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Home / Futures Blog / Wednesday Morning in Grain and Oilseeds 5/3

Wednesday Morning in Grain and Oilseeds 5/3

May 3, 2017 by John Payne

This Week In Grain (T.W.I.G)

Corn (N17) 371’4  -‘6

Soybeans (N17) 965’0  +1’0

Chi Wheat (N17)  447’0  -7’0

KC Wheat  (N17) 458’0 -9’6

Cotton (Z17)   74.59  -.34


KC wheat is rolling over this morning, foreign markets refuse to follow the US wheat markets higher.  It is important to remember that the US is a price taker when it comes to wheat, gone are the days where they are price makers like in corn and soybeans. In one week, US HRW went from the cheapest offered to the most expensive. Given offshore interest in KC wheat is nil anyway, any rallies need to be led from  The fund money givith and taketh away, as of this morning markets are off their highs from yesterday morning by about 13 cents. I am not throwing dirt on this rally by any means, I think prices have a very realistic shot at the February highs but we need some help from the Matif and Black Sea contracts. Right now NOLA HRW is offered at 190 per MT vs Black Sea in the 180 area.  Weather in the black sea is not threatening at this point.

HRW Crop tours will continue today, covering the harder hit areas of Western Kansas. Yields out in eastern/central Kansas sound like they are around 15% under the record from a year ago, closer to trend.  I assume that average falls today. Again, I am not turning bearish at these levels but would think about selling 470 July for producers with old crop in the bin.  Below is a chart from DT pro, the top red line is the 200 day MA of the top end of the bollinger band I have posted. If that line is approached, I like making some sales especially if you have remaining old crop to move before harvest.

 

Thoughts and prayers to the folks in SW Illinois, SE Missouri and NE Arkansas.  Everyone in the delta really.  Images are flowing in showing flooded fields and bridge closures.  I read one article saying that folks need to decide which side of the river they want to live on for the short term, given they probably wont have a chance to cross back once the floods start.  It sounds like the Southern Mississippi river is going to be closed to barge traffic, which has caused corn bids to drop on the river.  The worst part is that more rain is coming.  Prevent plant talk is going to begin. I think we see money begin to flow into corn ahead of this weekend so I prefer to be long right now.  If December corn would fall into the low 380’s consider making purchases.  Acreage is going to be an issue.

 

This could be a bean problem as well, although I think we can stand the acreage loss in beans more than corn.  Bean planting is going to begin to ramp up north given the window over the coming weeks.  So supply dominates the US story while demand is the global story.  Brazilian trade data showed exports above 10 MMT.  This is a record.  At this pace Brazil bean exports look to jump 20%. I doubt this data is much to rally the market in the short run but if US supplies falter mid summer, the 90+MMT China plans to import will stress S.AM supply and cause rallies. I would be cautious selling beans at these levels in the longer run.  Over the short term we probably see 950 Nov again given there is no real supply story in the US to follow.

Cotton markets remain super boring, trading between 74.50-75.00 in December futures.  The market has its eye on the delta weather, but the Texas outlook appears to be fantastic in coming weeks.  Continued US demand will need to be in the cards to keep the bulls interested, Thursday morning exports will be watched keenly.  Next week’s WASDE is expected to show increased exports and a carryout cut.  We could see more cotton acres in the months ahead but balance sheets will not show it for a while.  I remain patiently hedged in the 72-74 cent area.

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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