Greetings from Memphis! I’m visiting family this week but I do have a home office down here and you can reach me by email or my office phone number any time. This week usually is “low volume” but that doesn’t mean you can’t have big moves. If there is no news this week then the markets tend to stay quiet. If there is significant developments than the markets can make exaggerated moves due to the low volume. For example, back in 2009 I was one of the few brokers in the office for Black Friday. Dubai defaulted on $59 Billion of government bonds and gold moved $100 on during a very low volume session right after Thanksgiving. The market made a big recovery the next week but “unexpected news + low volume” can equal big moves. This weeks and the week between Christmas and New Years tend to offer the same risks.
There are two big stories about China over the weekend. The first is Communist Party offcials speaking to their media about the commitment to strengthen IP laws, market reforms, and fairer competition. Change in China is slow and could be too slow for the US. The stories I read suggest China wants to start making IP reforms starting in 2022 and completely implementing them by 2025. I can’t imagine that going over well in Washington.
The other big story over the weekend was the landslide election in Hong Kong as pro-democracy candidates took nearly 90% of open seats up for grabs. This really is a double whammy for Beijing. The trade war is hurting the Chinese economy much more than the US and now they are losing political support in Hong Kong, and this is all playing out very publicly on the world stage.
Grain & Oilseeds
The markets are higher today as more snow is forecast in the central US and that will further delay corn harvest. Farmer sales also tend to slow down during the week of Thanksgiving and that can be supportive too. Andy Daniels, the founder of Daniels Trading, has an opinion about rice today. This is a low volume market that can trade very fast. It is hard to use stops and options can be tricky to get in an out of. However, it is an interesting take on the market and for those of you who will trade small and are open to the risk, it could be a trade worth taking. This also appeared in The Van Trump Report this morning. Andy and Kevin have been good friends for years. Andy will also be speaking at FarmCon in Kansas City in January.
Cattle on Feed came in as expected on Friday. Placements were huge at 110% but the market was looking for 111% from last year. Feeders were down big on Friday ahead of the report as uncertainty around the Placements number caused selling. Today they are up a point as the number came in as expected. Hogs are seeing a little support this morning too. We have a neutral bias on cattle in the near term. We think Dec and Feb Hogs are close to the bottom of their ranges and any positive export activity from China or a breakthrough on Phase One could send hogs up 4 or 5 points.
Really good article from John Kemp at Reuters. Oil Traders Bet on Economic Upswing in 2020. It is worth the read. I will be around all week working from Memphis. Feel free to call or email anytime. We will be doing a podcast tomorrow so you’ll be hearing from me soon. I will also be on Chip Flory’s AgriTalk tomorrow too.
About Turner’s Take Podcast and Newsletter
If you like this content then please sign up for a free subscription of Turner’s Take Newsletter & Podcast.
Subscribe to Turner’s Take Newsletter & Podcast
Turner’s Take Newsletter & Podcast - Turner’s Take is a complimentary weekly market commentary newsletter that covers the Grain, Livestock and Energy futures spread markets using fundamental, technical and seasonal analysis.
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.