Weekly Update: September 11, 2013

| September 11, 2013

Weekly Update: September 11, 2013

 

Commodity Watch:

Unfortunately, gold and silver trading has turned into a choppy mess in recent weeks.  Increasingly uncertain news flow out of the Middle East, along with continued Fed tapering worries, makes these metals a tough trade.

But keep in mind…

An FOMC meeting is scheduled for September 18th– next Wednesday.  That’s when Ben Bernanke is expected to give important insight into the Fed’s tapering plans.  Until then, we’ll just have to keep a watchful eye on gold and silver.

As far as corn goes, things will likely get interesting soon…

The USDA releases their monthly WASDE report tomorrow.   As you know, the corn market has been turned on its ear this year thanks to the USDA’s lofty crop expectations.

But here’s the deal…

Above average heat enveloped the Midwestern US for most of August.  And it appears that high temperatures are putting a dent in once perfect growing conditions.  

In fact, a recent USDA crop progress report revealed US mature corn is only at 9%.  That’s not even close to where it should be for this time of year.  In fact, the five-year average mature corn level for early September is 28%.

Keep an eye on your inbox for a corn trade soon!

Let’s take a look at our open positions in oil and natural gas…

 

Portfolio Recap:

. . . . US Oil Fund (USO) September 2013 $36 Puts

Unfortunately, it looks as though the unexpected mess in Syria is going to ruin this trade.  As you know, our September $36 puts expire next Friday.  That leaves very little time for oil to drop to levels that would make this trade profitable.

Folks, WTI is still absurdly overpriced at $108 a barrel.  But now it’s looking like this Middle East uncertainty will last for some time to come.  All we can do is wait and see what the news headlines bring.

. . . . US Natural Gas Fund (UNG) October 2013 $19 Calls

Last week’s EIA inventory report didn’t help our natural gas trade.  Inventories rose 58 billion cubic feet (bcf) for the week of August 30th.  That was above analyst estimates for 53-57 bcf of storage additions.

Tomorrow’s EIA inventory report is extremely important for this trade.  We need to see storage additions come in-line or lower than analyst estimates.

For now, keep holding the UNG October 2013 $19 calls…

 

Category: Commodity Trading