The US and China reached a trade truce over the weekend at the G20 meeting. For now the market is cautiously optimistic about the deal. Shorts covered today but we did not see new buying. For the markets to rally further we need to see real export demand come to the US from China
Turner's Take Podcast
In Turner's Take Podcast, Daniels Trading futures brokers discuss the commodity markets from a fundamental, technical, and seasonal perspective. Turner's Take podcast (formerly Inside Commodity Futures) is hosted by Craig Turner, commodity broker with Daniels Trading and author of Turner’s Take newsletter.
The G20 meeting is Friday and Saturday in Argentina. The G20 is a group of leading economic nations who get together to address pressing economic issues. During this meeting nations will get together who need to address specific issues just between them. There are two of these discussions that are of particular note to our markets.
Happy Thanksgiving! In this week’s podcast we go over the big movement in Natural Gas. Then, I talk about some of the special podcasts I plan to do, like trading in limit markets, in-depth looks at the spread markets, and many more. So be on the lookout for those! Finally, we finish up with the grain and livestock markets.
Stocks and crude oil have been lower since late September. The US midterms have helped stabilize the stock market but crude oil is still lower due to increased output and concerns of global growth slowing.
The US Employment Cost Index increased 0.8% in the 3rd quarter, the Labor Department said today. For the year the index is now up 2.8%. Wages and salaries are up 2.9% in the last 12 months through September. That is the biggest gain in 10 years!
The Export report was bearish for corn, soybeans, and wheat. The market wants to see wheat sales to justify $5 prices. The corn and soybean market seasonally enjoy increased export sales this time of year but that has not been the case.
Soybeans are holding the 50 day moving average. A close below $8.69 in Jan 19 soybeans and a close below $9.1250 in Nov 19 soybeans could send the whole soy complex another leg lower.
High Natural Gas demand (for cooling) this spring and summer had drawn down stocks more than expected. The early start of winter and forecasts of a colder winter could be supportive of Natural Gas until February. Coffee has broken out higher as Brazilian producers threaten to limit supply in order increase prices (sounds like the coffee version of OPEC). Gold has consolidated as the stock market stabilizes with support coming in at $1220.
The USDA released the Oct WASDE at 11am central and the report is less bearish than expected, which is causing a modest rally in the grain and oilseed markets.
Tech stocks lead the markets lower today as the ten year interest rate is 3.25%, a high we have not seen since 2011. The two year interest rate has not been this high since 2008! The pace of interest rate increases is what fund managers are really concerned about. I think a lot of the big money managers are caught off guard and not hedged enough in the market. If they are following the old hedge fund play book, they should be selling the emini S&P futures against their long positions.