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April 2021 - Monthly Commodity Outlook Sample

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Energies

With winter over, demand for heating oil eases sharply.  However, supplies are also depleted.  Thus, even July-delivery heating oil has tended to make a distinct low in mid/late March and then to rally into mid April in order to encourage the industry to begin rebuilding inventories.  Notice that most advances over the lasts 15 years have been signficant while drawdowns have occurred in barely half.

Gasoline, of course, is the product most eagerly sought and bought.  Gasoline values tend to make a seasonal bottom just as winter arrives and then trend higher through spring when driving conditions improve and daily consumption increases.  Even more, the industry must accumulate inventory ahead of the traditional opening of the summer vacation and driving season on Memorial Day, the last Monday of May.

Likewise, supplies of natural gas normally reach their annual nadir at the end of winter.  The market needs to encourage new supply for the next heating season at the same time distributors in hot-weather regions, dependent upon gas to generate electricity to run air conditioners in summer, will be accumulating inventories.  That combined demand has tended to drive prices up into May.

Currencies

The Australian fiscal year runs July-June.  The A$ has tended to make a bottom in late December, rally into the first month or two of the year, and then trade sideways into March.  But then it has usually rallied into mid/late April.  This segment of that seasonal trend has been particularly reliable.

The British fiscal year runs April-March.  The pound has exhibited a tendency to decline into mid March only to reverse and run higher throughout April.

The fiscal year for the EMU, the monetary authority for the eurocurrency, runs concurrent with the calendar year.  The euro has also tended to run higher through April only to then decline sharply through May.  Though this strategy has succeeded in only 80% of the last 15 years, it has not suffered drawdown in 7.

Stocks & Metals

November through May is considered the best six months of the year for owning stocks.  April tends to be the peak of the run higher because monies meant for tax-deferred IRA accounts will be sent by April 15 and invested during the month.  Note the 100% reliability of this strategy.

Platinum made a six-year high in February, trading up to $1348.20.  It seems not to be sure whether to trade like a precious or industrial metal.  While gold drifted lower, it ran higher with copper.  At any rate, it has normally rallied into April and then corrected or even declined into June as July deliveries approached.

Copper made an eight-year high, running up to above $3.80 as the housing and construction boom continued unabated.  This market regularly rallied into April as inventories were built for the summer building and remodeling season.  By May, stocks are large and the industry sells aggressively into the retail market.

Grains, Soy & Meats

The new US winter wheat crop emerges from dormancy in spring.  As it does, prices tend to decline as it grows and harvest approaches in May.  But wheat has made a new six-year high, so traders need to take care.  Will seasonal declines be shallower and shorter even as harvest weighs on prices?

Likewise, as the new US corn crop is planted, old-crop prices normally turn weak when carryover is expected to be sufficient and planting goes well.  But corn made a new seven-year high.  So even as the crop is planted in April and early May, traders cannot take this strategy for granted despite its immaculate 15-year record.

Soymeal, a high-protein feed supplement for livestock, is consumed most heavily in the cold of winter.  Thus, consumption begins to decline in spring.  As it does, and with an eye toward harvests in South America, US producers sharply curtail production.  As they do, consumers are left to compete for a lesser stream of production and that from supplies of old-crop soybeans already tightened significantly by heavy use during winter.  Notice that soymeal made a six-year high, also.

Cattle slaughter normally soars in April on its way to its peak in May/June.  But the market has already discounted this dynamic into prices, which can then present good buying opportunities for retail grocers needing beef to sell for the opening of outdoor grilling season at the end of May.

Softs

Cocoa is harvested in two crops.  The main crop is harvested August-March and accounts for perhaps 80% of total production.  The mid crop is then harvested beginning in May.  Thus, prices can rally as the last 20% of the crop is brought in, with deliveries against July futures usually well taken.

Brazil, the world's largest coffee producer, begins harvest in May/June which is late autumn.  Prices normally decline through April and into late May in
anticipation. 



Last Updated on Thursday, 18 March 2021 07:25  
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