Beans Wheat Corn

[cheviot]

Hi folks ,

Any of you pop pickers looking at US ag complex.   

Referring always to spot : 

US wheat :

Fundamental s and d  ....Tight  but recent lack of Chinese purchases and threat of Cv has caused a bit of steam to come out of the bulls.

I see it like this.  The current lack lustre pullback will end around 545-558.  I do nt see it taking out 545 on a closing basis.  I think given the true s and  d that we will revisit 595 possibly taking that out to run to 630...Could be in May when old crop is getting scarce.  

[cheviot]

Beans :  

Fundamentals :  Not so clearly bullish. Lack of Chinese demand due to the cull of pigs...and lack of follow through from the Phase 1 trade agreement....Has seen the market drop along with Indx s ;  Cv seen as a reason for lack of demand and there are plentiful supplies of Beans in S America..  

So likely test of $880 .   i think it will hold as buyers come out of the wood work. I would nt put Granny into it though.  

[Caseynotes]

by the way, a good follow on twitter for wheat, corn etc is fatfinger (see below).

[Bopperz]

Hi,

The Chicago Wheat looks like it could pull back to the 550 point due to the 50 day EMA (blue line). Its been there twice before in Nov and Dec before bouncing back up.

Don't like the 15 point minimum bet though! With an ATR of 10, its a bit spicy for my current portfolio.

 

[Mercury]

Don't know anything about Wheat @cheviot and can't get sufficient years of data on IG to get a purely bearing, however the chart from 2000ish they do have looks very similar to some agri crops I do track and trade (NY Sugar No.11 and Aribica Coffee).  All of these soft commodities seem to have topped out during the commodity super-cycle top in 2011ish and since then have been in decline, whereas some of the harder commodities and precious metals have rallied harder, and in the case of PMs the general market bias is definitely bullish (not yet convinced!).

In my Coffee and Sugar posts I have discussed the case for an impending massive cyclical bull market on the basis that we have been at or near the long term range bottom, although there was still room below.  These markets took off, especially coffee BUT now it looks to me like Coffee is reversing and is more likely to put in lower lows on the long term trend before that Bull can take hold.  I had reversed and shorted Coffee near the top of the recent rally but thought it was a bullish retrace rather than a reversal.  Sugar is not there yet, although I am tactically Short now and waiting to see how it plays out.  My concern is that Sugar could follow all the rest of the Softs (And indeed hards as well, currently) lower.

Part of my thesis for a bull market in the making was technical and part fundamentals (As always).  The Fundamentals part was that in a trading range market, once you reach the bottom (or top) the probability is massively in favour of a reversal into the opposite trend.  Timing is hard as these markets can stay hugging the extremes for a long time.  There are signs that in both Coffee and Sugar farmers are leaving the market (supply issue building).  However, as @TrendFollowermentioned a while ago I believe, there was is a large stockpile of coffee about to be released on the market in Brazil.  Sugar definitely has a supply problem though it seems.  Another part was the idea doing the rounds of hyper inflation, driven by central banks getting what they have been seeking but not being able to control it.  This is being called the "reflation trade" and unsurprisingly not everyone agrees with the hypothesis...  The third factor was a falling USD, which ought to be good for commodities in theory (doesn't trump supply demand drivers though) but currently it is looking increasingly likely we will see DX at about 10000 (currently 9760ish).  So all in all it seems that another period of commodity bearishness is in play (check also the thread on HG Copper).

I remain convinced that a commodity bull market is going to happen and that softs will be the place to be when it does as I feel that industrial commodities will get hit by a recession (we may get that inflation trade first though, especially on Oil, which may then trigger the stocks crash and reflect the recessionary forces).  All of these markets are related but food and water security is the single biggest issue the planet faces long term, far out weighing climate change (the climate gang are talking about the wrong things!).  If the population is set to grow to somewhere between 9-13 billion by 2100 where is all the food and water going to come from?  That's long term of course but if prices are depressed and farmers leave the industry then supply shortages at low prices are inevitable.  Cue prices increases, and probably in a dramatic fashion.  The question remains, when?  I thought we might be there but this months price performance on Coffee makes me thing we are not yet.

 

 

[cheviot]

1 hour ago, Bopperz said:

Don't like the 15 point minimum bet though! With an ATR of 10, its a bit spicy for my current portfolio.

Yeah....Its a bummer of £15 just to get in to it.....

[cheviot]

Beans......I do nt see this holding these levels....Cv really spooking this commodity and o/supply issues until the Chinese start buying under Phase one??  I think it has to test $850.  Looking at the big picture , it increasingly looks like a bearish picture.  The 618% retracement bounce is clear and at the top end of an ABC.  

Wheat 

Suffering from C v in the same way....But s and d is underlyingly tight.....I d expect it to hold $545  

Money where mouth is...Yes I bought the blue line in Beans at the close on Thursday pm, I sold it for a 4pt bounce as I did nt feel comfortable with it..

Short beans long wheat would be a good Texas spread.....  

[cheviot]

13 minutes ago, cheviot said:

Suffering from C v in the same way....But s and d is underlyingly tight.....I d expect it to hold $545

Just seen a gap at $545 spot wheat....Another reason why the market wants to come back and fill it before moving ahead....

[Bopperz]

Afternoon,

Adding Rice to the thread, it was brought to my attention from a old colleague who picked up on the fundementals. Weekly chart has a solid upward trend since Nov, and the daily chart has few pullbacks, and (somehow) appears unaffected by the C virus.

 

[cheviot]

Wheat  ....Just a quick update.....Wheat choppy with a correctional feel to it.....I expect stout defence of $536 being a Fib ratio pullback and top of Wave 1.   

S and D just the same but lack of Chinese buying , an expensive $ and Cv , there s been some profit taking by insitutions as well as elevator/farmer selling.  

Beans are likewise ...Choppy sideways action with a downside bias , but $873 held, but I d expect that to be retested.  

I would nt be short either commodity.....a little choice buying may work well. 

[dmedin]

Those Brazilians are at it again: https://uk.reuters.com/article/us-brazil-grains-braun/column-brazilian-farmers-aggressively-sell-soy-corn-amid-weak-currency-u-s-china-deal-idUKKBN2080SR

[CharlotteIG]

Chris Beauchamp had done a piece to link up with this forum. It can be found on the platform on the news and analysis section, Analysis tab: 'Wheat v Corn – a tale of two commodities'.

Here's a small preview: 

[cheviot]

Weekly wheat update......When is a rally not a rally?  When its a B wave correction....The rally from wheat mid week did nt 'smell' right.  And now the market shas given up most of its gain to look like another test of $536....Month end can be a drama as book squaring  pushes the market around.  Usually month ends have been a cause for a rally....but .....My tummy tells me it could push lower first.....as Cv2019 takes a toll and a strong dollar....

[cheviot]

On 20/02/2020 at 14:00, CharlotteIG said:

Wheat v Corn

Charlotte....why is it that Wheat spread has widened out so much recently...evn when the market is quiet   it can be double the normal 6 bp   out to 12 bp s which makes it impossible to day trade or evn week trade !  

[CharlotteIG]

2 hours ago, cheviot said:

Charlotte....why is it that Wheat spread has widened out so much recently...evn when the market is quiet   it can be double the normal 6 bp   out to 12 bp s which makes it impossible to day trade or evn week trade !  

With the futures we take the underlying prices and wrap our spread around it. if the spread widens it's because the underlying has. 

Our standard pricing on Chicago wheat is around 1pt. What time was it 12pts. Also if this the future or spot?

[cheviot]

2 hours ago, CharlotteIG said:

With the futures we take the underlying prices and wrap our spread around it. if the spread widens it's because the underlying has. 

Our standard pricing on Chicago wheat is around 1pt. What time was it 12pts. Also if this the future or spot?

Its sitting at 15 bp right now 12.45 pm....spot.  You never used to be so wide...It was always 6 bp....With an entry of £15 min ( which I totally understand) it means £22,50 min as i write,  ?  

[dmedin]

Beans, wheat and corn - three things that give me terrible gas

Apropos of which, short gas!  And oil!