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Home / Futures Blog / TWIG Morning Minute – 8/16

TWIG Morning Minute – 8/16

August 16, 2016 by John Payne

This is a sample entry from John Payne’s newsletter, This Week in Grain, published on Tuesday August 16, 2016.


Good morning friends

Bearish markets don’t usually move up on bearish data. That’s the price action we have seen post Friday’s USDA report in corn and soybeans. The markets may face a small challenge today as the crop progress from yesterday showed unchanged across the board in corn, beans and cotton. While many are disputing the USDA numbers from Friday, it would probably be foolish to assume yield reductions are on the horizon if the USDA is going to keep conditions chugging sideways.

One thing I am considering moving forward is subscribing to a satellite service to help me track the yields from the sky. You are going to start to see these services pop up here and there. There has been a new one released recently called KERNEL, established by a company named Tellus Labs. These are folks out of Boston using NASA imagery along with the data from NOAA. You can learn more about it in this article. Below is an image from their latest yield forecast that they update weekly. Currently they sit at 169.6. I will be interested in following this over the next few months and seeing how correlated they are with USDA. Bullish corn traders hope they see 169 rather than 175.

kernel

Soybean markets are on the move after the bumper projections from Friday, moving much higher in yesterday’s trade. Soybean oil is the driving force of late, with yesterday’s stocks report showing a decline behind a record crush projected for this year. Record crush and record exports? That must be why the funds have hesitated to sell soybeans. Friday’s OI report showed another net spec position contraction, but that was from longs exiting. Fresh shorts have not come in droves. Soybeans are very attractive at these levels long term, but in the short run the question I have is whether or not the yields will keep going higher. Shorter term, the Nov soybean contract poked its head above the 100 period EMA on my 4 hour charts for the first time since mid-July. From that point prices fell from 11.20 to the mid 9’s. I would be careful getting long here, I’m a dip buyer.

soybeanoil

Wheat markets are doing as wheat markets have been doing for weeks, a sideways chop. The report on Friday didn’t give the bulls what they were looking for regarding Europe or South American wheat prospects. I remain bullish wheat in the longer term, waiting on a late Q3 breakout in July as new crop acreage needs to be attained. Take a look at this 4 hour chart in July. Its been in a 30 cent range over the last 45 days with the 4 hour 100 period EMA representing the lid on prices. The record large spec position has me wanting to be long the board in July, hedging length as we get toward the EMA.

The cotton position from last Tuesday remained record long. I assume the spec position has been paired substantially over the last week as prices have fallen from 71 where they were when the COT was measured. I would like to see where the spec position is now, before making any major judgments but assuming it’s still rather long I think there is more downside to go. Cotton bulls will hope the uptrend holds prices up here, but I’m not optimistic. Production wasn’t that disappointing in the WASDE report and if conditions aren’t going to deteriorate, the oilseed is probably too expensive for 68 cents delivery.

cotton

The rest of the week’s news flow will be slow in the ags up until the end of week as we will get Cattle on Feed and other livestock data. FOMC minutes will be released on Wednesday afternoon, but little change is expected from the meetings in the past. I would expect the currency markets to pick up the price action as we get out of August. Just a reminder the FOMC was projecting 4 rate hikes this year, so far we are still waiting on one. The Dollar index in the 95-100 range will keep commodity prices at bay, but don’t think we can’t see a move lower in the DX if the Fed points to continued low interest rates.

This Week In Grain

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.

Subscribe to This Week In Grain Learn More View a Sample

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.

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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