This is a sample entry from John Payne’s newsletter, This Week in Grain, published on Monday September 19, 2016.
Check out my newest offering for readers of TWIG, a morning audio breakdown of the overnight trade and a preview for the day ahead. This will be available via podcast soon, but today just click on that link and listen to my smooth silky voice as those good Monday morning vibes wash over you…..that’s the idea, I hope it sounds more like than nails on a chalk board. I’m sure you will let me know. I try to keep it around 5 minutes, today I go about 11 minutes as running through the schedule takes a little more time. I write this for you, the consumer so please let me know if you want something included in there.
The schedule for this week is somewhat slower in grains, relative to week’s past. But the important data points may take on more significance as the harvest gets into full gear.
- FOMC week! Wednesday we get Janet Yellen and her take on the economy and interest rate hikes. She saw the Fed hiking 4 times this year when she spoke back in January, so far we’re still waiting on #1. The trade has a small chance of a hike priced in, but most I read are expecting another “can kick” until after the election. This should be bullish commodities in a vacuum, especially if Japan CB and Euro CB (they both will address the market this week) would come off their uber-easy rate stances.
- Harvest gets underway across the US. Corn harvest has been underway for most in the southern regions, but the bulk of the northern belt should get started this week, weather permitting. So far, the corn harvest has come in below where most saw it in 2014 when yields were just above 170. I expect the areas that haven’t begun shelling yet (northern Iowa, Minnesota, Wisconsin, N. Illinois) to see massive yields and beat the 2014 season. But the question remains, can we get up to 174+? I don’t see it for corn but I think soybeans can. Here are the two satellite companies I follow.
- COT data remains similar
- Corn: Specs remain near record short but longs have come in and are almost 30000 over where they were 6 weeks ago (176k vs 148 k ). Longs remain near decade lows in corn.
- Beans: Spec short position is almost nonexistent while the long numbers remain near the 50th percentile level.
- Wheat: Record short spec trade while the net trends lower. There have been some longs come in of late though as the number of long speculative contracts now sits at 1 year highs. Chips are being put down on the table by both sides. I expect some volatility soon.
- Cotton: Spec longs have pared back their record long trade while the shorts remain at 3 year lows. Cotton has the conditions to support this in the field, but if a good yield is realized, watch out to the downside.
RECOMMENDATIONS: I remain bullish of corn and wheat, bearish of cotton and neutral old crop beans and bearish new crop beans.
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