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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.
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
Worth-A-Look
2016 A Tumultuous Year Explained in 128 Graphics, Bloomberg Graphics
https://www.bloomberg.com/graphics/2016-in-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].
DISCLAIMER:-FOR-EDUCATIONAL-PURPOSES
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