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4 Min Read
The cotton market is grinding slowly upward.
Rice seems to have more weakness than strength, cotton is making a slow move up, soybeans need to build on recent gain, corn is searching for a low, and wheat seems to have more price weaknesses. That’s the gist of commodity activities for the week of January 15.
Market “Near Term” Snap Shot
Rice: This market likely has more weakness than strength as market participants digest potential of significant expansion of 2018 U.S. long grain rice planted acres (Charts 38 and 39)
Cotton: Cotton prices are in a slow grind to the upside. Closing and holding above 88.50-cents implies possible significantly higher prices (Chart 40 to 42)
Soybeans: A complex market that needs to build on Friday’s price strength, or consideration must be given to revisiting the 2017 low of $9.00 (Charts 32 to 34)
Corn: Searching for a low, so assume bearish until price action becomes more supportive of a bullish case and give consideration to prices possibly moving to their previous 2016 lows of $3.15 or below (Charts 35 to 37)
Wheat: Wheat appears to have additional price weakness into the 3.90 area (Charts 43 to 45)
10-year Treasury Yield: Consolidating with new highs possible to 2.75 (Charts 1 to 3)
U.S. Dollar: A significant decline is now underway, so first give consideration to 87 before correcting and moving lower (Charts 4 to 6)
Oil $WTIC: Fundamentals and global uncertainties increasingly supportive of this market. Price action to $73-plus a consideration (Charts 29 to 31)
$CRB Commodity Index: Macro factors and chart structure imply continued cautious optimism, though some back filling may be in order (Charts 26 and 28)
S&P 500: Trend remains up, but a cautionary time period (Chart 14)
Global Equities Excluding U.S. and Canada: Trend remains up, momentum regained (Chart 16)
Feeder Cattle: Bullish
In addition to the following “Expanded near Term Market Outlook Considerations for Week Beginning January15, 2018”
Download Slide Show for charts and expanded details, Click Download Link
This Week’s Select Summary Considerations:
10-Year US Treasury Yield:
Consolidating with new highs possible to 2.75
Higher yields have been in part a function of U.S. and Global market intervention activities designed to extend domestic and global growth and the business cycles
Lower yields are a function of: Demand, Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors could take the yield lower
U.S. Dollar Index:
A significant decline is now underway, so first give consideration to 87 before correcting and moving 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 major low for the dollar
CRB Index:
Macro factors and chart structure imply continued cautious optimism, though some back filling may be in order
Global Government and Central Bank actual and anticipated intervention indicate a slow fruit bearing process underway
Bigger Picture: Though dangerously spastic, global macro and growth forces in general remain supportive of the commodity sector
$WTIC Light Crude Oil:
Fundamentals and global uncertainties increasingly supportive of this market
Price action to $73-plus a consideration
A complex and volatile market focused on global uncertainties like Saudi Arabian and Iranian building friction, other Middle East challenges, North Korea, market structure, geopolitical considerations and building possibilities of a Venezuelan civil war are just some additional considerations, all deserve heightened respect in a world with building economic, social, political and homeland security uncertainties
Soybeans:
A complex market that needs to build on Friday’s price strength, or consideration must be given to revisiting the 2017 low of $9.00
A world awash in liquidity, building economic momentum and many hard assets seemingly overvalued, be careful not to overlook the possible attractiveness of this asset to speculators, investors and end-users
Simply stated watch the price action to define soybean price dynamics
Corn:
Searching for a low, so assume bearish until price action becomes more supportive of a bullish case and give consideration to prices possibly moving to their previous 2016 lows of $3.15 or below
Long Grain Rice:
This market likely has more weakness than strength as market participants digest potential of significant expansion of 2018 U.S. long grain rice planted acres
Remain aware of potential near term uncertain global economic crosscurrents related to currencies, bonds, equities and commodities as they go through a rebalancing process
Cotton:
Cotton prices are in a slow grind to the upside. Closing and holding above 88.50-cents implies possible significantly higher prices
Wheat:
Wheat appears to have additional price weakness into the 3.90 area
SPY SPDR S&P 500 ETF:
Trend remains up, but a cautionary time period
Consolidation or correction desirable not required
Allow price action to provide guidance
$COMPQ Nasdaq Composite:
Passive investors have lifted this market to a level that one must now focus on the risk vs reward of holding the index near term
Allow price action to provide guidance
EFA iShares ETF - Global Equities Excluding U.S. and Canada:
Trend remains up
Momentum regained
Allow price action to provide guidance
EEM iShares ETF, Emerging Market Equities:
A cautionary time, but momentum regained
Allow price action to provide guidance
Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service. E-mail: [email protected].
Download Slide Show for charts and expanded details, Click Download Link
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