CHART VIEW: CME Group Class III Milk Futures by Jeff Gilfillan
CME Class III Milk front month futures broke out of a four-and-a-half-year range in August based on a monthly close (17.62) over previous high (17.44) from a failed breakout in January 2017. This was the 55th month of the recent trend, which is a data point in a Fibonacci Sequence (it’s easier to find these sequences than to explain their usefulness).
Both the weekly and monthly continuation charts have formed a somewhat normal distribution historically with the bulk of the value between 13.40 and 17.40 on a monthly and 15.15 and 16.90 on a weekly (market is trading 18.59 as of this writing). The market has deviated from the monthly range only seven times on a sustained basis since 1999 (as far as my charts go). The contract was launched in 1993. Each deviation lasted only about a year based on my eyeball analysis.
The weekly charts are trading at the 50% price point going back ten years and just under the 38.2% level on a monthly going back 15+ years. There still is some value up till about 19.20-19.30 before a potential squeeze or transitional zones test both sides. The areas of low value are between 19.20 and 20.75 on a weekly and 19.40 and 21.40 on a monthly.
Open interest has overall gone down through 2019 as prices have rallied. The only sector in the COT report that has shown a trend in net position growth is managed money going from net short to net long and adding. The open interest has shown a slight uptick since bottoming in August mostly due to trend following managed money. Considering “managed money” is only about 10% of OI, the market would likely need a strong pullback for the “reportables” and “other reportables” to consider building sizeable new positions and reversing the trend of declining OI.
Look for potential pullbacks finding support at 16.60-16.90 and upside moves getting squeezed around 20.00-20.50 or transitional moves targeting 21.75 to 22.25
Be patient as a spec and liquid as a hedger.
Trade Dairy Futures with Phillip Capital.
Phillip Capital is a CME Group clearing member located in the Chicago Board of Trade building. We offer electronic access to CME Dairy Futures markets through Globex for both speculators and hedgers. Our network of agricultural introducing brokers offer value added services for clients requiring trading assistance and block trade capabilities.
Exhibit A.
CME Group – CME Class III Milk Futures Continuation Weekly
Chart – Track N’Trade
Futures trading is not for everyone. The risk of loss in trading can be substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.
Exhibit B.
CME Group – CME Class III Milk Futures Continuation Monthly
Chart: Track N’Trade
Futures trading is not for everyone. The risk of loss in trading can be substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.
Exhibit C.
Source: CME Group – Commitment of Traders powered by QuikStrike