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Bobby Coats
May 29, 2017
4 Min Read
Bobby Coats and Bert Greenwalt, agricultural economists with the University of Arkansas and Arkansas State University, catch up at the Agricultural Council of Arkansas annual meeting in Little Rock.
What to expect from the markets this week, May 29, 2017
Click on download button below to view this week’s Market Price Considerations for Week Beginning May 29 slideshow.
Market “Near Term” Snap Shot
10-year Treasury Yield: Slightly bullish – lower yield
S&P 500: Caution – Likely consolidates for a period, technology component presently supporting price strength, longer term trend remains up
Global Equities: Some consolidating gains; others near term bullish; any significant corrective activity in the S&P 500 will spill-over into many global equities
U.S. Dollar: Remains Bearish - More weakness than strength; in general a positive for commodities
Oil: Inability to maintain price momentum could result in another leg down to below $45, which would aggravate commodity price weakness
Commodity Index: Remain cautious, dangerously weak, likely forming a base; do not rule out an additional leg down given sluggish global growth, geopolitical challenges, overall commodity supply exceeding demand
Corn and Wheat: Basing Continues – Bias: Cautiously Bullish; Achieving firmness to strength in the $CRB commodity index likely supportive of prices
Soybeans: An important week lies ahead as soybeans search of a bottom at $9.06 or possibly $8.35 area
Rice: Slight bullish bias remains due to U.S. long grain 2017 acreage and production uncertainty, but slowly losing momentum
Cotton: With the 84-cent-plus price objective achieved now we wait on price action to determine if additional price strength exists.
In addition to the following ,“Expanded near Term Market Considerations Week Beginning May 29, 2017”
Click on download button below to see accompanying tables for market analysis.
This Week’s Select Summary Considerations:
10-Year US Treasury Yield:
We enter the week slightly bullish with a potentially lower yield
Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors will likely take yields lower to 2 or below before moving higher
As global events unfold (economic, social, political, etc.) chart activity will provide guidance
US Dollar Index:
Remains Bearish: For a period the dollar should have more weakness than strength against the Euro
Big Picture: The dollar has a bullish bias given global economic, social, political and military challenges
Unless Middle East, North Korean, European, other anomaly events start to dominate market participant decisions for a period, then we are still DEFINING a trading range 95 -104
CRB Index:
Remain cautious, dangerously weak, likely forming a base, additional leg down should be considered possible
Bigger Picture: Though spastic global macro forces in general remain supportive of the commodity sector
For the CRB Commodity Index to breakout will likely be a function of oil price leadership and/or broad commodity support, a reasonably stable to weaker dollar and belief and confidence in global fiscal, monetary, trade and regulatory policy leadership
$WTIC Light Crude Oil:
Near-term prices remain in 45 to 55 dollar trading range. Will oil prices retest the top of the range at 55-dollars this week?
Additional price weakness from current levels will likely be problematic for the $CRB Index and commodity sector
As always, remain focused on the bigger “Geopolitical Picture and Building Military Friction”
Sustained oil prices below $50 presents macro challenges and raises global economic momentum concerns
Soybeans:
In search of a bottom at $9.06 or possibly $8.35
A resumption of commodity index weakness, a likely function of fundamentals and Fiscal and Monetary Policy and Global Economic Uncertainties, could translate into a final price low at $8.35 or lower
Simply stated watch the price action to define soybean price dynamics
Corn:
Basing period underway followed by upward price momentum
Cautionary Note: A resumption of oil price weakness could possibly be problematic for corn prices
Long Grain Rice:
Slight bullish bias remains due to U.S. long grain 2017 acreage and production uncertainty, but slowly losing momentum
This is a highly complex market with an array of factors impacting price from 2016/2017 fundamentals; 2017 acreage, production and quality uncertainties; present underlying aggregate commodity sector dynamics; problematic global economic momentum, geopolitical uncertainties, and/or global agronomic outlook
Cotton:
With the 84-cent price objective achieved now we wait on price action to determine if additional price strength exists
Wheat:
Bullish price potential to $4.71 to $5.51 remains a possibility
SPY SPDR S&P 500 ETF:
Caution – Consolidation period likely
Allow price action to unfold
Larger trend remains up
QQQ NASDAQ Power Shares:
Momentum driven by a select few technology stocks
Allow price action to unfold
Larger trend remains up
EFA iShares ETF - Global Equities Excluding U.S. and Canada:
Trend remains up
EEM iShares ETF, Emerging Market Equities:
Entering a cautionary period
Trend remains up
Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected].
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