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.

Could soybean futures retest $9 area?

Soybeans enter the week with potential upside price expectations, but future direction is uncertain.

What to expect from the markets this week, August 28, 2017

 

Market “Near Term” Snap Shot

  • Rice: Slight bullish bias remains
  • Cotton: Price needs to confirm that a bottom is in place, otherwise some serious price weakness could emerge given the current global economic setting
  • Soybeans: Bearish with a bottoming process underway
  • Corn: Bearish with a bottoming process underway
  • Wheat: Bearish with a bottoming process underway
  • 10-year Treasury Yield: We enter the week with the 10 Year US Treasury Yield slightly bullish or lower yield or interest rate
  • 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 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: Consolidation underway, so allow price action to provide guidance
  • Global Equities: 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 Aug. 28, 2017”

  • Download slide show for charts and expanded details. Click download button at end of this file.

 

This Week’s Select Summary Considerations:

 

  • 10-Year US Treasury Yield:
    • We enter the week with the 10 Year US Treasury Yield slightly bullish with a potentially lower yield
    • 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
  • S. Dollar Index:
    • Bearish - 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
    • Between Fed off-again and on-again accommodation and/or misdirectional verbal guidance, building uncertainties surrounding fiscal, trade and regulatory policy stimulative activities, the $CRB Commodity Index: a key economic indicator, has struggled
  • $WTIC Light Crude Oil:
    • Trading range $43 to $52 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:
    • Assume bearish until price action proves otherwise
    • Soybeans enter the week with potential upside price expectations, so is the price move corrective followed by prices resuming their move to the downside or is a bottoming process underway?
    • Given complex global macro challenges 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 the bullish case and give consideration to prices moving to their previous 2016 lows of $3.15 or below
  • Long Grain Rice:
    • Interestingly the bullish bias remains, but potentially near term uncertain global economic crosscurrents related to currencies, bonds, equities and commodities are rebalancing markets
  • Cotton:
    • Price needs to confirm that a bottom is in place, otherwise some serious price weakness could emerge given current global economic uncertainties
  • Wheat:
    • Consideration now has to be given to prices returning to their 2016 low of $3.90 or lower
  • SPY SPDR S&P 500 ETF:
    • A cautionary time period as gains consolidate
    • Allow price action to provide guidance
  • QQQ NASDAQ Power Shares:
    • Near term remain cautious of this index
    • Allow price action to provide guidance
  • EFA iShares ETF - Global Equities Excluding U.S. and Canada:
    • A cautionary time period
    • Attempting to regain momentum
    • Allow price action to provide guidance
  • EEM iShares ETF, Emerging Market Equities:
    • A cautionary time period, but regaining momentum
    • 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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