Grains and cattle rally to continue one more day

FOR WEDNESDAY: (10/5) Commodity Weather Group reports that rain continues to plague the Midwest harvest with forecasts putting severe storms in Kansas and Nebraska today and flash flood warnings from Oklahoma to Minnesota. Rain lingers on Wednesday with more storms in Kansas on Thursday and flash flood warnings from Kansas to Iowa. So far there have been only minor disruptions to Mississippi River traffic. The Army Corps of Engineers on Tuesday said the one Mississippi River lock that is closed should reopen tomorrow.

Inclined to think that the rally for grains and cattle will continue one more day. Hard to do countertrend buys on the grains and have to bank profits on cattle longs as things disappear quickly in that market.

Sloppy week ahead

FOR TUESDAY: (10/4) China is gone all week for Golden Week and while Germany will come back and trade will wander back from the Jewish New Year, we still may have a sloppy week. We’re very open to a crisis meltdown toward the end of the week but we never want to use the word crash. The oligarchs are good at keeping their fingers in the dike and a recent article noted that they have enough cash to keep the game and QE going another 4 years! By next Sunday we will favor a seasonal buy on stocks and at the moment they’re not giving us much of a pullback to play.

More rain in Iowa this week may support grains

FOR TUESDAY: (10/4) Monday’s violent rally was a bit of a shocker. We had cycles up for a few days and funds sometimes buy Oct. 1st for a week or so before the next USDA report but this was a bit much. Some announcement of the USDA not allowing flooded grain onto the market was a bit of a scare. Harvest in the Midwest was slowed by rain this past weekend, but should gain some traction under clear skies. More rain arrives on Tuesday and Wednesday, plus the weekly and 6-to 10-day forecasts favor rain for the western Midwest.

Stock cycles positive for Monday

FOR MONDAY: (10/3) Seemingly confirming the rumor, Agence France Press reports that Deutsche Bank is nearing a $5.4 billion settlement with the US Justice Department. This has catalyzed another leg higher in Deutsche Bank stock and lifted the whole market as it would appear that unconfirmed sources have ‘fixed’ the world’s most systemically dangerous bank (despite the fact that short-dated counterparty risk is soaring). Giving DB some breathing room is the fact that Monday is a banking holiday in Germany and that will leave traders in limbo.

The first of the month is often an up day for the stock market and cycles are positive so the market likely to accelerate and throw the bears under the bus. Given how rumors and problems so often erupt with these matters and given that cycles are messy next week for financials, we doubt we will get a clear-cut resolution. Moreover, we then have to deal with choppy trading ahead of the Oct. 7 employment. No rest for the wicked. Hard to make recommendations here on Friday and the first day of the new month tends to be a big-range volatile day anyway so have to see what unfolds.

Cattle look higher on Monday

FOR MONDAY: (10/3) Corn closed higher for the day after USDA reported smaller-than-expected Sept. 1 stocks of 1.74 billion bushels. The change in the stocks and other factors were enough to push December past resistance at the 20- ($3.34) and 50-day ($3.34) moving averages and higher for the week.

Going into October, attention will focus on the weather and harvest progress. Iowa should be dry the next few days to allow harvesting there, while showers linger in Illinois, Indiana and Ohio. The 6- to 10-day outlook (Oct. 5-9) favors more rain for Iowa. We are open for grains to recover a day but beans are a safer sell and corn could hit 340.50 and wheat 414 first. Hog and Pig report was bearish but how much more can it go before we get a bounce? Cattle look higher on Monday from limit down and key 119 level reached for Dec feeders so what to do but be patient.

Deutsche Bank climax by Oct. 9

FOR FRIDAY: (9/30) Deutsche Bank continues on the tilt-a-whirl, suggesting a Lehman moment, and of course they’re spouting rhetoric of how all is OK in the same kind of denial that Lehman spouted days before they collapsed. Some investors are starting a minor run but ultimately the government will come in and save DB. Starting to think climax by Oct. 9 so it continues to seem safer to be short overnight for a world and market on edge. Still, we won’t discount the power of the oligarchs to keep their world going and richer so those expecting the end of the world with DB or a Trump win will be disappointed. One of my favorite movies by Luis Bunel, The Discreet Charm of the Bourgeoisie, is a reminder of that: whatever the ups and downs and craziness of this group, they continue to grow and prosper and rule.

Continue to sell grain rallies

FOR FRIDAY: (9/30) Last of the month is often short-covering and profit-taking for funds no matter what the USDA comes up with. Hard to imagine anything friendly. Rallies will continue to need to be sold with harvest pressure and hard to imagine beans having a good number. We’ll continue to play cycles and patterns. We probably still need to be short corn and beans next week unless there’s a huge surprise. Cattle close to being done and hogs may be lower all of next week if the report goes poorly, as cycles are there for problems.

T-notes look lower one more day

FOR THURSDAY: (9/29) Still lots of data coming out and now we’re moving toward position squaring by fund managers at the end of the quarter. They push often stocks lower into the end of the month so they can buy them back for the seasonal October buy. T-notes look lower one more day. Everything is starting to get a bit more overdone.

Cattle getting close to being done

FOR THURSDAY: (9/29) Hard to be short grains but market may continue short-covering on Thursday, and Friday’s report reaction may also continue with short-covering. Harvest selling should pick up by Sunday. We may have to continue to take profits on grains if we can get lower. In the end, we’ll have to sell any rallies on Friday or Sunday if they manifest. Cattle are getting very close to being done but still a few more days left to sell. Hogs are sideways before Friday’s Hog and Pigs report.

Harvest selling should pick up by Sunday

FOR WEDNESDAY: (9/28) Crop fundamentals remain bearish with harvesting under way in much of the Midwest this week and forecasts call for dry weather the next few days. The seven-day forecast also favors dry conditions for much of the Midwest, while the 6- to 10-day outlook has above-normal chances for rain in Iowa and for much of the northwest quarter of the country.

Not sure what the late rally was about except some short-covering before Friday’s report. Hard to be short grains on Wednesday but market may continue short-covering on Thursday and Friday’s reaction may also continue short-covering. Harvest selling should pick up by Sunday. We may have to continue to take profits on grains. Meats gave up gains late and not sure what to do with them now. Cattle close to key targets so a recovery could happen on Wednesday.