UNIV. OF ILLINOIS CLOSING MARKET REPORT AUDIO COMMENTARY w/CHARTS:
Some Important Charts For The Week In Grains–The Week In General Showed Us That Geo-Politics Still Matter To Wheat & Energies, Given They Have Little of This Premium In Them In My View. Meanwhile, The Row-Crops Seemed To Be Driven More By S/D Fundamentals, With The Soybeans Finding Difficulty From Nearly All Sides. The Charts Below Help Show Us What To Be Watching Next Week…For What Some In The Trade Are Expecting To Be A Post-Thanksgiving Seasonal Low. I Hope They’re Right…
…Including The Audio Commentary, The Charts Above Suggest To Me The Following: (1) Soybeans have had a tough time from several fronts, including improving Brazil weather; but the major force hitting the soybeans has been the cash market at the Gulf faltering even with strong export demand still showing-up. I put this mainly at the feet of the continued weakness in China’s soy complex–and as a result, the soy product market has been a key leader to the downside. This needs to change before we can get a low in the soy complex in my view; otherwise, we’re going to have to rely upon the grains picking-up the “ball” and supporting an overall rally. (2) On this topic, I am concerned that without further geo-political upside in the wheat this holiday-shortened week, the corn could be ready for a pull-back: the funds have likely been buying corn and selling soy, as both the ratio chart and the Corn COT charts indicate. I think this could be unwound this week, especially given that the cash corn price at the Gulf is looking toppy after this week.
A wild-card issue continues to be the trade-tariff uncertainty that seemed to be put more on-hold this past week; however, with the WSJ reporting that a new USDA nominee has been picked by the Trump Team, let’s see especially how the soyoil and corn react to this news if it’s confirmed before Sunday night’s Globex trade. I’ll have a lot on this in the coming weeks, starting with my planned Client-Only Webinar Part 1 this week. If you’re interested in purchasing as a non-client, please contact me to discuss after market hours: 866 471-2588.
If you like this analysis, please consider signing-up as a subscriber or become a client. Start By Getting A 2-Week Free Trial On The Website Before Logging-Off Today.
LIVESTOCK COMMENTARY: CATTLE-ON-FEED INITIAL REACTION
Looking at the price charts below, I think it’s fair to reason that my mindset going into the USDA Cattle on Feed Report was one of needing to “feed the bull”; this was founded upon the idea that a big placements number could keep supplies of 12 Mln. Head on-feed around for several more months. The report suggested exactly that, and I wonder if the Feeders in particular will now take a pause in the cash market…as they have been “on fire” at the $2.75 area for std. feeder weights, while driving upwards of $3.50 for light calves (in some cases unweaned). So, this is the first thing to watch-for on Monday’s trade: cash feeders break lower without the help of cash cattle, and then the CME feeder futures falter and support an idea of keeping the “Sell Signal” in-tact on the Monthly Chart. For anyone carrying Nov. Feeders which expired this past week, the cost of those were more than offset by the $10+ run higher in futures since the end of October. And given the cash premiums over the futures, I am calling the bought put program a “success” as it managed our risk through the election and a lot of price uncertainty. It’s times like this when options expire that sometimes one wants to pull-back from hedging. I think the report on Friday would suggest not doing this, so we’ll see what happens on Monday-Tuesday to see how the landscape looks. And if it does look like feeders go from being the leader to the upside in prices for live cattle, to the leader to the downside, I’ll be getting some fat cattle hedge recommendations out to you before the Thanksgiving dinner is served.
INVESTOR COMMODITY CORNER: NEITHER OF THESE ASSETS SUGGESTED A SIGNAL THIS PAST WEEK. I AM KEEPING THEM ON THE WATCH-LIST AGAIN THIS COMING WEEK…
— POSSIBLE “SELL SIGNAL” IN-PLAY FOR THE S&P 500 —
— POSSIBLE “BUY SIGNAL” IN-PLAY FOR THE WTI CRUDE —
All Charts Source: LSEG/Global Commodity Analytics Unless Otherwise Noted. Please Keep In Mind, The Charts Shown Could Be From Mid-Session & Not Reflect Closes/Settlements.
Hypothetical Disclosure—HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. General Risk Disclosure—There is substantial risk of loss in trading futures and options, therefore you should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant circumstances. The information above is not meant to be advice to buy or sell futures and options. Options Risk Disclosure—The purchaser of options should be aware that he could lose all premium paid for such options as well as any commissions and fees. Further, purchasing deep-out-of-the-money options have a remote chance of becoming profitable. The writer or seller of options should be aware that there is unlimited risk and could result in such seller being required to maintain a futures position with any associated liabilities for margin. Past performance is not necessarily indicative of future results. Information Disclaimer—The information and data contained herein was obtained from sources deemed reliable. Their accuracy and completeness is not guaranteed. Any decision to purchase or sell based upon such information is the responsibility of the person authorizing the transaction. Prices could already have factored-into them the seasonality or cycles of the market. Copyright, 2020-24 Global Commodity Analytics & Consulting LLC