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Globe and Mail
12-05-2025
- Business
- Globe and Mail
Copper's Summer Slide: Can Traders Profit from July Futures' Seasonal Drop?
Copper, the metal that wires our homes and powers our tech, is facing a pivotal moment. The July copper futures contract, traded on the Chicago Mercantile Exchange Group (CME Group), shows signs of a seasonal sell pattern, backed by research from Moore Research Center, Inc. (MRCI). With London Metal Exchange (LME) inventories shifting, China's economy slowing, and money managers adjusting their positions, traders can act. Here's what you need to know about this opportunity, including the data, trader actions, and products to consider. MRCI's Seasonal Sell Pattern Moore Research Center, Inc. (MRCI), a trusted source for futures traders, has identified a historical sell pattern for the July copper futures contract. Their data shows that over the past 15 years, selling the July contract on May 20 has resulted in it closing lower on or about June 19 for 13 of the past 15 years (87% occurrence). This pattern stems from seasonal demand cycles, where industrial demand often slows in the Northern Hemisphere's summer after a robust pre-home building season accumulation, particularly in construction and manufacturing, which are heavy copper users. MRCI's research highlights that this sell window typically opens after the seasonal high in March, aligning with reduced physical demand. The logic is straightforward: copper demand dips as projects demand pauses for the summer, and traders who short the July contract may capitalize on this predictable price drop. While past performance isn't guaranteed, MRCI's quantified historical research makes this a compelling case for a short-term bearish play. Source: MRCI LME Copper Inventory Trends Recent London Metals Exchange (LME) inventory data supports the potential for downward pressure on copper prices. As of April, LME copper stocks stood at 430,000 metric tons, down from a high of 600,000 tons in August 2024 but still elevated compared to historical averages. The decline reflects increased Chinese imports, yet global stocks remain robust, with 67% of LME copper from Russian and Chinese origins, much of it undeliverable to the US markets due to trade restrictions. High inventories signal a looser physical market, which can weigh on prices when demand softens. The LME's cash-to-three-month spread has shifted to a contango of $34/mt in early April, indicating ample near-term supply compared to future delivery. This inventory cushion reduces the risk of a supply-driven price spike, reinforcing the seasonal sell thesis as demand will wane in the coming months. China's Slowing Economy and Copper Demand China, the world's largest copper consumer, is a key driver of global demand, accounting for nearly 50% of copper usage. However, its economy has been cooling, impacting copper prices. In Q4 2024, China's GDP growth slowed to 4.6%, down from 5.2% the previous year, driven by a persistent property market crisis and deflation risks. Industrial output, particularly in construction and manufacturing, has weakened, reducing copper demand for wiring and infrastructure. Despite stimulus efforts from Beijing, domestic consumption remains sluggish. The Yangshan copper premium, a gauge of China's import appetite, has risen to $93 per ton, showing some demand recovery. However, this is offset by high domestic production and exports of refined copper. In December 2024, China imported 398,000 tons of refined copper, a 13-month high, yet Shanghai Futures Exchange (ShFE) inventories dropped to 74,000 tons, suggesting stockpiling rather than robust end-use demand. The slowing Chinese economy, especially in copper-intensive sectors, aligns with MRCI's seasonal sell pattern. As summer approaches, reduced industrial activity in China could further depress demand, lowering July futures prices. COT Report: Money Managers' Positioning The latest Disaggregated Commitments of Traders (COT) report from the Commodity Futures Trading Commission (CFTC), dated May 6, 2025, reveals money managers' cautious stance on copper. Money managers hold a net long position of 23,338 contracts on the CME copper contract, down significantly from 70,504 contracts in February 2025. This reduction reflects fading bullish sentiment, with long positions slightly outweighing bearish bets. Short positions dropped from 53,207 contracts in February 2025 to 28,690, indicating less aggressive bearish conviction but a lack of strong bullish commitment. This balanced positioning suggests money managers are wary of macroeconomic risks, including potential US tariffs under President Trump and a global trade slowdown. Their retreat from copper aligns with the seasonal sell pattern, as funds may await clearer signals before re-entering the market. Traders can interpret this as a lack of upward momentum, supporting a short strategy for July futures. Source: CME Group Exchange Trader Actions Traders looking to act on this seasonal sell pattern have several options: Short the July Copper Futures Contract: Enter a short position around May 20, targeting a price decline by July 19. Use stop-loss orders to manage risk, given copper's volatility. Monitor LME inventory updates and Chinese economic data for confirmation of weakening demand. Spread Trading: Pair a short July futures position with a long position in a later contract, like September, to hedge against unexpected market moves. This leverages the seasonal dip while reducing exposure to broader price swings. Monitor Key Levels: Watch copper's support at $4.00 per pound and resistance at $5.00 per pound on the CME July copper contract. A break below support could accelerate the sell-off, while a move above resistance might signal a need to exit. Risk management is critical. Copper futures are highly leveraged, with a standard contract (25,000 pounds) requiring a margin of about $9,000. Micro contracts (2,500 pounds) require a margin of $900. Small price moves can lead to significant gains or losses, so position sizing and stop-losses are essential. Products for Trading Traders can participate using these CME products: Standard Copper Futures (HG): Each contract represents 25,000 pounds of copper; each tick (0.0005 per pound) is $12.50 in US dollars. Ideal for institutional and experienced traders. Micro Copper Futures (QL): A smaller contract of 2,500 pounds, with lower margin requirements, making it ideal for retail traders. Each tick (0.0005 per pound) is worth $1.25 per contract. Options on Copper Futures: Buy put options to profit from a price decline with limited risk, or sell call options to collect premiums if prices stay flat or fall. In Closing… The July copper futures contract presents a compelling seasonal sell opportunity, backed by MRCI's historical research showing a consistent price decline from mid-May to early July. Elevated LME inventories, a slowing Chinese economy, and cautious money manager positioning in the COT report reinforce this bearish outlook. Traders can act by shorting futures, using spreads, or monitoring key price levels, with standard futures, micro futures, or options as viable tools. While risks like geopolitical events or supply disruptions could alter the trajectory, the confluence of seasonal, fundamental, and market sentiment factors makes this a trade worth considering. Stay vigilant, manage risk, and let the data guide your moves.
Yahoo
06-03-2025
- Health
- Yahoo
Boulder scientists develop gas-analyzing device for use in medical studies, diagnosis
DENVER (KDVR) — A group of physicists from the University of Colorado Boulder partnered with the National Institute of Standards and Technology to develop a device that can analyze almost any sample of gas to a molecular level, according to a press release from CU. The device they created is laser-based and was coined the Modulated Ringdown Comb Interferometry. It takes a sample of gas and breaks it down into huge groups of varying molecules. The device is so precise that it can measure the concentration of molecules to parts per trillion. Former CU kicker Mason Crosby retires as a Green Bay Packer The team initially worked to better understand how to track gases like greenhouse emissions in a low-cost alternative, as well as using the device to diagnose illnesses. The group from the joint research institute, JILA, published the research findings in the Nature journal. To demonstrate the device at work, the physicists applied its function to an age-old science question, 'What is in the air we breathe?' They gathered breath samples from different people and identified the types of bacteria that were residing in each individual's mouth. The senior author of the study, Jun We, said the results were the culmination of three decades of research into quantum physics by CU and NIST to develop a device as specialized as the frequency comb laser. 'The frequency comb laser was originally invented for optical atomic clocks, but very early on, we identified its powerful application for molecular sensing,' said Ye. 'Still, it took us 20 years to mature this technique, finally allowing universal applicability for molecular sensing.' Now, the group of physicists has expanded the team to include researchers at the CU Anschutz Medical Campus and Children's Hospital Colorado to use the Modulated Ringdown Comb Interferometry device to analyze a range of breath samples from the organizations. This will allow the study to analyze how the results distinguish the breath of a child with pneumonia in comparison to another child with asthma. Jane Lynch to headline newly announced Boulder International Film Festival lineup The group will also launch a separate study into the analysis of patients with lung cancer before and after having a tumor removal surgery. The team wants to explore if the device can detect early stages of chronic obstructive pulmonary disease through breath sample diagnosis. 'But this is just the beginning,' said Qizhong Liang, lead author of the study and a doctoral student at JILA. 'Even better sensing performance can be established using MRCI.' Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Globe and Mail
05-03-2025
- Business
- Globe and Mail
Understanding the Spring Slump in Hog Prices – What Traders Need to Know
Historically, a predictable but often overlooked trend impacts hog prices, creating risks and opportunities for traders. From February through May, prices take a seasonal dip as an influx of hogs hits the market, driven by the fall pig crop reaching market weight. But supply alone isn't the only factor—weather conditions, growth rates, and shifting demand all play a role in this annual price movement. So, what exactly will contribute to this spring slump, and how can you use it to your advantage? The fall pig crop maturity: The fall pig crop, born in the later months of the year, reaches market weight around February-March, contributing to a surge in hog availability. The 2024 fall pig crop has had an opportunity to take advantage of lower feed costs (corn) than in the past. Could this add more weight as these hogs are brought to market? Larger spring pig crop: The spring pig crop is usually more significant than the fall crop, meaning more hogs will be ready for slaughter later in the year, further influencing the price decline in the early spring. Weather impact: Cold weather can slow pig growth rates due to increased energy demands for maintaining body temperature, reducing feed efficiency, and prolonging the time needed to reach market weight. However, once temperatures moderate, pigs experience compensatory growth, where improved feed conversion leads to a sudden surge in weight gain, resulting in a concentrated supply of market-ready hogs. This synchronized market entry amplifies supply pressures during the February-May period, further contributing to the seasonal decline in hog prices. Seasonal demand: Unlike beef, which sees stronger demand during the grilling season and holiday periods, pork consumption remains relatively stable, with no significant seasonal spikes between February and May. Additionally, export demand for US pork can weaken during this period as key importing countries adjust their purchasing patterns based on domestic production cycles and trade policies. With no significant domestic or international demand increase to offset the seasonal supply surge, hog prices face additional downward pressure during these months. This brings us to the recent Canadian and Mexican tariffs: The recent tariffs imposed on Canada and Mexico will dramatically impact exporting pork, considering Mexico is our most significant importer of US pork. Seasonal patterns: Source: Moore Research Center, Inc. (MRCI) MRCI research has found that hog prices peaked in February or March over the past 15 years before declining into the latter portion of May. The abovementioned fundamentals make it easy to see how this seasonal pattern evolved. As a crucial reminder, while seasonal patterns can provide valuable insights, they should not be the basis for trading decisions. Traders must consider other technical and fundamental indicators, risk management strategies, and market conditions to make well-informed and balanced trading choices. Source: Barchart The daily chart of the June Lean Hog futures contract shows last fall's seasonal low price followed by a rally to the February highs (green line.) After peaking in February, at contract highs for June, prices fell like a waterfall. Currently, hog prices are overextended to the downside and may need to rally to find more sellers to continue the current seasonal downtrend (red line.) The disaggregated Commitment of Traders (COT) report: Source: CME Group Exchange Like the grain markets, before they collapsed recently, pork producers aggressively sold (red bars) as the price (yellow line) rallied to $.92, holding 200K short contracts. While it's not unusual for producers to sell into rallies, it is interesting how aggressively they sold at lower prices than last year in the recent rally. During April 2024, prices rallied to $1.05, and they had 197K short contracts. Perhaps producers were already anticipating lower prices, and the idea of tariffs against Canada and Mexico made them sell more aggressively. Products for traders to participate in the lean hog trade: Futures traders can trade the standard-size 40,000-pound futures contract using the symbol (HE). There are no lean hog equity market products to trade. Two exchange-traded funds (ETFs) have lean hog futures contracts, which are considered commodity index funds, not just lean hogs. These products are the Invesco DBA and DBC ETFs. In closing….. Understanding the seasonal downturn in hog prices presents a valuable opportunity for traders who can anticipate and capitalize on these market movements. Historical trends and factors such as supply dynamics, weather impact, and shifting demand contribute to a predictable price decline from February through May. The additional influence of trade tariffs on key pork-importing nations like Mexico and Canada only adds complexity to this market shift. Traders can make more informed decisions when approaching this recurring cycle by carefully analyzing technical indicators, seasonal research, and market positioning through tools like the Commitment of Traders (COT) report. For those looking to participate, lean hog futures (symbol HE) provide a direct way to trade this seasonal pattern. At the same time, ETFs like Invesco DBA and DBC offer broader commodity exposure, including lean hog contracts. However, while seasonality provides valuable insight, traders must remain disciplined, integrating risk management strategies and other fundamental and technical factors into their trading plans. Those who recognize and react to these seasonal price shifts can position themselves advantageously in the lean hog market through futures or diversified commodity funds.
Globe and Mail
03-03-2025
- Business
- Globe and Mail
Live Cattle Insiders Are Speaking – Are You Listening?
The US beef industry is set for another year of strong market performance, driven by tight cattle supplies and strong consumer demand. As the beef cowherd stabilizes after years of contraction, supply constraints give cattle producers more leverage in the market. What are the cattle insiders telling us about upcoming prices? Weather, particularly the ongoing La Niña effects, will significantly impact grazing availability and cattle prices, with the drought expected to worsen in the Western US and other regions. Despite economic challenges, such as lingering inflation, the US economy is projected to grow 2-2.5% in 2025, supporting consumer spending (2/3s of the GDP) and demand. An essential economic number to watch will be the employment number. If unemployment creeps higher, this may lead to less income to support demand for higher-priced beef. Viewing Live Cattle Insider sentiment Source: CME Group Exchange The recent disaggregated commitment of traders report for the live cattle commercial traders was released on February 28, 2025, for the reporting period of February 18 – 25. This report shows that live cattle producers have been selling (red bars) as prices (yellow line) have risen in the recent price rally. The table reflects the positions of the producers currently as net short, 164K more short positions than long. And below that, we can see what their positions were at the same time last year, and again, they were net short. Keep this in mind as we review the upcoming seasonal sell window. Seasonal Pattern Source: Moore Research Center, Inc. (MRCI) MRCI research has identified a 15-year seasonal pattern (black line) of live cattle prices peaking in February and declining into May. In the recent paragraph, I emphasized that the commercial producers aggressively sold live cattle futures during the rally. At the same time last year, they sold into a rally, which led to a price decline in May. Commercial traders are the smart money in the commodity markets. Following them is like knowing what the 'insiders' are doing. Source: Barchart Another interesting seasonal table from Barchart shows the average price gain per month for the past 15 years. The 2025 peak came closer to February, resulting in a red month compared to the 15-year average of a positive month. Historically, March and April have been down months in the live cattle market, confirming MRCI research and the current sentiment of the live cattle market insiders. As a crucial reminder, while seasonal patterns can provide valuable insights, they should not be the basis for trading decisions. Traders must consider other technical and fundamental indicators, risk management strategies, and market conditions to make well-informed and balanced trading choices. Technical Picture Source: Barchart After prices peaked in late January, the market returned to test previous resistance, which now became support. Initially, cattle prices reacted positively to the support level, but on the subsequent retest, the support was broken on heavy volume, usually a bearish sign for prices. Will prices continue into the May seasonal lows when demand for grilling red meats returns? Time will tell, but the insiders are bearish, a significant seasonal sell pattern is present, and the trend is down on the daily chart. Ways to participate in Live Cattle trading Futures traders could trade the standard-size contract (LE). In closing…. The insights from industry insiders, historical seasonal patterns, and technical chart signals provide a compelling case for cautious optimism and strategic decision-making. Commercial traders, often considered the 'smart money,' have taken net short positions, aligning with a well-established seasonal tendency for cattle prices to peak in February and decline into May. The technical breakdown of key support levels on heavy volume further reinforces the possibility of a short-term price correction. While strong consumer demand and tight cattle supplies provide long-term support, market participants should be mindful of these signals when planning their next moves. Understanding the interplay between insider sentiment, seasonal price trends, and technical indicators can be a game-changer for those navigating the cattle market. While no single factor dictates market direction, aligning multiple signals can offer a clearer picture of potential price movements. As grilling season approaches, demand may provide support, but traders should remain vigilant and prepared for volatility. Producers and traders can make more informed decisions by paying close attention to insider positioning, historical trends, and technical price action, staying ahead of market shifts rather than reacting to them.
Globe and Mail
27-01-2025
- Business
- Globe and Mail
Trump's Bump in the S&P 500 is the Side of Extreme Rarely Seen, But That's Why it's Needed
The S&P 500 continues its bull market run from the October 2023 lows. While there are claims about the market being over-extended, the bull move does not seem ready to rest. President Trump has announced numerous outside investments in the US. An optimal seasonal buy window is approaching. Technically, the S&P 500 uptrend is still intact. Is this a great way to start 2025? With new leadership arriving after Inauguration Day in the US on January 20, a whirlwind of changes has occurred, with plenty more to come. With a mandate from the American people, President Trump has been assigned to deliver on his campaign promises, one of which was to strengthen our economy. In December, Trump announced a US investment deal with Masayoshi Son of SoftBank for $100 billion over the next four years to support AI advancements in the US. Before he was sworn in as President, he made a deal with Damac Properties, controlled by Emirati billionaire Hussain Sajwani. The deal is to invest at least $20 billion to build data centers in the US. Trump desires to be the world's dominant Artificial Intelligence (AI) leader. Requiring land development, electricity, water, and compliance regulations. The day after becoming President, Trump announced another $500 billion private sector AI deal. Investors from OpenAI, SoftBank, and Oracle are forming a joint entity known as Stargate. President Trump announced that this record-breaking AI investment will create an additional 100,000 new jobs in the US. He campaigned to lower unemployment and is working on fulfilling that pledge with other new investments in AI. But why is this good for the S&P 500? The weighted S&P 500 top stocks in the index are technology-related. The advancements of AI and the potential to become the world leader in AI will profoundly impact the S&P 500. As the economy improves, with more people finding jobs from these companies, we could expect to see tax revenue increase in the US, perhaps lowering our deficit and stabilizing social security funding. Technical Source: Barchart The weekly S&P 500 futures chart shows the resiliency of the bull market since the end of the last bear market lows in October 2022. Since then, the market has exhibited the classic higher highs and higher lows. Can this trend turn? Absolutely! But trading what you see instead of what you think usually makes more profits. Source: Barchart Another tool used for determining trends is the moving average. While the S&P 500 and Nasdaq 100 have slipped to the bottom of the rankings, both show positive results for all major moving averages, indicating a bullish trend. Seasonal Pattern Source: Moore Research Center Inc. (MRCI) Seasonal patterns can be used for market screeners. Once identified, a trader could consider the current trend. The odds of a successful opportunity increase if the seasonal trade is in the same direction. The chart reveals MRCI research for the past 15 years (blue line) of S&P 500 activity. Once the 15-seasonal pattern is identified, the research is refined to find optimal seasonal windows (yellow box). For example, MRCI has found that the S&P 500 has closed higher on approximately February 16 than on January 28 for 14 of the past 15 years, a 93% occurrence. During this optimal window, traders may buy and hold through the window or trade in and out of the market during the optimal buy window. Source: MRCI The above table of hypothetical past trades reveals that two of the past 15 years did not have a daily closing drawdown. Another lesson from using seasonality is that mindlessly buying or selling an optimal seasonal window could result in significant drawdowns (Worst Equity Amount column) before the move turns profitable. By using additional technical or fundamental analysis, a trader could time their entry closer to the extremes of the seasonal window and reduce some of the drawdowns. As a crucial reminder, while seasonal patterns can provide valuable insights, they should not be the basis for trading decisions. Traders must consider other technical and fundamental indicators, risk management strategies, and market conditions to make well-informed and balanced trading choices. Markets to participate in this opportunity Equity traders may use the exchange-traded fund (ETF) SPY to participate in this opportunity. At the same time, futures traders could use the mini-contract ES or the micro-contract ET. There are many more vehicles to trade the S&P 500, but these are among the more popular. Also, the S&P 500 is the most liquid index market to trade—allowing for safer executions of your trades. In closing….. As we look ahead, the S&P 500 offers a unique opportunity for traders to capitalize on its continued bull market momentum. This market is positioned for potential gains with robust technical indicators, historical seasonal patterns, and groundbreaking economic developments. The recent influx of record-breaking AI investments, championed by President Trump's administration, reinforces the US's ambition to dominate the global AI landscape and fuels the tech-heavy S&P 500's growth. The alignment of these developments with an optimal seasonal window, as shown by the MRCI research, further strengthens the case for bullish activity. With a 93% historical probability of higher closes from January 28 to February 16, the conditions are primed for disciplined and strategic traders to take advantage of this window of opportunity. There's no better time to seize the potential of this dynamic market. The S&P 500 shows strength and resilience, underscored by its steady uptrend and bullish signals from major moving averages. By aligning your trades with the powerful confluence of seasonal patterns and the transformative impact of AI investment, you can position yourself for success in this thriving market. Whether through SPY ETFs, mini-contract ES, or micro-contract ET, the S&P 500 offers a liquid, accessible, and potentially lucrative platform for traders ready to act. Don't wait—take this opportunity to ride the wave of innovation, economic growth, and a market on the move. Make 2025 your year to thrive in the markets!
