.

Happy trading!