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Market price considerations for the week beginning Dec. 19, 2016

Bobby Coats and Bert Greenwalt attend Ag council of Arkansas meeting
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.
When oil prices rise, grain markets often follow. That’s one of the considerations in this week’s analysis of commodity market technical and fundamentals by the University of Arkansas’ Bobby Coats.

Editor's Note: Markets covered: Rice, Cotton, Soybeans, Corn, and Wheat; Select U.S. Equities; Dollar; Oil; and 10-year Treasury Yield

Dr. Coats prepares this weekly look at developments in a broad range of markets and how they may impact the price outlook for the primary crops grown in the Mid-South for Delta Farm Press. This presentation is for educational purposes only.

By Bobby Coats

Near Term Market Considerations Week Beginning Nov. 28, 2016

Near Term Summary Expectations:

  • 10-Year US Treasury Yield: Additional yield strength expected
  • US Dollar Index: More strength than weakness
  • CRB Index: Possibly building a base to breakout to the upside
  • $WTIC Light Crude Oil: A market in search of higher highs
  • Soybeans, Corn, Wheat, and Rice: Neutral – If U.S. equities and oil stay bullish then soybeans, corn, wheat, and rice may participate in a price rise
  • Cotton: Bullish but corrective price action may be underway
  • SPY SPDR S&P 500 ETF: Bullish – Consolidating
  • QQQ NASDAQ Power Shares: Bullish - Consolidating

Charts 1 and 2. $UST10Y - 10-Year US Treasury Yield

Primary Consideration:

  • Near-term, the 10-Year Treasury likely consolidates, before searching for a higher yield.
  • The Bond market topped (low yield) back in July anticipating domestic and global fiscal policy (infrastructure, etc.) stimulus activities would be elevated to a level to compliment ongoing monetary policy. Trump Presidency expected to be friendly to business and favor investing in equities, the dollar and commodities over bonds.

Charts 3 and 4. Power Shares US Dollar Index

Primary Considerations:

  • Bullish - Dollar running into resistance, consolidation likely, but near term expect more dollar strength than weakness
  • Global interventionist government and Central Bank activities will define dollar strength or weakness over the next 3 to 12 months

Charts 5 and 6. CRB Index

Primary consideration:

  • The CRB Commodity Index appears to be building a base to breakout to the upside.
  • In the equity markets the financial, industrial, and materials sectors have been major beneficiaries of anticipated reflation fiscal and monetary intervention activities.

Charts 7 and 8. $WTIC Light Crude Oil

Primary Consideration:

  • This is a market in search of higher highs
  • A challenging market for a number of economic and geopolitical reasons
  • Trump Presidency likely bullish U.S. production
  • OPEC and others likely define price top
  • Global uncertainties supportive of prices

Charts 9 - 10. Soybeans

Primary Consideration:

  • Neutral - I remain more concerned about additional price weakness and the culmination of a bottoming process near term. The bottom Weekly Bollinger Band presently $9.30 per bushel as this market coils for a major price move.

Alternative Consideration:

  • Considering global risks and uncertainties and building aggressive fiscal and monetary policy intervention activities argue a price bottom is in place or near.

Additional Thought:

  • Market participants appear to be building a risk appetite. If this market does not show weakness and moves above $10.49, then shorts should be mentally vigilant of price action.

Charts 11 – 12. Corn

Primary consideration:

  • Neutral - Near term bottoming process underway, likely a retest of the previous low at $3.15 per bushel

Alternative consideration:

  • Bottom in place and upside consideration to $4.15 per bushel

Charts 13 and 14. Rice

Primary consideration:

  • Neutral Rice
  • Bottoming process underway

Charts 15 and 16. Cotton

Primary Consideration:

  • Bullish prices likely into the 84-cent area. Near term if prices fall below 70-cents, then likely corrective price activity underway.

Charts 17 and 18. Wheat

Primary Consideration:

  • Neutral
  • Forming a price bottom
  • Price weakness into the $3.80 area a possibility

Charts 19 – 20. SPDR S&P 500 ETF

Primary Consideration:

  • Bullish - Consolidating

Charts 21 - 22. QQQ NASDAQ Power Shares

Primary Consideration

  • Bullish - Consolidating


2016 A Tumultuous Year Explained in 128 Graphics, Bloomberg Graphics

Charts Book Index – Link

Chart 1. $UST10Y - 10-Year US Treasury Yield, Weekly Chart, 2012 – Dec. 16, 2016

Chart 2. $UST10Y - 10-Year US Treasury Yield, Daily Chart, May 2016 – Dec. 16, 2016

Chart 3. Power Shares US Dollar Index, Weekly Chart, Dec. 2013 – Dec. 16, 2016

Chart 4. Power Shares US Dollar Index, Daily Chart, July 2016 – Dec. 16, 2016

Chart 5. $CRB Reuters/Jefferies CRB Index, Weekly Chart, September 2013 – Dec. 16, 2016

Chart 6. $CRB Reuters/Jefferies CRB Index, Daily Chart, May 2016 – Dec. 16, 2016

Chart 7. $WTIC, Weekly Chart, Dec. 2013 – Dec. 16, 2016

Chart 8. $WTIC, Daily Chart, May 2016 – Dec. 16, 2016

Chart 9. Soybeans, Weekly Chart, September 2013 – Dec. 16, 2016

Chart 10. Soybeans, Daily Chart, May 2016 – Dec. 16, 2016

Chart 11. Corn, Weekly Chart, September 2013 – Dec. 16, 2016

Chart 12. Corn, Daily Chart, May 2016 – Dec. 16 2016

Chart 13. Rough Rice Jan '17 (ZRF17) CBOT, Quarterly, Continuation Chart, 1987 – Dec. 16, 2016

Chart 14. Rough Rice Jan '17 (ZRF17) CBOT, Daily Continuation Chart, August 2016 – Dec. 16, 2016

Chart 15. Cotton, Weekly Chart, September 2013 – Dec. 16, 2016

Chart 16. Cotton, Daily Chart, May 2016 – Dec. 16, 2016

Chart 17. Wheat, Weekly Chart, September 2013 – Dec. 16, 2016

Chart 18. Wheat, Daily Chart, May 2016 – Dec. 16, 2016

Chart 19. SPDR S&P 500 ETF, Weekly Chart, September 2013 – Nov. 18, 2016

Chart 20. SPDR S&P 500 ETF, Daily Chart, May 2016 – Nov. 18, 2016

Chart 21. QQQ NASDAQ Power Shares, Weekly Chart, September 2013 – Nov 18, 2016

Chart 22. QQQ NASDAQ Power Shares, Daily Chart, June 2016 – Nov. 18, 2016

Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected]


TAGS: Corn Cotton Rice
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