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Home / Futures Blog / This Week in Grain 2/28- Monthly Wrap

This Week in Grain 2/28- Monthly Wrap

February 28, 2017 by John Payne


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

Corn (H17) 371’0  +2’6

Soybeans (H17)1018’2  +7’2

Chi Wheat (H17)  423’6  +5’0

KC Wheat  (H17)  446’0  +2’0

Cotton (Z17) 74.22  +.07


The ides of March are upon us.  The last trading day of the Feb kicks off today as CBOT and cotton markets look to close the month on a green note.  Below I have monthly continuous bar charts of the big 4 markets we cover.  While the markets feel like they have made more headway in Feb you can see that the ranges are actually pretty small relative to the last few years.  On an optimistic note, corn and wheat have their first three month winning streak since 2014. Can we go for 4? Sure why not.  I think we eventually see a test of those front month highs near 440 corn and 520 wheat at some point, although it may be a while.

Moving back to a shorter time frame, firmer markets is the theme this morning, although still below where prices opened yesterday.  After rallying to the highest levels since August, Chicago wheat has fallen like a stone, dropping in six of the last seven sessions giving back more than half of the 73 rally we saw come in since the Dec delivery started.  This is spec and farmer liquidation at its finest, I believe the farmer is done for now while the specs probably have a little more to go but not much. What’s most surprising is probably the way the March Chicago wheat contract is following the exact same road map as December, September and July wheat before it.  It rallies in the period ahead of first notice day (price or roll day for farmers on basis contracts), followed by heavier than expected deliveries and a smashing of the front-month spread before futures take out support and give back much of the rally.  If this trend holds, the short term lows in corn and wheat will be made today.

South American weather remains promising for production,  with drier/warmer weather featured across Argentina, while near to above normal rain drops across N and C Brazil. The Brazilian rains could cause some slowdown of the harvest, but that shouldn’t be an issue as the line at the ports is long anyway. One note for beans, this morning I look at FOB offers from Argentina, Brazil and NOLA and the US is now the most expensive. Its only by a couple of dollars but it is higher none the less.  I think we should start to see the bean export sales come down and settle back into more historical patterns.  I like the bean markets as I look at the charts from afar, but I do not really like the fundamentals.

Dec 17 cotton is back above 74 as the front month May and July positions lead the way.  We have seen precipitous long fund covering show up in the CBOT markets but cotton maintains this massive strength at last year’s highs. US export sales will be watched on Thursday for even more buying after last week.  The bears will continue to point to a massive jump in US ending stock supplies with a normal yield.  Traders I read are looking for higher planted acres for cotton in China and a 7% jump in India as well.

IN other news, plains monthly crop condition ratings pegged 43% of the Kansas wheat crop GD/EX, down 1% from the end of January. But, the Oklahoma wheat crop rating improved 10% to 43% while the Texas rating was up 4% to 34%. NASS will start reporting national US wheat crop conditions during the first week of April.  We want to be long ahead of that, as demand stories exist now.  Maybe we can see a supply side story join the party as the Q1 ends.

I look forward to seeing everyone who can attend the Commodity Classic at our event tomorrow evening on the river walk. It appears to be a solid crowd, can’t wait to see you all.  I am going to try to post from San Antonio but don’t hold me to it.


 Hedge ideas:
– Sold March corn near 370 –REMAIN SHORT THROUGH FIRST NOTICE.  WE WILL LOOK TO GET LONG AT THE END OF FEBRUARY- EXPIRED WORTHLESS
– Hedged Dec 17 cotton at 70-71 cents.
-Sold another portion of Dec 17 production on Friday near 73.50.
-Bought Dec 17 cotton 73 cent puts for 4.50
––Sold April Wheat call options ahead of March delivery- WE WILL LOOK TO BUY THESE BACK TOMORROW, FEB 28
Spec Recommendation:
– Sold June Hogs at 77.00 REMAIN SHORT
– Sold October Hogs- 67.00- REMAIN SHORT
– Buy July corn- Sell Dec Corn (see Turner’s Take)- REMAIN LONG SPREAD
UPDATES ARE IN BOLD. Please call or email if you have any questions.

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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