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Commodity Low Seen Before the End of May!

by Dave Hightower on May 14, 2012

Below is an excerpt from The Hightower Report’s most recent Newsletter. To receive access to this story, with trade strategies, and our daily coverage of 16 markets, visit futures-research.com for your free 2 week trial!

As of this writing the markets were fully entrenched in a risk-off mentality that was the result of weak US data, renewed Euro zone turmoil and perhaps a measure of political uncertainty in China. While the recent change in leadership in Greece and France cast doubt on past austerity pacts and the uncertainty has injured global confidence, it isn’t a given that the global recovery attempt will be completely foiled by this bump in the road. However, the Euro zone situation will probably remain the dominating theme for now, and it could take some time before the newly installed leaders realize they will have very little capacity to dictate terms to the rest of the world.

Greece’s ability to dictate terms to the EU is effectively zero, and that could be quickly demonstrated by the Germans, who might be able to exert even more influence over the EU in the wake of the temporary power vacuum in France. However, the change in Greek and French leadership will probably have some impact on current affairs, as politicians everywhere are taking note of the disdain for aggressive austerity. As the ultimate goal of politicians is to stay in office, the recent turn of events might result in a reduction of austerity policies. It could also increase the prospect of additional easing from key central banks.

In the US, where austerity is often touted for members of the Euro zone, it might not take much of a slide back towards recession and/or renewed Euro zone debt concerns to resurrect efforts at yet another US stimulus package, especially with the election looming ahead. It is also possible that significant turmoil from the Euro zone situation could bring the US Fed off the bench sooner than previously expected. The Fed made it clear last year that it considered events in the Euro to be very important to the US economy.

China is perhaps content and even happy with the recent decline in commodity prices, as it is providing an opportunity to restock. We suspect that the PBOC is taking note of the recent reduction in inflation (June crude oil down $16/barrel from the March high), which could give it a freer hand to act. Unlike the US, China can insulate its economy from inflation pressures through an aggressive rebuilding of commodity supplies.

We suspect that copper, platinum, cattle and corn have already seen 90% of their anticipated liquidation off of macroeconomic events and that the ECB and the Fed will step up and soothe sentiment when the June S&P contract reaches down to the 1325 level. The economic horizon is dark right now, but sharply lower energy prices for the early portion of the summer, fresh easing from one or more central banks, another round of refinancing in the US housing sector and increased auto production by Ford and Toyota could quickly improve fortunes. It is also possible that further deterioration in the US economy and adverse polling data might force the US Administration to employ some classic capitalistic measures.

In looking at the enclosed chart of the spec net long positioning of non-financial markets and adjusting those figures for the additional price slide in May, commodities in general are getting much closer to a “liquidated” condition. On the monthly CCI chart, a normal retracement from the 2001 low and the 2011 high points to a potential bottom around 500. We remain bearish in the short term but realize a bottoming potential is coming most likely as a result of US Fed dialogue!

Cattle: Significant Breaks Appear To Be Buying Opportunities

by Terry Roggensack on May 14, 2012

Cattle may continue to decline over the near term under the bearish influences of declining equity and financial markets in Europe, but significant breaks would appear to be buying opportunities. The emergence of the pink slime story and another case of mad cow in the US helped to drive the market sharply lower over the past 2 1/2 months, with August futures down as much as 12.5% into the April 27th lows. However, the beef market seems to be stabilizing; the export impact from the mad cow case might turn out to be very small; and the market is entering what is traditionally a strong demand period over the next month.

Weekend beef demand for the last half of May and much of June is usually very strong, and the setback in gasoline prices of the past few weeks could free up disposable income for beef purchases.

With a surge in cash corn values, traders see placements of cattle into feedlots for May and June coming in well below last year’s levels. This will help tighten the supply of market-ready cattle for the late summer and fall. Cow slaughter was very active during the early summer last year as drought began to reach into the southern plains. This summer, excellent pasture and range conditions may help to keep cow slaughter down.

The USDA has projected third quarter beef production to be down 40 million pounds from the second quarter. Production typically increases 100-200 million pounds during that period, and it was up 178 million pounds in 2011. This year’s second quarter decline will be the first since 1996 and only the second of the past 22 years. This may counteract the typical seasonal weakness in cattle prices this summer. Contra-seasonal moves can be violent. Comparable years are 1996 and 2008. In 1996 August cattle bottomed in late April and posted contract highs in August. In 2008 August cattle made a significant low under 92.00 in late April and rallied to 106.15 by June 20.

August 2012 cattle appear to have put in a significant low in late April, with a reversal and spike bottom from an oversold technical condition. The Commitments of Traders reports as of May 1st showed traditional trend-following funds (non-commercials minus index traders) were net long 24,549 contracts. This was down from more than 70,000 contracts in the early spring. A continuation of the long liquidation trend from May 1st could leave the market oversold.

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Commodity Outlook – 2012.04.30

by Dave Hightower on April 30, 2012

At times the markets attempted to rekindle anxiety toward the Euro zone debt situation, but the trade wasn’t predisposed to fully embrace that threat. The US Fed and the PBOC haven’t exactly been falling all over themselves with promises of additional easing. From China’s perspective, they are probably content to see a wide range of physical commodity prices fall back. It’s clear that they are taking advantage of recent weakness in the grain markets to rebuild their buffer stocks. On the other hand, residual uncertainty off the US political condition and the prospect of a shift in leadership in France has added to the “hunker down” mentality that was ushered into the market shortly after the March US unemployment report disappointed economists and investors. While recent US corporate earnings have come in generally positive, the US equity market hasn’t been in a position to benefit as much in recent quarters, perhaps because the outlook for the economy is mired in a blanket of uncertainty. The recent weakness in stocks and the corrective action in a host of physical commodity markets appear to be tightly correlated to the softening macroeconomic vibe. Therefore, better growth or definitive action from key central banks might be needed before a bottom in physical markets can be expected.

Continuous Commodity Index - Monthly - Cash

The chart of the combined non-commercial and nonreportable position in non-financial markets indicates that the net spec long position has been moderately rebuilt since the late 2011 washout. Therefore it is possible that even more long liquidation will be needed to balance the markets and even suggest that prices are cheap again! While the $10 slide in nearby crude oil prices from the March high probably relieves some pressure on the economy, the 30-cent per gallon decline in gasoline prices is likely an even bigger boost. However, unless energy prices fall further or are prompted to go lower by a politically-motivated SPR release, one probably can’t expect the US economic pace to be markedly improved without additional monetary easing. As can be seen in a monthly Continuous Commodity Index chart, commodity prices in general have fallen back near the December 2011 lows, a period when the world was expecting a breakdown of the Euro zone and thought that the US economy was going to be pulled back into a recession because of it. As of this writing, it did not appear as if the situation was nearly as ominous as it was in December, and while the US economy was showing signs of softening, it could easily be improved by just a couple of dovish words from the Fed. It is also possible that supportive action from the PBOC would be enough to shift global economic sentiment back onto a positive plane. Still, it appears that the equity market’s job over the short term might be to track lower until there is more assistance from the Fed.

Longer-Term Look: Natural Gas

by Dave Hightower on April 16, 2012

Usually our trade suggestions are focused on the near term, but the historical slide in natural gas prices have created a situation where we see the need to make a longer-term, investment-type recommendation. There are trading opportunities that need to be acted on quickly, and then there are investment plays that offer significant long-term potential. But often the long-term investments may be in markets that are not yet ready to shift into a sustained trend. Buying far out-of-the-money, long-dated options could be one way of approaching these situations, but we think using combinations of options and futures and/or various option spread strategies can increase our staying power and reduce risk. Another benefit is that we might be able to let the market finance a portion of our trade and put us a leveraged position if our opinion proves accurate. We will kick off our new “Investments” section with the long side of natural gas. In subsequent newsletters we will update this position and possibly add additional strategies from time to time.

Nearby natural gas prices continue to suffer from a record US production pace, record high inventory levels for this time of the year and lack of a near term demand catalyst. However, cheap and plentiful natural gas presents an attractive alternative to $100 per barrel crude oil and $4 per gallon gasoline. While the near term fundamentals are likely to keep pressure on natural gas prices, a pullback in US production and new demand sources from the automotive and utility sectors favor a bullish bias over the intermediate term.

The natural gas market is currently transitioning from the winter inventory drawdown period into the summer stock-building phase. The extraordinarily warm winter has left US storage levels at record highs for this time of the year. This comes as the EIA is forecasting 2012 natural gas production to reach another record, boosted by a surge in shale gas output. At this rate, supplies are expected to exceed US storage capacity in late summer. Record storage and production, along with limited storage capacity, have the potential to trigger a further slide in prices as operators try to make room for new natural gas.

Meanwhile, historically low prices could slow the gains in US production. The latest EIA recently forecasted the rate of annual production growth in 2012 to slow to 4.5%, down from 7.9% in 2011. The drop in prices has already sparked a 31% reduction in the Baker Hughes rig count from the October 2011 high. This decline has been slow to materialize into a drop in production, but low natural gas prices have already forced a number of companies to halt production at higher-cost wells. There are a couple of demand catalysts that have been gaining attention recently: natural gas-fueled vehicles and natural gas-generated electricity. Besides the lower prices, the benefits of switching to natural gas in fleet transportation are that it requires less maintenance, increases engine life and provides fewer greenhouse gas emissions. The amount of coal used for US electricity generation is expected to fall 10% in 2012, while natural gas use expected to increase by more than 17%.

The warmer winter in the US has reduced the number of heating degree days for 2012 to 11% below the 30-year norm. And while that caused a 4% reduction in US natural gas use by the commercial and residential sectors, that is expected to be more than offset by the boost in consumption for electric power generation. The warmer weather trend in the US could provide an added boost to air-conditioning demand this summer. As it stands, natural gas demand attributable to air conditioning is forecasted to run about 10.5% above the 2011 peak in the third quarter.

Natural gas prices are down 85% from their 2008 peak and are expected to grind lower as the production/storage issue is resolved. The downdraft in prices has already done a good job in discounting a warm winter period and record production pace. Support for natural gas on the monthly charts stands at $1.850, then $1.760. To capitalize on the potential for a further drop in prices and then a late-summer rebound, we recommend a strategy of selling futures and buying out-of-the money calls.

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Aquaculture and Soybean Demand

by Dave Hightower on April 16, 2012

Aquaculture is the farming of aquatic organisms such as fish, mollusks, crustaceans and aquatic plants. Growing populations around the world have put added strain on the demand for protein, and that has fueled a significant increase in aquaculture production (up 72% from 2000 to 2009 according to the FAO). Aquaculture is viewed as a more efficient way of producing proteins than traditional land-based meat production. A study conducted last year showed that 100 pounds of feed will yield 65 pounds of farmed salmon but only 20 pounds of chicken and 13 pounds of pork.

Listed below are some facts about the aquaculture industry and its potential impact on the global soybean market:

China generated 62.5% of world aquaculture production of fish, crustaceans and mollusks in 2009 (34.8 million tonnes). Other major producers include India, Vietnam, Indonesia and Thailand.
Fishmeal is more efficient as a protein source for aquaculture than plant-based proteins. (Carnivorous fish are not accustomed to plant-based feed.) Progress has been made on the plant end, but feed rations still require 15-30% fishmeal.
Expansion of global aquaculture could use 70% of the global fishmeal supply by 2015. Global fishmeal output has been running around 6-7 million metric tons per year for the last ten years. Average global trade has been running 3-4 million tons per year.
China is by far the greatest consumer of fishmeal, ranging between 1.6 and 2 million metric tons annually. Japan and Thailand follow with 700,000 and 400,000 metric tons per year, respectively.
While some decline in fishmeal output can be blamed on overfishing, most of the variations have been attributed to the presence of El Nino.
The apparent limitations to fishmeal output leaves the potential growth in the aquaculture sector dependent on alternative feed sources, such as soybean meal, and on the ability to develop plant-based feeds that are efficient for aquaculture production.
The protein content in fishmeal is estimated at 65% versus 48% for soybean meal.
World soybean meal production in 2009/2010 was 165 million tons, which was about 25 times greater than global fishmeal production.
The expansion of China’s swine, poultry and aquaculture sectors has been the driving force behind China’s importing of soybeans. The Iowa Soybean Association estimates that China’s aquaculture sector consumes 5 million metric tons of soybean meal or the equivalent of 235 million bushels of soybeans.

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Sources: Food and Agricultures Organization of the United Nations (FAO), USDA, Iowa Soybean Association.

Special Report: Soybeans – 04/04/2012

by Terry Roggensack on April 5, 2012

Below is an excerpt from The Hightower Report’s most recent Special Report. To receive access to this report, with trade strategies, and our daily coverage of 16 markets, visit futures-research.com for your free 2 week trial!

While fund traders are already holding a record high net long position in soybeans, the market is unlikely to experience a significant setback in the bull trend until traders see either a major jump in planted area from the March USDA Prospective Plantings report or a prices reach a high enough level to significantly reduce demand. In a normal year, soybean demand would be have shifted to South America at this point, but the lower production out of that region this year will keep demand focused on the US. Traders expect an extremely tight world supply until the South American harvest next February. The real question for the market in the meantime will be how high new crop soybean prices will need to move in order to significantly reduce demand from key end users like China.

World Soybean Production Change

The market may also see a need to move higher over the near term in a last ditch effort to attract increased US planted area to soybeans. The Prospective Plantings estimate came in at just 73.9 million acres, which was well below trade expectations for 75.4 million. Plantings were estimated to be down 550,000 from last year in Iowa and down 200,000 from last year in Indiana, Minnesota and Nebraska. In addition to the low acreage estimate, the USDA pegged March 1st soybean stocks at 1.372 billion bushels, down about 20 million bushels from trade expectations.

The fast pace of export shipments to China has more and more traders believing that China’s import demand for the 2011/12 season will be closer to 57-58 million tonnes than the USDA estimate of 55 million. For 2010/11 China imported 52.3 million tonnes. For 2012/13, traders are looking for at least 60 million tonnes. Some traders are also expecting China’s soybean production to come in below 13 million tonnes this coming season, down from 13.5 million last year, as some acres are shifting to corn.

Argentina’s Rosario Grain Exchange recently pegged the Argentine 2011/12 soybean crop at just 43.1 million tonnes, down from their previous estimate of 44.5 million tonnes and down from the March USDA supply/demand report estimate of 46.5 million tonnes. As a result, traders are looking for a drop to 43-45 million tonnes for the April USDA report. Traders are anticipating Brazil’s production to come in at 65-66 million tonnes, down from the March USDA estimate of 68.5 million. If these expectations come true, it would shave an additional 5-6 million tonnes off of global production for the 2011/12 season and would result in the largest year-on-year decline on record.

Supply/Demand Scenarios for 2012/13

The supply/demand tables show the need for near-perfect weather, high yield and additional planted acres. The soybean market needs to pull 1-3 million acres away from intended cotton, corn and double-cropped wheat in order to avoid extreme tightness for the new crop season. For example, many traders are looking for demand to come in around 3.4 billion bushels for the coming season with beginning stocks around 245 million bushels. With this level of demand, even a jump of 2 million acres from the prospective palntings estimate accompanied by a trendline yield of 43.4 bushels per acre would bring ending stocks to a mere 109 million bushels. This would push the stocks/usage ratio to a record-low 3.2%.

If a soybean rally can attract an additional 1.5 million acres and the yield comes in at a simple 3-year average of 43 bushels per acre, ending stocks would come in at just 58 million bushels, and the stocks/usage ratio would fall to a record low 1.7%.

The point of the exercise is to show the need for demandprice rationing, even if the market attracts more acres and experiences good enough weather for high yields. The real question here is not “if” the market can rally but how high soybean prices need to go to slow the surging global demand.

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USDA Grains Stocks and Planting Intentions Review – 2012/03

by Terry Roggensack on March 30, 2012

CORN

The USDA report this morning was considered mostly supportive against trade expectations with the corn market called 15-20 cents higher for old crop and 5-7 higher for the December contract. The USDA pegged corn planted acreage at 95.864 million acres compared with trade expectations at 94.7 million. This is the highest planted acreage since 1937. March 1st stocks were pegged at 6.009 billion bushels as compared with trade expectations at 6.15 billion.

PRICE OUTLOOK: Corn Stocks - March 1st The report is mixed as planted acres came in higher than expected but stocks were lower. The stocks report showed that there are about 140 million fewer bushels of corn than expected, which is a reality. The extra planted acres could result in about 185 million bushels in extra production for the coming year. May corn looks set for a quick recovery, with resistance at 639 1/2 and 647 3/4. Look for a test of 675 3/4 over the near-term.

SOYBEANS

Soybean Stocks - March 1st

The USDA reports were considered very bullish for soybeans with the market called 15-20 cents higher on the opening. Planted acreage for soybeans came in at just 73.902 million acres, which was well below trade expectations for 75.4 million. The USDA pegged March 1st stocks at 1.372 billion bushels compared with trade expectations at 1.39 billion.

PRICE OUTLOOK: With the surge in expected demand for US soybeans due to crop losses in South America, traders believed that planted area would need to increase to 76 or 77 million just to absorb the extra demand. The report news is very bullish for November soybeans and suggests significant rationing of demand even if there is a high yield. A resumption of the uptrend leaves 1355 as the next upside target for November soybeans, and the market may need to push above 1400 into the planting season to attract more acres.

WHEAT

The USDA reports this morning were considered bullish, with the wheat market called 10-20 cents higher. The USDA pegged total wheat planted acreage for 2012 at 55.908 million acres compared with trade expectations for 57.4 million. Spring wheat planted area was just 11.976 million acres compared with trade expectations at 13.3 million. North Dakota corn plantings were up 1.17 million acres from last year and this caused planted area to wheat to come in below expectations. March 1st wheat stocks came in at 1.201 billion bushels compared with trade expectations near 1.223 billion.

PRICE OUTLOOK: The report news was bullish for corn and soybeans as well, and this should help support a solid recovery in July wheat over the near term. It is likely that funds currently hold a record or near record net short in wheat. Look for initial resistance for July wheat at 646 3/4 and 653 1/4 and an eventual recovery to 674.

Soybeans: Bullish Setup for New Crop Beans

by Terry Roggensack on March 12, 2012

In the previous issue of this newsletter, we covered the new crop corn situation closely but just brushed over soybeans. In this letter, we will take a closer look at the new crop soybean setup. The soybean complex is in a steep uptrend, with old crop meal closing higher in 9 of the last 10 trading sessions as of this writing. With a sharp drop in production from South America and a jump in demand from China, the soybean market had good reason to rally. The market may also be making one last move to help entice producers to shift some of the intended acreage from corn and wheat back to soybeans. With the South American harvest just picking up steam, some traders expect to see more normal supply levels over the near term. New crop soybeans seem to have more upside potential from here, as the South American supply will tighten considerably in the November to February period for the coming season and there is significant uncertainty on the US supply outlook for the new crop season.

This writing occurred ahead of the March USDA supply/demand update, which is expected to show a drop in both US and world ending stocks for the 2011/12 season. Traders look for ending stocks to come in around 260 million bushels, down from 275 million estimated in February. World ending stocks are expected to drop to 57.75 million tonnes from 60.28 million last month as South American production is adjusted lower. However, some traders are looking for a 4-6 million tonne drop in production for Brazil, Argentina and Paraguay combined, so it may take a drop in demand to pull world ending stocks down by only 3 million tonnes. If we assume that world production will be adjusted lower by 4.5 million tonnes, it would leave world production at 247 million tonnes. This would be down a whopping 17.2 million tonnes from last year and would be the largest annual decline on record. This downward shift in production helps to push some demand into the Northern Hemisphere’s new crop season and increases the need for a high yields.

The USDA Outlook Forum Conference in late February forecasted US plantings at 75 million acres this year, unchanged from last year and down from 77.4 million two years ago. The Conference also assumed a trendline yield of 43.9 bushels/acre, up from 41.5 million last year. Usage is expected to increase 3.335 billion bushels, which would leave ending stocks at just 205 million bushels and the stocks/usage ratio at 6.1% versus 9.1% in 2011/12 and 6.6% in 2010/11. Even if yield reaches a new record high 44.5 bushels per acre, ending stocks would fall to 243 million from 275 million this year. If the yield were up 2 bushels/acre from last year and the same as two years ago, ending stocks would slip to just 149 million bushels and stocks/usage to 4.4%, the lowest on record.

This study shows the need for a high yield for the coming year, and it also helps to explain the surge higher in soybean values over the past month. As a result of the potential tightness, the market is likely to be extremely sensitive to weather developments into the spring. While the market is technically overbought after the recent run higher, the supply/demand outlook is positive. The soybean market may attract more attention from fund traders this year, as it has the story and the trend to draw in new buyers. The Commitments of Traders reports as of February 28th showed that trend following fund traders (non-commercials less index funds) held a net long position of 97,139 contracts. This was up 19,456 contracts from the previous week. The buying trend is a short-term positive force. The record high net long position was 160,198 contracts, so there appears to be significant room for more spec buying to come into the market.

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Cocoa Special Report: World Production Deficit Ahead!

by Terry Roggensack on February 28, 2012

The cocoa market saw some extreme price movement during 2011, first reaching multi-decade highs in March and then losing nearly half of its value by year’s end. The main catalyst for the price volatility was the political situation in the Ivory Coast, where a civil war triggered by a disputed Presidential election resulted in an export ban for cocoa and other key commodities. Once opposition forces were able to gain control of the Ivory Coast, the resulting build-up of cocoa supplies was able to once again reach markets in Europe and North America. In addition, the 2011/12 season resulted in all-time record high cocoa crops for several major West African producers. Ivory Coast cocoa port arrivals were over 1.5 million tonnes, while official cocoa purchases in Ghana reached the 1 million tonne level for the first time ever. This resulting supply “glut” was matched by sluggish global demand levels late in the year and kept prices under considerable pressure. A turning point may have been reached early in 2012 that may provide cocoa prices with an opportunity to post solid gains during the next few months.

The Ivory Coast remains the focal point of the cocoa market, and it may be that this season’s crop will provide the cornerstone for an extended rally. Excessively dry conditions over the past few months, due in large part to a severe edition of the “Harmattan” winds, has caused a severe decline in recently harvested cocoa levels. The full impact of these negative crop conditions may not be fully seen until the upcoming mid-crop is harvested later on this year. As of mid- February, this season’s Ivory Coast cocoa port arrivals were running around 80,000 tonnes behind last season’s pace, and they are likely to lose further ground as the season goes on. Many analysts are cutting back on their forecasts for the Ivory Coast this season, as the crop could see a much larger decline than the 10% that the International Cocoa Organization (ICCO) is currently projecting.

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Corn: Tight Ending-Stocks and Possible Big Acreage Increase

by Terry Roggensack on February 27, 2012

The extremely tight old crop ending stocks outlook continues to provide underlying support to the corn market, and the outlook for a surge in production and ending stocks for the 2012/13 season continues to keep a lid on advances. News from the baseline USDA data released a few weeks ago was viewed as a mixed bag. China import demand is expected to grow significantly in the next ten years. However, the baseline data also shows that US corn planted area for the 2012/13 season would be at the highest level since 1944, with a record production this season. It also showed ending stocks more than doubling from 801 million bushels for the 2011/12 season. Yield was pegged at 164 bushels per acre for the 2012/13 season, and trendline yield advances to 182 by 2021/22.

The USDA Outlook Forum supply/demand conference (February 23-24), which is the first real look at the new crop season, is to be released after this writing. If the USDA raises their planted acreage estimate 94.5 million acres (from the 94 million in the baseline projections worked up in November) and also leave trendline yield at 164 bushels per acre, production could hit a record high 14.202 billion bushels. Even if one assumes an increase in usage of 500 million bushels for the new crop season, ending stocks would jump to 1.813 billion bushels. A 166 yield would push ending stocks towards 2 billion bushels. If we assume that usage will increase by 500 million for the season, it will take a yield down at 154.6 bushels per acre to end up with fewer than 1 billion bushels. A yield which is 9.4 bushels per acre under trend has occurred in just 4 years of the past 21, and to expect below-trend yield for a third year in a row is a bit of a stretch.

Weather is still a factor in South America, as Brazil’s second crop season is just beginning, with the crop about 30% planted. Weather is already a concern in the Midwest with dry conditions reported in the western Corn Belt and parts of the northern plains. If the early spring weather is dry, bulls will point to yield concerns in the US and dry soil conditions in the grain belt in China, but bears will likely win out as corn plantings will jump to a fast start. This may increase the odds of planted area coming in even higher than expected.

The Commitments of Traders reports as of February 14th showed non-commercial traders were net long 228,687 contracts, a decrease of 4,626 contracts for the week. The selling trend is seen as a negative force. Non-commercial and nonreportable traders combined held a net long position of 95,430 contracts, down 11,820 for the week. Open interest is up 103,456 contracts over the past month, but the market has mostly traded in a choppy and sideways pattern since January 24th. The chart pattern for new crop corn is negative with a series of lower highs since the August 31 contract highs on November 9, January 3 and February 6. Considering the hefty net long position from the fund traders, higher open interest and the weak pattern, don’t rule out a continued downtrend into the planting season.

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