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Home / Futures Blog / This Week in Grain- 12/12-12/16

This Week in Grain- 12/12-12/16

December 12, 2016 by John Payne


This Week In Grain (T.W.I.G)Good morning friends

Corn (H17)  358’0   -1’4

Soybeans (F17)  1037’6  +’2

Chi Wheat (H17)  408’6  -7’6

KC Wheat  (H17)   407’0   -6’4

Cotton (H17) 71.32   +.32


Overnight price action was weak across the board in CBOT markets, with only cotton and bean oil higher on my screen this morning.  Crude oil will start the week as the story in the commodity space.  Front month WTI gapped open last night on a double header of good news.  The first news event came out on Saturday when it was announced that non opec oil producing countries (Russia) and Saudi Arabia met in Vienna and agreed on a production cut (link to story). The second news came out of the President-elect’s camp, where the head of Exxon-Mobile, Rex Tillerson, is being floated as Secretary of State.  The combination of both news leaks have crude up about 2.50 or 5% this morning.  Front month WTI is trading at highs not seen since this summer.

The crude news obviously will help the bio diesel and ethanol sectors, but in the long run not the short run.  Expect grain news flow this week to be dominated by outside influences after the WASDE report on Friday resulted in little to change the sentiment of the trade.  The report changed little statistically or rhetorically.  The outlook for both corn,  soybean and cotton supplies are higher a year out than they are right now. In wheat, we look for a contraction of production but the foreign markets are stepping in for what we will not produce next year. That said, the short profile of the corn and wheat trades reflect as such.  Soybean speculation remains near the higher side of historical ranges while cotton speculation is at a record long position right now.  I feel very strongly that cotton prices need to either correct or trade sideways to allow the longs to regroup for a higher push.  Maintain sales targets for 2016 production and hedges for 2017 cotton at this juncture.

Lastly, the federal reserve will meet this week and release what many expect to be their first rate hike of 2017 on Wednesday.  This will be the first hike since last year at this time. The attention will shift very quickly to comments about expectations for 2017 rate hikes. The bond markets have been pounded in recent months, exacerbated by the Brexit and Trump elections.  There is a lot more downside in my opinion, but I would be careful with a “sell the rumor buy the fact” mentality in the bonds.  Commodity funds are short already in corn and wheat, “covering” could be bullish in these instances.  If there was one thing I took away from Kevin Van Trump’s Ag Think Tank last week it was the upside being most susceptible to the unknown news event for wheat and corn with so much negativity priced in already.  Soybeans remain a wildcard and cotton is already record long, be careful on the downside in those markets.

This week’s weather forecast features no rain for Argentina and S Brazil and really cold for the bulk of the mid-west. There is some rain in the forecast for Argentina next week, but not much. The SAM weather problems are still “fringe problems” right now, but the potential is there for production losses if things do not change over the next 30 days. Corn bulls need to keep this in their cap.  The potential for a rally is great, but wheat remains an anchor. The opposite is the case for cotton.

https://media.blubrry.com/twigcast/p/content.blubrry.com/twigcast/TWIG1212AM.mp3

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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.

Filed Under: This Week In Grain, TWIG Cast

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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