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This Week in Grain- 1/23-1/27

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

Corn (H17)  369’4   -‘2

Soybeans (H17) 1062’0  -5’2

Chi Wheat (H17) 429’2    +1’0

KC Wheat  (H17)  441’4   -1’4

Cotton (H17) 73.80   +.76

CBOT Markets are slightly lower this morning after little volume in the Sunday night session, while ICE cotton trades higher- led by front  month March’s push toward 74 cents.  The news flow this week should be dominated by the myopic coverage of the president’s first days in office. Here’s hoping the rhetoric of the last year is over with and the news focuses on action instead of innuendo. Other than Cattle on Feed (Friday), there is little USDA data we can bite our teeth into. Exports will be monitored closely, especially for cancellations from China.  The Chinese New Year has begun, the market will expect little in the way of purchases into February while the celebrations begin overseas.

The government economic data releases will be slow as well, so more emphasis should be put on COT placement, as funds probably look to adjust with the inauguration behind us.   CFTC data on Friday showed that funds piled into commodities like Soybeans, Corn and Cotton.  Check out the charts below while you listen to the audio at the bottom of the newsletter.  I try to point out a few things I notice with fund participation lately.  I also updated the latest trade recs and fills.  Please call with questions.
We see rain fell across some of Argentina’s driest southern crop areas overnight with totals ranging from 1/2 of an inch to 2 inches in some areas. The rest of the Arg was dry over the weekend. The forecast has not changed, hot and dry weather will prevail this week under a high pressure Ridge, with limited additional rain chance offered until the 12-15 day period on the current runs.   Brazilian weather will feature dry weather for much of S Brazil over the next 10 days with ongoing moderate to at times heavy rainfall across N Brazil which could cause some early bean harvest delays. NE Brazil will hold in a drier weather trend. No extreme heat is expected through Feb 4th. It will be an interesting day with the charts all pointed up and uncertainty remaining regarding South American crop sizes. We that any CBOT break will be sustained until South American crops are better known in February. Argentina is likely to remain in a drier/warmer weather trend that could pose some additional upside market risk. That said, COT reports show funds are jumping on the weather story.  IN the case of corn and wheat, this may just be the beginning but in the case of cotton and soybeans, we are hitting loftly levels in participation that are difficult to want to buy.
SOURCE CFTC
Trade ideas:
– Buy July corn- Sell Dec Corn (see Turner’s Take)- FILLED NEAR 12 CENTS
– Buy March short dated Bean puts to protect crop insurance prices
– Sell March corn near 370 –FILLED ON MARCH CORN SALE AT 370 ON FRIDAY
– Sell March KC wheat, look to re-own July via calls or collars
– Hedge Dec 17 cotton at these levels and more near 73 cents.
Spec Recommendation:
– Sell April Hogs
– Sell June Hogs
– Sell October Hogs
-Buy Feb hogs/Sell April on a spread  (EXIT THIS SPREAD AT 2.25, FOR A PROFIT OF APPROX 1.85 POINTS)
-NEW: BUY FEB/SELL APRIL CATTLE AT 1.10
Please call or email if you have any questions.

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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)