Commodities Wrap: Luck of the Irish

I have found that the harder I work and the more research I do the luckier I am. Crude is back near the recent highs having gained nearly $4 off yesterdays lows. The previous 2 attempts above $83 in the last week have failed will 3 times be a charm. We continue to advise clients to be a seller above $81 and a buyer near $77 given the opportunity. Clients hold puts in May contracts and are currently under water. Natural gas has lost its footing again today losing just over 1% as of this post. Clients are lightly long futures and hold June calls and are under water. Energies have not be kind to us of late but in time we think that will change. New highs in stocks today...DO NOT fight the Fed is the saying! The higher prices get on the indices the more room they have to fall. Now that the S&P is above 1150 could 1200 be challenged? We suggest getting out of the bulls way as for futures and will be advising buying more June puts on evidence of a top.

Sugar traded below 18 cents/lb for the first time since July of 2009 today though prices settled almost 4% off its low. We want to see more evidence before picking a bottom as we've already tried unsuccessfully in recent weeks with clients. We expect further downside in cotton but as we've suggested we need to see a close below the 20 day moving average for confirmation; in May 80.85. OJ closed down for the third consecutive day but we want to see a trade closer to $1.30 before we would shop longs for clients. Let the debt market continue to work higher before establishing shorts. Both 30-yr bonds and notes were gainers today but we expect more to follow. If it grows in the ground most likely it was higher today; corn 2%, soybeans 1.5%, wheat 1.85%, oats even joined the party gaining 3.2%.Look for our specialty article on corn published today. Clients are long corn via futures and options thinking a move to $4.50 and beyond. If in fact Ag continues north clients will be advised to take off the May soybean oil at B/E or a slight loss. They own 40.00 puts and are intrinsic but prices have started to move up, gaining 1.17% today. Much like equities the higher cattle get the better sell opportunity I see in the futures, stand aside for now. Prices have gained 12% in the last 2 1/2 months and are in our opinion close to an interim peak...stay tuned.

April gold was higher for most of the day but started to break lower in late dealings. We favor the sidelines or selling rallies still anticipating a trade below $1100. May silver remains stuck between $17.10(50% Fibonacci level) and $17.60 (38.2% Fibonacci level) with prices closing smack-dab in the middle. We have July call spreads on with clients but are looking for an exit door as we fear there is more downside risk than upside potential currently. We are right back to where we were 2 weeks ago in copper as prices were higher by 10 cents the last 2 days. We expect downside in the months to come; this is more of a long term trade. The dollar is below the trend line but failed to follow through to the downside. The Pound did rally as expected but the Euro did not...go figure.

Our clients Canadian dollar options have moved against them as we've yet to get pressure in energies and metals as we anticipated. That is why we played with June options and not futures. They are still alive to fight anther day. We feel it is still doable to see the Loonie come apart but a move down needs to develop from here or we will be cutting losses.

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