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Cotton and rice bullish, corn bearish, soybeans and wheat seeking price direction at beginning of week.
5 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.
Markets will spend the week digesting the interactive impacts from an array of global seasonalities, the very real threat from North Korea, hurricanes Harvey, Irma, and those following in their wake, building global fiscal and monetary policy uncertainties, etc.
From a global economic perspective is the glass half-full or half-empty?
For those impacted globally by catastrophic weather and other risk events the glass surely seems totally broken, and our hearts and prayers go out to all who have recently been or who are presently in harm’s way.
Reality is governments and Central Banks globally through fiscal, monetary, trade and regulatory policy have accomplished much, related to recession avoidance and the overall economic viability of global economies for one to possibly three years into the future. The purpose of this article is not to discuss the costs of these accomplishments.
Given global government interventionist activities the U.S. Dollar and Chinese Yuan Renminbi have some breathing room to empower economic activity in their respective countries for a period.
The 10-Year US Treasury Yield or Interest Rate remains bullish and keeps flashing red telling us the world is dangerously frail. Now turn the coin over and look at the other side of the economic coin and what does one see? Many global currency and equity markets are showing stability implying economic energy is building. That said, near term if the 10-year Treasury falls below 1.95 this week, then we need to show concern and define ominous unfolding economic events and their potential impact on markets.
For the next four to six weeks U.S. and likely a number of global equity markets may enter a consolidation period and possibly some correction before momentum is regained.
So near term how does this possibly impact the commodity and other markets? Continue reading and study the attached slide show.
What to expect from the markets this week, beginning Sept. 11, 2017
Market “Near Term” Snap Shot
Rice: Bullish bias remains
Cotton: Bullish bias with a price consideration of 91-cents
Soybeans: Additional price strength implies a likely price bottom in place, but assume bearish until price action proves otherwise, a stronger final bottom likely needs to form
Corn: Bearish with a bottoming process underway
Wheat: Defining a price bottom
10-year Treasury Yield: Yield Sideways-to-Down: We enter the week with the 10-Year US Treasury Yield slightly bullish with a potentially lower yield
S. Dollar: Bearish – Possible corrective activity likely, the door is now open for a decline to 87 or lower
Oil $WTIC: Sideways choppy price action with this week’s prices more bearish than bullish. The $45 to $50 trading range may give way to an upside potential of $55-plus
$CRB Commodity Index: Government, Central Bank, other intervention certainly creating commodity market uncertainty. Do not rule out a revisit to previous index lows during this period of global consolidation. That said, this index is building a base to move higher
S&P 500: A cautionary time period with momentum waning
Global Equities Excluding U.S. and Canada: A cautionary time period with momentum ever so slowly declining
Feeder Cattle: Consolidating before moving higher
In addition to the following “Expanded near term market outlook considerations for week beginning Sept. 11, 2017.”
Download Slide Show for charts and expanded details by clicking on the Download Link Button at the end of this article.
This Week’s Select Summary Considerations:
10-Year US Treasury Yield:
Yield Sideways-to-Down: We enter the week with the 10 Year US Treasury Yield slightly bullish with a potentially lower yield
Bond yields need to hold at 1.95 or serious consideration must be given to ominous building economic problems
What could continue to move the yield lower? Demand, Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors could take the yield lower
S. Dollar Index:
Bearish – Possible corrective activity likely, the door is now open for a decline to 87 or lower
Given global macro considerations coupled with no significant global anomaly event moving forward this index may have some serious weakness
Unless Middle East, North Korean, European, Venezuelan or other anomaly events start to dominate market participant decisions, then we are still in search of a low for the dollar
CRB Index:
The question in search of an answer: What is the near-term impact of government and Central Bank intervention globally, the North Korean threat, and Harvey and Irma’s impact on economic activity? Do not rule out a revisit to previous index lows during this period of global consolidation and uncertainty. That said, this index is building a base to move higher
Caution is advised since global economic, social, political and military uncertainties remain problematic
$WTIC Light Crude Oil:
Sideways choppy price action with this week’s prices more bearish than bullish. The $45 to $50 trading range may give way to an upside potential of $55-plus
A complex, volatile and an uncertain market that deserves a great deal of respect in a world with building economic, social, political and homeland security uncertainties
Soybeans:
Assume bearish until price action proves otherwise, a stronger final bottom likely needs to form, but additional price strength implies a likely price bottom in place
Given complex global macro challenges assume until price action proves otherwise that the bottoming process has not yet completed, and a retest of the $9.00 area or potentially lower into the $8.35 area is still a possibility
Corn:
Assume bearish until price action becomes more supportive of a bullish case and give consideration to prices moving to their previous 2016 lows of $3.15 or below
Long Grain Rice:
Bullish bias remains, but keep peripheral vision on potential near term uncertain global economic crosscurrents related to currencies, bonds, equities and commodities as they go through a rebalancing process
Cotton:
Bullish bias with a price consideration of 91-cents
Wheat:
Presently strong resistance headwinds remain in force, wheat seasonality favorable, but global economic forces problematic near term; therefore give consideration to prices returning to their 2016 low of $3.90 or lower
SPY SPDR S&P 500 ETF:
A cautionary time period with momentum waning
Allow price action to provide guidance
QQQ NASDAQ Power Shares:
Near term remain cautious of this index with momentum slowing
Allow price action to provide guidance
EFA iShares ETF - Global Equities Excluding U.S. and Canada:
A cautionary time period with momentum ever so slowly declining
Allow price action to provide guidance
EEM iShares ETF, Emerging Market Equities:
A cautionary time period
Allow price action to provide guidance
Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected].
DISCLAIMER-FOR-EDUCATIONAL-PURPOSES
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