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.

Rice bullish; corn bearish; cotton, corn, wheat defining price direction

World political uncertainties looming over commodity markets.

What to expect from the markets this week, September 4, 2017

Market “Near Term” Snap Shot

  • Rice: Bullish bias remains
  • Cotton: Price needs to confirm that a bottom is in place, otherwise additional price weakness could resume given current global economic uncertainties
  • Soybeans: Bearish bias remains, price discovery this week should be helpful in understanding if price action is corrective, and we can expect lower prices or a bottom is in place
  • Corn: Bearish with a bottoming process underway
  • Wheat: Strong resistance headwinds imply continue giving consideration to prices returning to their 2016 low of $3.90 or lower
  • 10-year Treasury Yield: Yield Sideways-to-Down
  • S. Dollar: Corrective activity of the recent ongoing decline is underway, before likely resuming its downside move to 87 or lower
  • Oil $WTIC: Trading range $43 to $52 with this week’s prices more bearish than bullish
  • $CRB Commodity Index: Government, Central Bank, other intervention certainly creating commodity market uncertainty. Do not rule out a revisit to previous index lows during this period of global consolidation. That said, this index is building a base to move higher
  • S&P 500: A cautionary time period with momentum waning
  • Global Equities Excluding U.S. and Canada: Cautionary period, but attempting to regain momentum
  • Feeder Cattle: Consolidating before moving higher   

In addition to the following “Expanded near term market outlook considerations for week beginning Sept. 4, 2017:”

  • Click on download button below to download slide show for charts and expanded details. (Click download link)

This week’s select Summary considerations:

  • 10-Year US Treasury Yield:
    • Yield Sideways-to-Down: We enter the week with the 10 Year US Treasury Yield slightly bullish with a potentially lower yield
    • What could continue to move the yield lower? Demand, Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors could take the yield lower to 2 or below before a move higher
    • If the yield moved above 2.75 then some consideration would need to be given to a change in trend
    • Big Picture: This is a market that likely moves sideways for a few years and even revisits the previous low or lower
  • S. Dollar Index:
    • Bearish – Possible corrective activity, but breaking support at 92.56 opens the door for a likely decline to 87 or 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 low for the dollar
  • CRB Index:
    • The question in search of an answer: What is the near term impact of Government and Central Bank intervention globally on economic activity? Do not rule out a revisit to previous index lows during this period of global consolidation. That said, this index is building a base to move higher
    • Caution is advised since global economic, social, political and military uncertainties remain problematic
  • $WTIC Light Crude Oil:
    • Sideways choppy price action with this week’s prices more bearish than bullish
    • A complex, volatile and an uncertain market that deserves a great deal of respect in a world with building economic, social, political and homeland security uncertainties
    • North Korea, market structure, geopolitical considerations and building possibilities of a Venezuelan civil war are just some of the supportive factors
  • Soybeans:
    • An important short week for market price discovery, assume bearish until price action proves otherwise
    • Given seasonal complex global macro challenges, as previously stated assume until price action proves otherwise that the bottoming process has not yet completed, and a retest of the $9.00 area or potentially lower into the $8.35 area is still a possibility
  • Corn:
    • Assume bearish until price action becomes more supportive of a bullish case and give consideration to prices moving to their previous 2016 lows of $3.15 or below
  • Long Grain Rice:
    • Bullish bias remains, but keep peripheral vision on potential near term uncertain global economic crosscurrents related to currencies, bonds, equities and commodities as they go through a rebalancing process
  • Cotton:
    • An important short week, price needs to confirm that a bottom is in place, otherwise additional price weakness could resume given current global economic uncertainties
  • Wheat:
    • Presently strong resistance headwinds, in this aggregate market seasonality period give consideration to prices returning to their 2016 low of $3.90 or lower
  • SPY SPDR S&P 500 ETF:
    • A cautionary time period with momentum waning
    • Allow price action to provide guidance
  • QQQ NASDAQ Power Shares:
    • Near term remain cautious of this index with momentum slowing
    • Allow price action to provide guidance
  • EFA iShares ETF - Global Equities Excluding U.S. and Canada:
    • A cautionary time period of consolidation or even a correction
    • Allow price action to provide guidance
  • EEM iShares ETF, Emerging Market Equities:
    • A cautionary time period
    • Allow price action to provide guidance
  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]

DISCLAIMER-FOR-EDUCATIONAL-PURPOSES

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