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Home / Futures Blog / This Week in Grain- 12/14 FED DAY

This Week in Grain- 12/14 FED DAY

December 14, 2016 by John Payne


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

Corn (H17)  359’2   -1’6

Soybeans (F17)  1021’0  -7’0

Chi Wheat (H17)  413’4   -4’0

KC Wheat  (H17)   412’2  -3’0

Cotton (H17) 71.96    -.08


Grain markets were lower across the board amidst a tight trading range last night.  Corn and bean markets are focused on moisture approaching the parched areas of Argentina while the cold weather in this country and Russia should buoy the wheat market for now. The US FOMC is expected to raise its lending rate for the first time in a year as the US economy rebounds. The news of the rate hike today is not what traders will be looking for, they will be keeping an eye on the rhetoric they put out in the statement and press release for more signs of future tightening.  I would be careful getting too excited about US economic recovery trades, much of what is pushing this rally could be taken away by a stingy congress, but that’s talk for 2017.

Corn charts look fantastic with last week’s high being taken out yesterday.  I expect a choppy but upward sloping corn and wheat chart as we get into 2017. I remain bullish corn but would look to move toward the sidelines if DEC 17 would get through 4.00. The fundamentals are bearish in grains, yet the charts are bullish , with OI being so short in wheat and corn the fuel for a rally is there. Beans sit in the middle of historical OI range which makes recommending hedges difficult.  It does not take a genius to look at SAM production and acreage in the US and say SELL, but I’ve been in this rodeo too long to hear everyone say the same thing and know it will work out. If inflation is what is driving this bus, then corn and wheat probably come to beans, not the other way around.  That said, I do like shorter term hedging strategies in soybeans to help lock in insurance at higher levels. I can explain that better in person so give me a ring if you have questions.

Cotton is a sentiment trade right now, much like the stock market.  Sentiment has formed a little bit of a bubble with Trump in his honeymoon phase, I can’t imagine the Dems in congress are going to make it easy for him. I’ve already heard a lot of shade being thrown on this new infrastructure plan.  That said, fighting cotton from the short side has been a difficult endevour, if you took my advice and rolled hedges into DEC 17 then the shelter has been helpful.  I look for cotton to correct at some point in the next few weeks, the gaps above the chart may get tested though. I wholeheartedly recommend get some hedges on for 2017 cotton if you are making an acreage switch. I like buying shorter term puts from the spec side as well if you are inclined, the record long spec OI calls for it.

Ill be back with audio this afternoon, post FOMC at 1 pm central.  Energy traders should also be on the lookout for the inventory report that comes out today at 10 am. US energy stocks are really high, spec length is as well.  I like buying crude but I would wait for a pullback.

 

 

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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