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Home / Futures Blog / This Week in Grain – Weekly Wrap 5/26-5/30

This Week in Grain – Weekly Wrap 5/26-5/30

May 30, 2014 by John Payne

This is a sample entry from John Payne’s newsletter, This Week in Grain, published on Friday, May 30, 2014.


Grain bears take the month of May in a route, as new crop prices close on their monthly lows. December corn was down 53 cents for the month, July KC wheat was down close to 90 cents in May and July beans were off a modest 15 cents. This is not encouraging for next month as crop condition reports begin to come out amidst fantastic growing conditions in corn and beans, and an apparently improving wheat crop (we will see).

With WASDE still 8 trading days away, there appears to be little that is getting in the way of lower prices. Corn saw fantastic export numbers today, which were ignored as more selling hit the tape. Part of me could be convinced that the reason why corn prices are lower is because of old crop selling, except I don’t buy that because July closed near its highs against December corn in the spreads. This tells us that end users need better prices to help get corn out of the farmer hands. Lower prices won’t inspire that, but higher basis levels will. I might look at basis contracts for producers who are still holding on to grain. 20+ the board in areas along the river in the northern Corn Belt seems pretty attractive.

Corn wasn’t the biggest loser of the month, wheat was. The Ukraine and weather driven hysteria from a few weeks back is completely gone from the rhetoric I read. This has been replaced by fantastic yield reports from out east. With harvest still a few weeks away, I look for wheat to continue to slide. Money flow is negative and looks to be getting worse every day. The saving grace for the bulls is the massive premium that is holding in KC over Chicago. If this were truly the end, I would assume that KC wheat would be giving back a lot of that premium to Chicago. Unlike corn, WASDE has been brutal to wheat prices. Every month we get a reminder about how much supply is on hand. Wheat bulls will be looking for reductions to supply, hopefully for them the USDA changes its tune.

Beans maintain their massive premium over Corn and Wheat on relative scales. There appears to be a bit of a protein bubble developing, with soybeans and its cousin soymeal holding strong on the board (old crop) and the meat markets remain highly elevated. Demand appears to remain strong across the board in all protein markets. I don’t look for that story to change anytime soon, and it may help keep beans strong into next year.

Check out the weekly wrap up video for my take on the close to the week and month.

THE SCHEDULE

Equities remain the place to park your money, as they rallied again this week. The S&P appears to be bulletproof as a horrible GDP report on Thursday was shrugged off. Durable goods orders were also weak as was pending home sales that resulted in a positive week for the equity indexes again, with the ES closing the week at all-time highs. Eventually, this kind of strength in equities should encourage buying in commodities- especially as interest rates remain artificially depressed. Grains will be the story again, but for now they remain stuck in a nasty bear trap or a fantastic bear trap depending on how you are positioned. For next week, the macro reports will be large as we have G7 meetings along with a myriad of Chinese data. The grain reports will remain quiet until the following week when all eyes will focus on WASDE.

schedule

THE CHARTS – MONTHLY CONTINUOUS!

CORN

BEANS

beans

WHEAT-CHICAGO

WHEAT-KC

This Week In Grain

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STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

Filed Under: This Week In Grain

About John Payne

John Payne is a Senior Futures & Options Broker and Market Strategist with Daniels Trading. He is the publisher of the grain focused newsletter called This Week in Grain, along with being a co-editor of Andy Daniels’s newsletter, Grain Analyst. He has been working as a series 3 registered broker since 2008.

John graduated from the University of Iowa with a degree in economics. After school, John embarked on a 4 year career with the United States Navy. It was during two tours in Iraq and the Persian Gulf where John realized how important commodities are to the survival of society as we know it. It was this understanding that brought about John’s curiosity in commodities. Upon his honorable discharge in 2007, John’s intense interest in the world of commodities inspired him to move to Chicago and pursue his passion in a career in the futures arena.

After a three year position with a managed futures firm specialized in livestock trading, he was given the opportunity to join the team at Daniels Trading. Being in the business and seeing how other IB’s operated, it was the integrity and straightforward approach of the Daniels management team and brokers that attracted him to make the move. Since joining Daniels, John has broadened his fundamental and technical analysis of the markets even further. John has been writing his newsletter This Week in Grain under the Daniels banner since 2011.

Working in high pressure industries like the military and capital markets, John has learned the value of preparation in times of stress. He believes that instilling within his clients the value of a good plan and a cool head for dealing with the day to day swings of commodity markets. He treats every client as a teammate, understanding that his job is to help clients achieve their goals, whatever they may be.

John is a proud supporter of the Iraq and Afghanistan Veterans of America, the Veterans of Foreign Wars and the National Corn Growers Association. When he is not working, he enjoys athletics of all kinds and spending time with his wife and their two kids.

John’s commentary is featured in the following publications:

* All Ag Radio – Sirius Channel 80
* AM 880 KRVN – Lexington, Nebraska
* RFD TV
* Wall Street Journal
* Barron’s
* China News Daily (English version)

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Risk Disclosure

This material is conveyed as a solicitation for entering into a derivatives transaction.

This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.

Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.

Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.

You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.

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