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Markets to Watch
Wheat Strategies
Wheat may be shifting from a relentless bear market to a sideways to higher
market. This comes on a significant shift away from the bearish supply news that
has dominated the market since early 2008. The shift began with lower winter
wheat acreage in the US last fall, although this was not enough to halt the
buildup of US and world wheat stocks.
Heavy rains in Canada this spring and an ongoing heat wave in France during May
and June brought the first chance for a serious reduction in the world supply
outlook. This has been followed by the spread of hot and dry weather in wheat
growing areas from eastern Ukraine, through the Volga and southern Ural areas of
Russia and on into Kazakhstan. There is concern that the region's Sukhovei winds
could sweep in from the steppes at below 30% humidity, a scenario that can
result in severe damage in a matter of hours if the crop is already stressed.
Russia’s Ministry of Agriculture lowered its total grain estimate for the year
to 85 million tonnes last week, from a previous estimate of 88-90 million. They
emphasized that this would still leave 20 million tonnes available for export,
which is a critical factor since Russia has aggressively pushed into one new
export market after another in recent years, starting with Egypt and the eastern
Mediterranean, then the entire Mediterranean, then Central and South America.
For the upcoming marketing year, they had already set their sights on exporting
milling and feed wheat to East and Southeast Asia.
The Russian crop losses we have seen so far should bring a modest retrenchment
in their export advances, and further crop damage would bring a major shift away
from Black Sea origins. This would normally benefit France and the rest of the
EU, but poor weather there could bring a major surge in demand for US wheat.
This comes as the US winter wheat harvest nears completion, which is typically
followed by less hedging/selling pressure in futures. If news from Europe and
Eurasia continues to be supportive, the nearby continuation chart could easily
bounce back to the late 2009/early 2010 highs near 570 to 580. More bad weather
news could lift the market up to 610 to 615.
If you'd like to receive daily information on Wheat trading strategies, click here.
If you'd like to discuss trade strategies to determine the best execution strategy for you regarding the market, contact us or call us toll free at 1.800.800.3840.
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Industry News
Impact of Sub-Prime Crisis Continues to Serve as Drag on Global Economy
The impact of the sub-prime crisis continues to serve as a drag on the global
economy into the 3rd quarter of 2010. As suggested in our last newsletter, the
evidence of slowing in the US economy has become more prevalent throughout a
wide range of statistics over the last month and that in turn has created a
fresh drag on physical commodity prices.
We also suggested in prior publications that a number of physical commodities
like soybeans, sugar, crude oil, RBOB, heating oil and natural gas are pretty
flush with supply right now. Fears on the demand side are, therefore, something
that should be expected to weigh on price structures.
Ordinarily we would have expected some response from the government to recent
evidence of slowing but our Congress gets a full week off for the 4th of July,
perhaps so they can take advantage of their superior health care benefits and be
fully rested when they get back. Complicating the move toward additional
stimulus measures are international concerns toward deficit spending and
apparent fundamental differences within the government on what type of stimulus
measures actually work.
While the jury is still out on whether extending unemployment benefits is a
stimulus, those benefits were included in the original record stimulus package
and it doesn't seem as if the country is garnering a sustained benefit from that
spending. However, given that the Democrats have a solid majority and also the
White House, we suspect that a noted portion of any additional stimulus will be
directed by the California and Nevada Congressional contingents toward
unemployment benefits extensions.
We have to wonder if key members of the G20 won't begin to complain that the US
is using borrowed money for suspect programs. Therefore, the international
response to an upcoming US stimulus push might serve to reduce the flight-to-
quality status of the US Dollar and the US Treasury markets. While we aren't
expecting an all out discussion of a downgrade of the US debt rating, it is
possible that money won't be as aggressive in flowing toward US financial
assets.
In the event that the President dares to dream big and Congress puts together
another massive pork barrel package, it is possible that global market players
might attempt to shape US policy by their investment flows. While China recently
suggested that would not abandon US Treasuries, they reportedly held in excess
of $900 billion at the end of April. Therefore, they do have the power to
influence US policy decisions. We see the prospect of the Dollar weakening ahead
but we doubt that factor alone will be capable of turning off a pattern of
weakness in physical commodities.
Keep a pulse on the industry and access more industry news.
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Get the inside story on bonds and gold combined with direct actionable trading recommendations. This special report address the following questions and more:
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Featured Video
Providing “Excellence through Execution” since 1995!
Click here or anywhere on the video image below to launch the “About Us” video page on the Daniels Trading web site.
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Upcoming Webinars
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Kurt Pfafflin |
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dt Pro 201 - Intermediate Order Entry, DOM & Chart Execution Techniques |
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Tue, 07/13 |
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03:30 PM CST |
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Maximize your trading potential by harnessing the power of our flagship dt Pro platform. You'll trade with ease and increased confidence as you learn powerful order entry and position management tactics.
Bracket orders, trailing stops, OCOs and many others will be covered. |
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Craig Turner |
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dt Vantage 101 - For Traders Who Need Access to any and all Strategies Executable in the Futures and Options Markets |
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Wed, 07/14 |
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03:30 PM CST |
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During this webinar well show you everything you need to know to get on the fast track using dt Vantage, our all purpose futures and options trading platform. dt Vantage gives you everything you need to trade futures, futures spreads, options and options spreads. Whether you send your orders to the electronic market or the pit, you can rest assured you have a stable and flexible platform for all of your trading needs. |
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Drew Wilkins |
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dt Pro 101 - Get Started with Our Flagship Trading Platform |
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01:30 PM CST |
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During this webinar we'll show you everything you need to know to get on the fast track using dt Pro, our flagship trading platform. Giving you direct market access, dt Pro provides everything you need to trade with speed, transparency and powerful indicators. |
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Burton Schlichter |
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Capture the Move! A predictive not descriptive look at today's market. |
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Thu, 07/15 |
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02:30 PM CST |
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Look over the shoulder of Burton Schlichter, an experienced dt broker and author of the "Capture the Move" newsletter, which is exclusive to Daniels Trading clients. He will use his trading experience to identify opportunities in today's markets and share with you his formula for trading! Join the others who have "Captured the Move" and allow yourself to become an active trader while still maintaining a busy life. |
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Scott Hoffman |
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Insights on Swing Trading |
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Thu, 07/15 |
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03:30 PM CST |
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Review swing market trading analysis and research for the coming week's market with Scott Hoffman - Senior Futures Broker and Educator. Unlike others who teach using stale data, Scott uses current trading scenarios for his futures market seminars. You can apply his dynamic techniques immediately! |
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About Daniels Trading
Daniels Trading is a relationship-focused commodity futures brokerage located in the heart of Chicago's financial district. Founded in 1995, we have a history of providing effective and reliable trade executions to both individual traders and institutional investors around the globe. In addition to our focus on relationship and execution, Daniels Trading is a leader in providing ongoing education opportunities and resources for our customers.
Watch our "About Us" video.
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