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APRIL 2012

Knock, knock. Who's there? Inflation.

Finally, some government officials are admitting that inflation might become an issue soon. I suppose they don't eat meats and grains. Live and feeder cattle prices have increased nearly 50%. Corn futures prices have doubled and wheat and soybean prices have increased by more than 25% since 2009.

Maybe they don't drive cars or heat their homes. Heating oil and unleaded gas futures have increased by nearly 50% since 2009.

Quantitative easing, record low interest rates and economic growth in the United States may be the catalyst that keeps commodity prices rising for many years to come.

Large and aggressive sell offs can be expected and used to get long or to add to longs in grains, metals, meats and energies.

Trading ideas: Buy July, November and December Calls, Buy July, November and December Futures and Sell July and September Puts on sell offs to weekly support levels.

Don't know beans?

The February 28th C.O.T. report showed that fund traders held a net long position of 97,139 contracts which is well below the recort net long position of 160,198 contracts. In my opinion, this means that there is still upside potential for soybeans over the near term.

The Brazilian harvest is starting to get rolling and the March 30th U.S. prospective plantings report affected prices. We can see lots of volatility over the next few months and any 40-60 cent sell offs can be used to get long this market.

Trading ideas: Buy July, November and December Calls, Buy July, November and December Futures and Sell July and September Puts on sell offs to weekly support levels.

Range bound metals and nimble investors= opportunity.

Gold and silver futures prices have been trading in very wide sideways trading ranges for many months.

The spike lows that occurred in late September 2011 and late December 2011 can be used as entry points for bullish bets over the next few months. The spike highs on the weekly charts can be used to enter bearish bets.

Trading ideas: Sell September Puts, Buy September and December Calls or Buy June and July Futures at weekly chart support levels.

The author of this newsletter is Michael K. Smith. He is the president of T & K Futures and Options, Inc. and has over 18 years of futures and options trading experience. He is quoted regularly in several national and international media outlets such as Bloomberg, Reuters, Dow Jones and Marketwatch and is the author of the T & K Futures and Options, Inc. monthly newsletter. Learn more>>

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