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

Matthew Bradbard
MB Wealth Corp.
(954) 929-9898
(954) 929-9993 fax
matt@mbwealth.com
www.MBwealth.com

Please do not place any trade orders via email as they will not be executed.

Trading in commodity futures and options involves substantial risk of loss. Past performance is not indicative of future results.

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We will return Tuesday after the long weekend expecting to see the majority of commodities higher…time will tell.

Oil should close about 10% off its lows this week. We expect more upside to come in the weeks to come in Crude, RBOB and heating oil. Some of our clients are back into natural gas; buying September 50 cent call spreads today. We will remain flexible on this position but want to have light exposure to play a potential move to $4.75/5.00 in the coming weeks. As long as prices in the indices sty above the 200 day MA we continue to think we will get a rally out of here.

We’ve advised clients that we will be looking to be a seller between 1125-1145 in the S&P.

Sugar was off by nearly 5% today; clients remain long willing to ride this a bit lower before throwing in the towel. Most are long October futures and short calls against their futures.

Cotton closed lower all five sessions this week; on a trade below 79.50 we expect 77.50.

We advised clients to book a profit on their short 30-yr bonds today. We are shy of our objective but chose not to hold the position over the long weekend. Euro-dollars will close down on the week but until we get a settlement below the 20 day MA we would not get too excited about the downside. Those traders with a long term horizon are advised to have short exposure but do not pile in just yet.

Clients need more downside ideally next week to exit their shorts in lean hogs. December live cattle gave back all their gains from yesterday today closing down 1.21%. Clients started buying yesterday and will likely be adding to their longs next week.

If $1200 continues to support gold we may reluctantly be a buyer next week for clients…stay tuned. Silver was higher by 2.7% this week closing just above the 20 day MA today. Clients are long via futures and options as we expect a trade above $19 in the coming weeks.

Funds were sellers of agriculture today doing some month end window dressing. We suggest using this set back to be a buyer of corn, soybeans and soy meal.

Clients remain long the Loonie and Pound into next week expecting more upside.

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

Copper

Copper for July delivery is higher by nearly 2% this morning to $3.11/lb. At the end of last week Copper was able to find support at $2.90/lb and is now pressuring initial resistance at $3.10/lb. The US Dollar index on Tuesday failed to surpass last week’s high near 87.50 and now is succumbing to selling pressure. A decline below 86.50 would provide further boost to Copper and other commodities. The Euro looks to have made a short-term double bottom. Any strength over the rest of the week would be enough to confirm the double bottom.

In regards to Copper-specific data, stockpiles at the Comex and the London Metal exchange continue to decline. Stockpiles have declined about 13% since the middle of February. Meanwhile Chinese customs data shows imports of refined Copper at “similar levels to 2009.” We must keep in mind that 2009 figures were aided by stockpiling and stimulus spending. At present, Chinese demand remains buoyant and even so at $3.00/lb which is quite elevated in comparison to 2009 price levels. Also while monetary tightening has reduced activity in housing (sales were down significantly at last report), prices are still rising. The Chinese stock market has been a warning sign but we must realize that their market hasn’t always reflected the economy the way we are used to in the West.

Speaking of the West, recent US economic news is supportive. Bloomberg notes that, reports due today on orders for factory goods and new home sales should show gains in April. Also consumer confidence has increased to a 2-year high and the OECD raised its economic growth forecast for the US.

Going forward, Copper will continue to be driven by the US Dollar but perhaps to a lessening degree. Economic data will also be important as Copper tries to find its footing. $3.50/lb now looks to be very strong resistance while $2.90 has been established as near-term support. Copper is within a range-bound pattern and it should stay that way going forward. Look for a bounce to as high as $3.30. If Copper begins to threaten that support then it has negative implications for the global economy.

Platinum

Platinum for July delver is higher by $48/oz or 3% to $1,539/oz as it is recovering from the nearly $100/oz drubbing it took two days ago. Over a two-day period, Platinum fell 19%. In the very short-term we can expect sustained recovery. Platinum remains heavily oversold and a potential short-term double bottom in the Euro is helping Platinum and most markets recover from oversold conditions.

Furthermore, the economic picture in the US seems to be stabilizing in the wake of sovereign debt troubles in Europe. Bloomberg notes that reports due today on orders for factory goods and new home sales should show gains in April. Also consumer confidence has increased to a 2-year high and the OECD raised its economic growth forecast for the US. Finally, Europe’s troubles have served to strengthen both the US currency and US Treasury bonds, which should quell some fears about the US fiscal situation. Hence, US demand is currently not a worry for traders and investors.

In only a few weeks the World Cup will start. Why is that important to Platinum? South Africa is the host country and South Africa is the largest producer of Platinum in the world. ETF Securities believes that Platinum could spike as a result of a disruption in power supplies to mines. Here is how it could happen. State-owned Eskom Holdings generates and distributes 95% of the country’s power. Since it is winter in South Africa, it is safe to assume that with the World Cup taking place, electricity demand will exceed the peak seen last year. In 2008, blackouts in South Africa caused mines to be offline for five days. Keep this in mind as the World Cup approaches.

Normally, we don’t write about the Commitment of Traders Report but I wanted to take a look at it in the context of the 19% decline in Platinum. Open interest and commercial short positions have surged in the last 18 months. Open interest has increased from more than 10,000 contracts in 2008 to nearly 40,000 just weeks ago. We should note that this data is as of last Tuesday. Some of the frothiness was removed during the liquidation. To gauge the extent we will have to wait until the next report. Turning to the weekly chart we see that Platinum has found support at $1,480. The next resistance zone of $1,580 to $1,600 (which is right below the 50% retracement of the decline) is our near-term target.

There may be a number of reasons why but the bottom line is volatility in the commodity markets is here to stay. June Crude oil is back above the 20 day MA having gained $4 on its way to $87 in our opinion. RBOB and heating oil are on the verge or breaking out to new highs; we suggest taking profits on up days because IF we get a correction the distillates are more of a challenge to trade out of.

Natural gas was lower by nearly 8% today on a bearish inventory report; on a new low take a loss on long futures. Clients just missed their entry order on their September 50 cent call spreads today, they will try again tomorrow.

Indices are back above the 20 day moving average; continue to use that level as the pivot point. Fresh short entries should have taken a small loss being we settled above 1200 in the S&P.

Sugar looks to be making a bottom and after 11 straight down weeks it is about time. Clients will be approaching October from the long side next week if we see more positive action tomorrow.

Make sure you put in profit orders on your coffee as this market can be quite volatile; we’re anticipating a trade of 5 plus cents to the upside. Clients 30-yr bond puts got hit a little today. We suggested holding as we still see a trade closer to 116′00 in the June contract next week.

More buying from China helped corn in early dealings but we did taper off by days end closing only 1.4% higher. July outright calls are picking up as well as December futures but some of our clients still need to lift their short July hedges. We suggest on a setback to do so even if it is at a small loss and expect to make that up on your December longs.

We continue to feel KCBOT ad CBOT wheat are a sale above $5.

Lean hogs were lower again today but we think more sellers will appear on a breach of the 20 day MA; in June at 83.45.

Clients hold a small long in gold options expecting $1200 in the coming weeks. Silver was higher by 2% today recouping the losses from the prior three sessions closing at $18.50 today. Clients have very minimal long exposure in futures. We will be looking to buy dips but may need to raise our buy objective…stay tuned.

Copper has failed to break the 10 day MA the last two sessions, when it does look for 10 cents quickly.

Clients were able to but the same June Pound put options liquidated yesterday at a profit back on close to their original entry price. We are looking for prices to fall off again into next week.

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

Trading in commodity futures and options involves substantial risk of loss. Past performance is not indicative of future results.

Jordan Roy-Byrne, CMT

Copper

At the time of last week’s missive, the weekly chart looked bearish. However, the market finished the week strong, forming a bullish hammer on the candlestick chart. The market followed through in the last few days as it broke above 340 to a 19-month high. The weekly close above 340 probably spooked some shorts. Recent data has been mixed. The Case-Schiller index of US home prices showed an unexpected rise in January. Any improvement in the housing market would be bullish for Copper. Meanwhile, we found out that employers cut 23,000 jobs this month. The expectation was for a gain of 40,000. Weak economic data would be more bullish for Copper as it would prompt calls for more stimulative measures. Interestingly, China’s Jianxgi Copper is looking for reduced demand due to cuts in spending on the power industry, which accounts for 45% of Chinese demand. Today we are seeing weakness in the US Dollar and strong metals prices across the board. Technically, the next resistance point is 380 while support is 345. Certainly there can be some short-term upside but traders and investors should be advised of the large overhead resistance at 380.

Platinum

As we go to press, Platinum is higher by about 1.6%. As with Copper, Platinum reversed to end last week and now we see excellent follow through in the first half of the week. The metal is higher by more than 3% since Friday’s close. Anglo Platinum, the world’s biggest producer of Platinum, made some bullish comments today on the metal. Neville Nicolau, the company’s CEO is looking for a nice rise in price and believes the price will err on the high side. He noted that the price of Platinum has been solid due to a mixture of demand. Automotive and industrial demand has increased as of late. As a result, demand remains solid. Assuming the market can close the week near present levels then it would constitute a major breakout. A daily and weekly close at or above 1650 would be significant. We note a thin zone of resistance from 1600 to 1800. If the market can “follow through” then it has decent upside in the near term.

Copper & Platinum Weekly Update

Jordan Roy-Byrne, CMT

Copper

As we pen this, the May contract, the most heavily traded futures contract, is down by about 1.5%. Once again, Copper failed to close the week above 340. Note that seven times in the last 12 weeks, Copper has traded above 340 but has never closed a single week above 340. Copper inventories as per the London Metal Exchange, declined in the last week, which continues a trend that has persisted for about five weeks. Meanwhile the US Dollar has strengthened in the past week, which reduces the appeal of hard assets.

Technicals lead fundamentals and that is why we need to pay attention at this juncture. The probability is high that we won’t see a weekly close above 340 anytime soon. If we do get one, your humble analyst doubts it will be sustained. Looking further out, the market could consolidate in a triangle pattern. The next move could be down to support at 310.

The COT data is not supportive of the bulls but it isn’t as bearish as it was back in January. Since that time, commercial short positions and open interest have declined. The commercials are modestly net short. Assuming 340 continues to hold as resistance, then the weight of the evidence argues for consolidation.

Platinum

As we go to press, the April contract is down by 1% and change. About two weeks ago we said that a weekly close above 1600 would usher in a retest of the January high at 1653. The market started last week with a rally that came within a whisker of 1650. However, the market closed the week with a reversal candle. Thus far this week we see continuation to the downside.

We are at a juncture when technical evidence is arguing that this could be the end to the tremendous rebound. Note that Copper’s latest rebound peaked four weeks ago, while Platinum peaked last week. As far as the commodities complex (excluding Gold & Silver), Copper has been a leading indicator and Platinum a lagging indicator. So recent failure in Platinum could be confirming Copper’s failure.  First support is at 1550 and second support is 1475-1500.

Furthermore, the COT data is presenting more headwinds for bulls. I looked through the past 15 years and open interest is now at a 15-year high while commercial short positions are within a whisker of a 15-year high. Unless the market can battle back and close near 1600, then we have to assume a failure is in place.

Copper has traded higher both today and yesterday primarily as a result of weakness in the US Dollar. A continued decline in inventories monitored by the London Metal Exchange is also buoying the market. Inventories have declined for 10 straight days. On March 2^nd, inventories had reached the highest level since 2004. The Commitment of Traders report shows that commercial short positions and open interest have declined materially since the market’s first shot at 350. Open Interest is down from roughly 160K contracts to 128K contracts while commercial short positions are roughly half the amount of the total at January’s peak. The market continues to struggle with weekly resistance at 340. Again, it is important to watch how the market closes the week. A close above 340 would indicate confidence, as market participants are willing to hold long positions at 340 into the weekend. On the daily chart 345 is resistance. The inability of the market to close above 340 isn’t necessarily bearish. Tight consolidation allows the market to sustain an eventual move in either direction. The short-term outlook is healthy as long as Copper holds above 330. A weekly break above 340 should propel the market to and slightly beyond January’s high.

Platinum

Last week we noted: “Last week our analysis proved correct, as Platinum was able to hit 1600. Assuming it can hold above 1600 into the weekend, then we’d be anticipating a retest of 1650.” The market did close last week above 1600 and now we are seeing follow through to the upside. The market is higher in overseas trade (today is Wednesday) trading at 1635 as we pen this. A move to 1650 looks very probable. Platinum has already broken above its January high when graphed against Commodities, the Euro and the British Pound. We noted relative strength in a past commentary and we are seeing it with Platinum. It is the current leader in the metals group. A long-term chart shows that 1500 is now strong support with 1600 likely to become a support point. The next long-term resistance point is 1800. Fundamentally speaking, the weakness in the US$ is providing short-term support as is the reemergence of the “risk trade.” There is some good news in the microeconomic sense. The European Automobile Manufactures Association reported that new car registrations rose 3% in February. This was led by the UK, Spain and Italy. In an example of how the credit crunch can be bullish for demand sensitive commodities, we note that state-owned South African producer Eskom Holdings is struggling to fund a $62 billion expansion, which is necessary to meet rising demand. South Africa produces 75% of the worlds platinum.

Today’s world food supplies run on razor-thin inventories.

While the food riots of 2008 have all but disappeared from our short-term memories, the threat of them returning grows stronger with every passing day.

According to the World Bank, food prices increased 83% between February 2005 and February 2008. In April 2008, when the United Nation’s World Food Programme warned that a “silent tsunami” of hunger was sweeping the globe because of soaring food prices, it was more than just a clever sound bite tossed off by a bureaucrat: It was a warning that the world’s poor were being squeezed as increasingly higher portions of their family incomes were being spent on the food they required for their very survival.

Improved fertilizers will be a key to the solution of this problem. And they won’t just promote crop growth – savvy investors who fertilize their portfolios will be pleased with their profit harvest.