FOR WEDNESDAY: (5/31) Corn opened sharply higher as the ping-pong match continues between 376 and 366. Markets were overdone on Tuesday and a bounce here is healthy. Downward patterns weren’t quite completed for wheat and beans so we’re open for another thrust lower. Cattle liked news out of China but still may be in trouble overall and look lower on Thursday. Markets moving toward position squaring for the end of the month by funds and that often distorts everything so continue to bank profits and move stops lower.Continue reading
Sideways action after holiday likely
FOR TUESDAY: (5/30) Quiet markets on Monday didn’t tell us much. The Fed’s Williams said three rate hikes in 2017 made sense and balance sheet normalization should begin this year. The pound posted the biggest gain among G-10 currencies, though the bounce wasn’t enough to erase Friday’s plunge when polls showed the coming election may be closer than expected. Oil trades back under $50/bbl as boost in U.S. drilling activity threatens OPEC’s efforts to reduce a global supply glut. On Friday Baker Hughes revealed U.S. explorers added 2 rigs to 722, highest level since April 2015. After the market was unimpressed with accord Thursday to prolong output limits, Saudi Arabia’s Energy Minister Khalid Al-Falih said the strategy is working, global stockpiles will drop faster in 3Q
As Bloomberg notes, despite the longest winning streak for U.S. stocks since February and record highs posted by equities globally, the ongoing bond rally hints at an undercurrent of investor caution. With the fate of the Trump administration’s pro-growth stimulus plans uncertain, the dollar is one of the weakest-performing major currencies this year, even as the Federal Reserve prepares for more rate hikes. Gauging the ability of the global economy to withstand rising borrowing costs will be key for traders.
“The U.S. economy is about as close to the Fed’s dual-mandate goals as we’ve ever been,” Federal Reserve Bank of San Francisco President John Williams said in Singapore on Monday. “With the attainment of our dual-mandate goals close at hand, it’s more important than ever for monetary policy to work toward what I like to call a ‘Goldilocks economy’ -– an economy that doesn’t run too hot or too cold.”
Three-day holidays can be crazy but not enough news to create that. We often can see sideways action as people come back late from the holidays. Still, the first day of the trading week before employment report can be a big-range day.Continue reading
Friday’s rallies may begiven back early in the week into May 31
FOR TUESDAY: (5/30) Will the trade focus on the wetter Eastern corn belt which pushed the market up last week or the drier and warmer weather by the end of the week? I suspect that Friday’s rallies will be given back early in the week into May 31 but it does seem that prices may go higher into mid-June based on wetter and cooler weather in the East. Cattle on Feed report came out early during trading hours because of the holiday and left us all with no risk/reward if we left early for the holiday. Still may be able to get something on. Few more higher days for hogs we think.
JULY SOYBEANS (electronic ok)
SWING TRADING RECOMMENDATION: Hold July bean shorts from 957 with a 945.50 stop. Exit more partials at 906.00.
TODAY’S COMMENTS: (5/30) We do see lower prices the next few days into the end of the month. We took more partial profits at 933.50. Support is at 922.75 and 905. The solid break below 930 opens the door for eventually seeing 897-905. Rallies may have trouble taking out 935.50 now. We had suggested partial profit at 945 and that came in and the break below 938 easily project 933.
OVERALL: Daily chart suggesting 895 and if acreage increases, it’s possible.
NEAR TERM: (5/12) Five waves down projects 895 or 904. Cycle lows could continue into May 31. We should get a recovery into June 12 and June 16 and the lower into the June 30 USDA reports.
CYCLES OVERVIEW: May 29-31 low.
Weekend cycles have a high terrorism alert
FOR FRIDAY: (5/25) Fridays before 3-day weekends are usually quiet. Usually by 9:30 am everyone who came in is gone. Not sure if GDP will mean much. Markets are open Sunday night and usually until 10:30 am-12:00 pm on Monday so check with your broker. Asian and European trade can be brisk sometimes. Cycles over the weekend do have a high terrorism alert and there might even be some major domestic violence. Be safe with holiday driving particularly this weekend. Continue reading
Focus on weekend weather
FOR FRIDAY: (5/26) Fridays before long weekends can be rather sideways. We have to wait for Monday’s weather to get any new surprises out of the market and while we have weekend rain, not sure the market cares that much more given that it only could push corn up to 375 earlier in the week.
JULY CHICAGO WHEAT (electronic ok)
TODAY’S COMMENTS: (5/26) Not much action here. Wanting to take profits at 422.75 on partials but wondering if we’ll have to wait until Monday night or Tuesday to get it. First support at 422 and then 416.50.
FUNDAMENTALS: (5/25) The lower crude oil, technical factors and possible corn acres being switched to soybeans may have been selling factors. Soybean planting has gone well so far, with 53% done as of Sunday, 1% better than both the five-year average. Planting was ahead of the state average in Iowa, but behind in Illinois and Indiana
OVERALL: Seasonal pressure is always on winter wheat into late May and it can sometimes extend into mid-June. Three waves down on the weekly continuation chart project 3.99 and the USDA has given 3.85 as the lower end for where prices may go and they figure the market will not get above 465. Hard for us to see wheat getting above 438-440 again and given the downside potential to 399 or 385 on July wheat, we have to continue to sell rallies. First place July wheat will fall is 418 and then 410-2.
CYCLES OVERVIEW: Higher into May 26; May 29-31 low.
Stocks may take profits after Thursday’s high
FOR THURSDAY: (5/25) Will the trade go flat before the long holiday weekend already on Thursday? It will thin but Thursday will be a better day to trade vs. Friday. We have the markets open most of the holiday weekend in electronic trading and have outlined cycles for the weekend. We think stocks will take profits after Thursday’s high and that the dollar will do short-covering from a new low on Thursday, and that will pull gold off after a secondary high on Thursday. Looks like crude will get stuck with sell the fact but we won’t play until OPEC is clear but it looks like a sale Friday-Tuesday of next week.Continue reading
Hogs not done until 8290-8300
FOR THURSDAY: (5/25) We had a bias toward higher grains on Thursday and they usually are not higher this day. Cattle in transition and have to leave it alone and if you want to gamble on a weak reaction to the report for Friday, get in on Friday. Hogs not done until 8290-8300 comes in.Continue reading
Gold and silver higher into Thursday
FOR WEDNESDAY: (5/24) We looked closely at cycles this week and not seeing anything to knock stocks down, and the trade is blowing off the latest scandal rumors and is more interested in increasing end of the month profits. Dollar looks lower into Wednesday/Thursday and gold and silver higher and oil looks higher into June 3, and there is enough of a breakout that we can probably buy dips.Continue reading
Could see short-covering Thursday
FOR WEDNESDAY: (5/24) We usually don’t want to be short grains on Wednesday so watch carefully and take partial profits and move stops down. We could see short-covering on Thursday before the long weekend but market looks lower after the holiday. Corn and soybean futures closed lower as USDA data late yesterday showed farmers successfully dodged most of last week’s rain showers to stay current on spring planting. Wheat futures slipped as USDA data also showed some improvement in the winter wheat crop and good planting progress for spring wheat.
JULY CHICAGO WHEAT (electronic ok)
TODAY’S COMMENTS: (5/24) Break to 428 means we’re on the right side of this market. First support at 422 and then 416.50. Market may bounce on Thursday but I think we can be short into the weekend. While the weather remains troublesome for winter wheat, with more rain forecast later this week for the Plains, USDA said the crop improved 1 point to 52% good/excellent last week, contrary to forecasts for a small slippage in ratings. However, Illinois wheat lost ground with USDA rating it 44% good/excellent compared with 52% the prior week.
OVERALL: Seasonal pressure is always on winter wheat into late May and it can sometimes extend into mid-June. Three waves down on the weekly continuation chart project 3.99 and the USDA has given 3.85 as the lower end for where prices may go and they figure the market will not get above 465. Hard for us to see wheat getting above 438-440 again and given the downside potential to 399 or 385 on July wheat, we have to continue to sell rallies. First place July wheat will fall is 418 and then 410-2.
CYCLES OVERVIEW: Lower into May 24; higher into May 26; May 29-31 low.
Dollar looks lower into Wednesday/Thursday
FOR TUESDAY: (5/23) We looked closely at cycles this week and not seeing anything to knock stocks down, and the trade is blowing off the latest scandal rumors and is more interested in increasing end of the month profits. We can’t be bearish but we are sure where we can get an entry. Dollar looks lower into Wednesday/Thursday and gold and silver higher and oil looks higher into June 3, and there is enough of a breakout that we can probably buy dips.Continue reading