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.

Commodity Index strengthening

Inability to maintain price momentum in oil markets could result in another leg down to below $45, which could aggravate commodity price weakness..

What to expect from the markets this week, May 29, 2017

Click on download button below to view this week’s Market Price Considerations for Week Beginning May 29 slideshow.

Market “Near Term” Snap Shot

  • 10-year Treasury Yield: Slightly bullish – lower yield
  • S&P 500: Caution – Likely consolidates for a period, technology component presently supporting price strength, longer term trend remains up
  • Global Equities: Some consolidating gains; others near term bullish; any significant corrective activity in the S&P 500 will spill-over into many global equities
  • U.S. Dollar: Remains Bearish - More weakness than strength; in general a positive for commodities
  • Oil: Inability to maintain price momentum could result in another leg down to below $45, which would aggravate commodity price weakness
  • Commodity Index: Remain cautious, dangerously weak, likely forming a base; do not rule out an additional leg down given sluggish global growth, geopolitical challenges, overall commodity supply exceeding demand
  • Corn and Wheat: Basing Continues – Bias: Cautiously Bullish; Achieving firmness to strength in the $CRB commodity index likely supportive of prices
  • Soybeans: An important week lies ahead as soybeans search of a bottom at $9.06 or possibly $8.35 area   
  • Rice: Slight bullish bias remains due to U.S. long grain 2017 acreage and production uncertainty, but slowly losing momentum  
  • Cotton: With the 84-cent-plus price objective achieved now we wait on price action to determine if additional price strength exists.   

In addition to the following ,“Expanded near Term Market Considerations Week Beginning May 29, 2017”

Click on download button below to see accompanying tables for market analysis.

This Week’s Select Summary Considerations:

  • 10-Year US Treasury Yield:
    • We enter the week slightly bullish with a potentially lower yield
    • Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors will likely take yields lower to 2 or below before moving higher
    • As global events unfold (economic, social, political, etc.) chart activity will provide guidance
  • US Dollar Index:
    • Remains Bearish: For a period the dollar should have more weakness than strength against the Euro
    • Big Picture: The dollar has a bullish bias given global economic, social, political and military challenges
    • Unless Middle East, North Korean, European, other anomaly events start to dominate market participant decisions for a period, then we are still DEFINING a trading range 95 -104
  • CRB Index:
    • Remain cautious, dangerously weak, likely forming a base, additional leg down should be considered possible
    • Bigger Picture: Though spastic global macro forces in general remain supportive of the commodity sector
    • For the CRB Commodity Index to breakout will likely be a function of oil price leadership and/or broad commodity support, a reasonably stable to weaker dollar and belief and confidence in global fiscal, monetary, trade and regulatory policy leadership
  • $WTIC Light Crude Oil:
    • Near-term prices remain in 45 to 55 dollar trading range. Will oil prices retest the top of the range at 55-dollars this week?
    • Additional price weakness from current levels will likely be problematic for the $CRB Index and commodity sector
    • As always, remain focused on the bigger “Geopolitical Picture and Building Military Friction”
    • Sustained oil prices below $50 presents macro challenges and raises global economic momentum concerns
  • Soybeans:
    • In search of a bottom at $9.06 or possibly $8.35
    • A resumption of commodity index weakness, a likely function of fundamentals and Fiscal and Monetary Policy and Global Economic Uncertainties, could translate into a final price low at $8.35 or lower
    • Simply stated watch the price action to define soybean price dynamics
  • Corn:
    • Basing period underway followed by upward price momentum
    • Cautionary Note: A resumption of oil price weakness could possibly be problematic for corn prices
  • Long Grain Rice:
    • Slight bullish bias remains due to U.S. long grain 2017 acreage and production uncertainty, but slowly losing momentum
    • This is a highly complex market with an array of factors impacting price from 2016/2017 fundamentals; 2017 acreage, production and quality uncertainties; present underlying aggregate commodity sector dynamics; problematic global economic momentum, geopolitical uncertainties, and/or global agronomic outlook

        Cotton:

    • With the 84-cent price objective achieved now we wait on price action to determine if additional price strength exists
  • Wheat:
    • Bullish price potential to $4.71 to $5.51 remains a possibility
  • SPY SPDR S&P 500 ETF:
    • Caution – Consolidation period likely
    • Allow price action to unfold
    • Larger trend remains up
  • QQQ NASDAQ Power Shares:
    • Momentum driven by a select few technology stocks
    • Allow price action to unfold
    • Larger trend remains up
  • EFA iShares ETF - Global Equities Excluding U.S. and Canada:
    • Trend remains up
  • EEM iShares ETF, Emerging Market Equities:
    • Entering a cautionary period
    • Trend remains up
  1. Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected]

 

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