This is a sample entry from John Payne’s newsletter, This Week in Grain, published on Tuesday July 26, 2016.
Grain and oilseed markets trade on both side of unchanged after another unchanged/stellar crop progress report for corn and beans, but are weaker into the AM session for wheat. Crop conditions out yesterday afternoon had corn rated at 76% good to excellent, unchanged from last week. Soybean ratings were noted at 71% GE, also unchanged from the week prior and like corn, basically sideways since early June. 76% of the crop was said to be blooming, while 35% is setting pods. Once pod setting is over, the risk to the crop yield falls dramatically. Wheat ratings came in at 68% GTE, a drop of 1% vs. last week. Winter wheat was reported as 83% harvested. I would assume most of those unharvested acres are in the northwest.
Below is a chart from AG RESOURCE showing the big 4 corn producing states and their late July crop ratings.
Cotton is the crop I am beginning to worry about. We saw an additional 2% fall from GE to PVP, which puts crop conditions lower than at any point last year. If you have been reading me for a while, you know I am bearish cotton at these levels based off speculative open interest (historically long), but one of the things that worries me now is the short covering from commercials or gins who might have made cotton purchases based off quality that isn’t there. The specs are almost tapped out to the buy side in my opinion, but the commercials wouldn’t be and could be a key to a leg higher. I remain bearish in the mid 70’s and would plan on hedging 2017 cotton production if a push toward the 80’s would occur.
Wheat prices are lower this morning as the Matif contract pulls back from its 100 day EMA. The good news is Russian wheat prices are up on the back of the jump in price from the EU. Black sea prices are up between 3-5 dollars per mt. This is big as in the past when we have seen jumps in price from other markets; the Russian prices weigh on the market as they continue to low ball. If Russian wheat could climb back above 170 per MT, we could easily see the US Dec board push back toward 5.00 in KC. I remain optimistically bullish of wheat and would be buying breaks that Sep delivery provides.
Cattle will open with expanded limits this morning after limit moves yesterday across the complex. The spec short looks to be moving to the sidelines as expectations about a larger and larger cattle herd every quarter going forward might be in question. I look for Nov feeders to make a run to 140 and Oct fats look to push to 115 on this move but I imagine they get rebuffed at the 100 day EMA. The specs are nonexistent in cattle right now; the fuel is there for this rally to continue.
NOV FEEDERS
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.
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.
