This is a sample entry from John Payne’s newsletter, This Week in Grain, published on Thursday August 18, 2016.
Corn markets were up slightly in the overnight as the “melt up” mode continues. The price action in corn reminds me a little of 2014, where prices just slowly grinded higher over the 3 months following harvest. Short term resistance lies ahead though as the 100 period EMA sits at 341 Dec corn. Without much in the way of supply news (other than crop progress) until we get to September, the demand side should push prices to a certain extent. I like buying deferred corn contracts on breaks, I would be patient today and look at shorter term sales near 340 Dec or wait for a pullback closer to 330 before buying.
- Weekly corn export sales of 167,400 MT for 2015-16 & 1,042,700 MT for 2016-17 were within expectations.
Soybeans are flirting with the same EMA corn is dealing with today. Soybean oil is driving the bean complex of late. The managed money net spec position is near even as of last Tuesday where prices are currently trading. I feel like there is a lot more potential to a bean oil rally than a rally in beans outright. I like the area where prices are if you want to buy oil. Soybeans themselves feel heavy here though. Yes, the demand news has been outstanding, but if the prices were going to rally on that they probably would have already. While beans are above some decent support, the last two tests of these levels has left spec longs holding the bag. I think we see prices well above here longer term but could see good soybean yields pushing prices back into the mid 9’s one more time.
Chart from Ag Resource
- Soybean sales of 177,900 MT for 2015-17 & 1,597,900 MT for 2016-17 were at top end of lofty expectations. Exports of 865,100 MT
Wheat open interest in Chicago is down some 50,000 contracts since late July, I think we can assume light short covering is at hand as the net spec position is still near record large. The 4 hour Chicago wheat chart is fighting with 100 period ema just like corn. The market feels like its stuck sideways for now waiting for whatever impetus could drive world values higher. Russian wheat prices are coming up, but the rest of the complex is going sideways with little premium added since the first of the month. I remain bullish wheat in 2017 contracts but would buy weakness not strength. Wheat will have its day, predicting the move is frustratingly difficult right now. We did see our first sale to Algeria since 2012, it’s been a while since North African countries have been looking the US way. Demand is here, relative to supply though it’s probably not strong enough….yet.
- Wheat sales of 489,500 MT for 2016-17 were within expectations. Exports of 717,900 MT a MY high
Cotton performed amicably yesterday all things considered. The uptrend that has been in place since the end of Q1 is in place and the doji bar left behind on the charts is bullish technically. I don’t believe those high prices are seen again barring a massive drop in conditions but a run into the low 70’s is probably in the cards. Due to the large spec position seen on COT report from Friday even after the selloff, I would be more inclined to short rallies going forward. Look to roll hedges up on rallies if you rolled them down on the break.
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