Could extreme volatility be in the future?Could extreme volatility be in the future?
China and the U.S. weather are still at the center of the grain market.
August 7, 2018
Soybean bulls are happy to see the USDA finally reducing their crop-condition estimate. Prices were up double-digits in the overnight, but continue to trade around the $9.00 level.
Weekly ratings fell from 70% rated "Good-to-Excellent" last week down to 67% this week. States deteriorating the most are: North Dakota -9%; North Carolina -8%; Missouri -6%; Kentucky and Mississippi -5%; South Dakota -4%; Iowa and Tennessee -3%; Minnesota and Nebraska -1%; Illinois, Kansas and Louisiana "unchanged"; Indiana and Wisconsin +1%; Arkansas +2%; Michigan +3%; Ohio +7%.
Soybeans "blooming" are reported at 92% vs. the 5-year average of 86%. Soybeans "setting pods" were reported at 75% vs. the 5-year average of 58%.
From a historical perspective, I don't like reading that NOV soybeans tend to deteriorate in price from now through early-October. I'm hoping this year bucks the trend. I suspect a lot will depend on remaining August weather and how Chinese trade talks progress in Washington. I still see more extreme volatility on the horizon.
Many professional traders still see an easy -$1.00 move to the downside on further deterioration in Chinese trade talks and a cooperative U.S. weather. On the flip side, many professional bulls are talking about +$1.00 immediately added to the upside should trade talks produce an agreement and or U.S. weather deteriorates more rapidly in the weeks ahead. Bottom-line, nobody really knows the direction of the next $1.00 move in this market, but traders continue to believe the wild swings are still in play.
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About the Author(s)
Founder, Farmdirection.com
Kevin is a leading expert in Agricultural marketing and analysis, he also produces an award-winning and world-recognized daily industry Ag wire called "The Van Trump Report." With over 20 years of experience trading professionally at the CME, CBOT and KCBOT, Kevin is able to 'connect-the-dots' and simplify the complex moving parts associated with today's markets in a thought provoking yet easy to read format. With thousands of daily readers in over 40 countries, Kevin has become a sought after source for market direction, timing and macro views associated with the agricultural world. Kevin is a top featured guest on many farm radio programs and business news channels here in the United States. He also speaks internationally to hedge fund managers and industry leading agricultural executives about current market conditions and 'black swan' forecasting. Kevin is currently the acting Chairman of Farm Direction, an international organization assembled to bring the finest and most current agricultural thoughts and strategies directly to the world's top producers. The markets have dramatically changed and Kevin is trying to redefine how those in the agricultural world can better manage their risk and better understand the adversity that lies ahead.
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