This is a sample entry from Craig Turner’s email newsletter, Turner’s Take Weekly, published on November 04, 2014.
***Starting November 10th, Turner’s Take Daily will only be available to Daniels Trading clients and paid subscribers. If you are a client and wish to receive the Daily newsletter for free please make sure you sign up via your online access at Daniels Trading or contact your broker. If you are not a Daniels Trading client and would like to subscribe, please see here: www.turnerstake.com***
1) Grains: Expecting Bearish WASDE
Soybeans and soybean meal has lead the grain markets higher these past few weeks due to tight soymeal supply, US rail logistic issues, slow US harvest, and adverse South American weather. Jan Soybeans traded almost $10.60 and now we are back to 10.08. Harvest is back on track, weather has improved in South America, and while the US rail logistic issue is far from solved, soybean meal processors and end users have been able to get enough supplies to hold them over, which can be seen in the weakening meal cash prices.
The next catalyst should be the WASDE and I’m expecting a bearish WASDE report. I think the USDA adds to both the Corn and Soybean carryout. If that happens, and combine that with the current weakness in the grain markets, we could see beans below $10 and corn testing $3.40 by the end of the year.
As for harvest progress and soybean meal, Morgan Stanley had an interesting note about how IA, IL, and IN vastly improved their harvest progress in the past two weeks. These three states make up for almost half of the US soybean meal crushing capacity. The meal coming out of these three states in the next coming weeks have the potential to send the soybeans and meal markets lower.
I have two different projects for both Corn and Beans. For corn I have projections for the WASDE next week and I also have projections for what I think the final USDA numbers will be for the 2014-15 crop. I have the same set of numbers for Soybeans too.
***Please note all trade recommendations, position updates, and risk management based on this commentary will be in Turner’s Take Daily only.***
2014-2015 Corn and Soybeans Supply & Demand Tables
Jan Soybeans
2) Crude Oil: How Low Can It Go?
Crude Oil is now trading in the 70s and the fundamentals, technicals and seasonals all look bearish. As for term structures, we are changing from a inverse market to a carry market among many spreads. March vs June Crude has been a popular seasonal play (bearish) this time of year. When crude is in a normal supply and demand market, you can make the case March may trade $1.00 or $2.00 under June depending on how high (or low) crude oil prices are. We are trading at a “carry” or negative prices in many spreads for the first time in 2014. Below is a chart of March vs June Crude.
***Please note all trade recommendations, position updates, and risk management based on this commentary will be in Turner’s Take Daily only.***
March vs June Crude Oil
3) Currencies: King Dollar Making A Comeback
The US Dollar has been on a very big comeback and recently broke through four year highs. When you consider the Fed is ending QE, Europe and Japan are heading down the road of more QE, and the US economy is stronger than Europe, the recent run in US dollar and decline in the Euro and Yen could be still in the beginning of a trending market. If you have not been keeping up with the most recent headlines The Telegraph put out this story yesterday: Dollar Smashes through Resistance
In the futures markets, you can be bullish the US Dollar Index or bearish the Euro or the Yen. I prefer to be bearish Euros because I like the liquidity of the Euro, I like that the Euro has mini and micro contracts, I like that you can trade the euro in the futures or fx markets, and I think the liquidity in the options is a little better in the euro too. To me being long the US Dollar Index, short the Euro futures, or short the Yen futures are all pretty much the same position, so pick the contract you are most comfortable trading.
Below is a weekly chart of the Euro. I think we test the lows of 2012, which is about 1.200, in the next few months.
***Please note all trade recommendations, position updates, and risk management based on this commentary will be in Turner’s Take Daily only.***
Weekly Euro Chart
4) Livestock: Bearish Cattle
I continue to think Cattle is close to a top. I know supplies are tight but packer margins are so negative I just can’t see them bidding up cattle unless they absolutely have to. I don’t think these high prices can be passed through to the consumer, so the packers are in a bind. Do they continue to operate at a loss, pass on the high prices to consumers, or stop buying cattle unless they absolutely have to? Time will tell but the December Live Cattle chart tells me that we are seeing some very strong resistance at 170.000. When you combine that with the spread charts, like Dec vs Feb for example, I think the market structure is starting to break down which can be the first sign of real weakness in the cattle markets.
***Please note all trade recommendations, position updates, and risk management based on this commentary will be in Turner’s Take Daily only.***
Dec Cattle Chart
Dec vs Feb Cattle Chart
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