This is a sample entry from John Payne’s newsletter, This Week in Grain, published on Wednesday May 25, 2016.
It’s blowout time again for the soybean markets as the breakout above recent highs in both soybeans and soybean meal yesterday was head turning for a everyone across the trading spectrum. Picking highs in this environment is impossible, but more times than not when the market gets parabolic like this, it eventually gains equivalent amount of suction to the downside. As of this point, there is little that slows this down outside of data from the “authorities” that refute the shortage being talked about in the MSM. Corn and wheat are not following, yet. But Ill say this, if you like soybeans here then corn and wheat are buys too.
- Short Dec 16 Corn/ Long Dec 17 Corn at even money
- Buy Dec Cotton on a pull back to uptrend line just below 62.00 and put your stop below the 100 day EMA near 61.11 (for today).
CORN: 420 is the number to watch in the corn markets. A break and close above those levels today could bring waves of short covering. IF YOU ARE A PRODUCER, THIS IS A MOVE YOU NEED TO HEDGE. 420 with a 30 under basis is around breakeven for the higher cost producer. Argentina continues to struggle harvesting its corn crop. The Buenos Aires Grains Exchange this week guessed harvest at just 30% complete, really delayed but I am hearing the later planted corn is yielding better than expected. What has me concerned about this rally from the short side is that cash prices are spiking within Argentina and Brazil. That isn’t a US story, what happens if all of the sudden US yields look suspect? On the other hand, some 70% of Argentina’s supply is left to hit the market. I’ll keep you guys in the loop on price breaks down there.
SOYBEANS: This will get updated by the USDA next Friday, but I think its important to keep this in perspective as the US soybean growing season moves on. The US stocks to use number that you see there is factoring in a trend yield. We could easily see another 2.00 tacked on to this rally if all of the sudden US supplies are in doubt.
WHEAT: The most bearish story in the corn market space is coming out of the wheat fields. Yields are going to be monster out west. I know of a guy who is being offered rent for 10 of his acres so a local elevator can store wheat in bags until they can find more room. Supplies are that large out west. Offers can’t come in low enough to get our product moving. This is going to drag on corn as I would expect feed rationing needs to take place. A corn rally above 450 is probably needed to get wheat above 5.00 in July KC. If you listen to me on the radio you have heard me say I think 5.00 is still achievable, I am running out of time with only 4 weeks until 1st notice day. I still encourage producers to buy or roll calls into the fall for hope of a quick pop that can help add premium to sales prices.
COTTON: Dec cotton is closing on July as first notice day appears on the horizon. So far nothing fundamentally bullish is developing with cotton supplies, but there is story brewing in demand for cotton seed meal. The livestock feed component is seldom talked about but it has some weight here. Soybean meal, corn meal and DDG for feed is spiking. Cotton is getting some love! I still target 65 to unload some sales but Im patiently waiting for a retest of the trend line for a spec buy. If filled put the stop below the 100 day EMA.
CATTLE: One of our tech guys here, Don DeBartolo (TRADE SPOTLIGHT) came out with a feeder cattle trade recommendation yesterday I think has a great chance of working if filled. In my opinion, this breakout probably comes as the Corn market fails. If corn and wheat leg higher here, I think cattle stalls in the teens for fat cattle and the 40’s for feeders. Check out the recommendation.
Subscribe to This Week In Grain
This Week In Grain - This Week in Grain (T.W.I.G.) is a weekly grain and oilseed commentary newsletter designed to keep grain market participants on the cutting edge, so they can hedge or speculate with more confidence and precision.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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.