Patterns suggest very oversold conditions for grains

FOR WEDNESDAY: (7/20) We warned you how these bullish forecasts can quickly change. The NWS’s latest weekly and 6- to 10-day (July 24-28) outlooks indicate this week’s hot weather of 90 and 100-degree highs will be brief, likely lasting through Friday, with next week’s highs expected in the 80s.

Also, rain last week and through the weekend put crops in good position to weather this week’s heat. Patterns suggest very oversold conditions for Dec wheat at 438 and Nov. beans at 1021 and Dec. corn to max. 342 so that some short-covering may develop and maybe the reality of the heat in Chicago will get those traders short-covering. Meats are moving toward congestion ahead of monthly reports.

Weaker metals and crude ahead

FOR TUESDAY: (7/19) Failed Turkey coup rebound was easy to predict but summer trading was so muted not sure we learned much. Usually by Tuesdays the trade is back from long holidays and ready to re-position so let’s see if volume picks up and confirms weaker metals this week and weaker crude over the next week and hoping for a secondary low on stocks to buy.

Grains due for a bounce?

FOR TUESDAY: (7/19) I suspect that markets are oversold enough that we’ll get a bounce if we can get in from lower levels at pattern completions. Corn, soybean and wheat closed higher on Monday as traders await the severity and duration of this week’s Midwest heat wave.

For the Midwest, forecasts put 100-degree highs from the Mississippi River and west and 90-plus east of there. The 6- to 10-day outlook (July 23-27) has above-normal temperatures in the Midwest and Plains then, plus dry conditions for the western Midwest. Reports from the field say Midwest corn made it through pollination in good shape and widespread weekend rain should help the crops make it through this week’s hot weather. Winter wheat moved higher with corn and soybeans despite harvesters reporting good yields as the winter wheat harvest moves into Nebraska and South Dakota. Protein content has slipped with readings of about 10% common versus the normal 12%.

Cycles optimistic for Monday

FOR MONDAY: (7/18) Cycles are a bit more optimistic for Monday for a bounce for stocks but still think some downward congestive action could dominate for a few days.

With the background noise changing with French terrorism, we can give the dollar a better chance to reach higher but we still want to sell gold on Monday if we can. Crude still looks under pressure next week.

Grains look lower next few sessions

FOR MONDAY: (7/18) Rains last week focused south of I-80. That’s expected to change into early next week, according to maps for the next seven days, as milder temperatures begin to give way to heat from the Southwest. Official 6- to 10 and 8- to 14-day forecasts out yesterday show the warmer and drier pattern extending into the last week of the month, though the latest updates this morning dial back the extreme conditions some. Lately the more bearish forecasts tend to manifest over the weekend and cycles suggest as much going into Monday.

Still, we’re open one more recovery but at the moment we think the market will be lower the next few sessions. Gaps on Sunday night are very difficult to trade.

Terrorism in France roils markets

FOR FRIDAY: (7/15) A serious truck bomb in France could change action for Friday and we have to scramble out of short gold and long stocks until we are sure how markets react.  This week has been too news driven with too many surprises for holding any trade very long and we will continue to stay on top of it as best we can.

Our heart goes out to that country again at this very troubled time.

Weather sparks bean reversal

FOR FRIDAY: (7/15) We warned you how fickle these forecasts are how they can quickly turn. Soybeans made a sharp turn lower at midday and closed sharply lower as new forecasts apparently favor rain next week for the Midwest crop and indicated the heat wave then may not last long.

Previous hot, dry forecasts for the Midwest helped drive corn and soybeans higher this week with some help from Tuesday’s USDA report that increased exports for corn and soybeans and lowered Brazil’s corn crop.

Quick 2-day pullback on S & P should be over quickly

FOR THURSDAY: (7/14) Quick 2-day pullback on S & P should be over quickly here and the push higher should continue into August 1 so the party isn’t over. We’re still waiting for retracements from Tuesday’s wild action and then can get positions in play for next week with most swings suggesting trending action between July 18-27 next.

We’re wanting to short gold and silver on retracements.

Corn pollination may finish before heat arrives

FOR THURSDAY:  (7/14) Forecasts put 90 to 100 degree temperatures in key soybean areas next week, which could hurt crop development. Corn closed higher, although gains were pared late, on lingering support from Tuesday when USDA raised this year’s exports, partly because of an expected smaller crop in Brazil. Soft red winter wheat finished about 2 cents higher and hard red winter near unchanged. USDA confirmed on Tuesday there will be plenty of wheat in the world, with the United States, Argentina, Australia, Canada, Russia, and Ukraine all expected to harvest more.

Still, much of corn pollination should be done by the time the heat arrives but concerns still remain that a stretch of above-normal heat with dry conditions could still affect yields. Cycles aren’t giving us too many clues. We have had a bias toward a bearish reaction by Monday but those forecasts flip so easily it’s hard to gamble on unless you get in at good levels with big pockets.

Breakdown signal for T-notes and gold

FOR WEDNESDAY: (7/13) The potential impact of the new PM in the UK  caught us napping on  Tuesday. Yes, now suddenly the UK is fixed and there are no potential problems for Europe, or so the market reacted today. Sometimes these news events are followed by the trend as usual, and that may again be the case with the recovery in the dollar late.

We’ll give our original cycles the benefit of the doubt for a few days and see what happens but T-notes issued a breakdown signal and so did gold so the other markets might follow so be cautious.