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.

Grain prices bullish bias; Market Noise Numbing Market Decisions

A number of national and international events are creating "Market Noise" that has the potential to influence market prices in the near-term and impact market responsiveness.

Market Snap Shot

  • Bonds Bullish
  • Domestic and Global Equities Consolidating Gains
  • S. Dollar Sideways to Down
  • Commodity Index Basing
  • Oil Running into Resistance
  • Soybeans, Corn and Wheat Bullish Bias
  • Rice Neutral
  • Cotton 84-cent Price Objective

“Market Noise” A Bit Overwhelming.

The level of Market Noise and its perceived potential at some point to influence market prices are eroding market participants of near-term efficient market responsiveness.

Presently, the current number of factors with potential to influence market prices plus or minus are numerous. A few key market impacting events follows:

  • North Korea building nuclear threat and saber-rattling under this administration will have consequences. U.S. Navy’s Carrier Strike Group 1 was sent to reinforce U.S. resolve.
  • The debt ceiling or congressional limit on national debt, or the debt the U.S. Treasury Department can issue, has once again reached a peak. Currency market participants will be closely watching presidential and congressional activity surrounding this issue.
  • French elections: May 7, 2017 France will have a new president. The possible election of a far-right candidate has huge implications for the future of the European Union. I could make the same argument for the election of a far-left candidate. Bond, currency and equity markets are presently factoring in likely outcomes, even though market participants totally misread the outcome of the BREXIT vote.
  • Syrian events are complex and much news and information surrounding the unfolding events are misleading and likely incorrect. Building Syrian tensions could serve as a catalyst to ignite building Middle East tensions.
  • A near-term causality in the Syrian Crisis is U.S. and Russian relations, which now appear to be regressing as the giant military powers seek to achieve specific Syrian and Middle East objectives, not to mention European and Global objectives.
  • China has their own set of economic, social, political, and military objectives. China is sending mixed market signals on North Korea, Syria and the Middle East.
  • S. domestic and global fiscal, monetary, trade, and regulatory policy have all become question marks as market participants struggle to understand the resolve of global governments to elevate global growth and limit deflationary forces.

Near Term Market Summary Considerations Week Beginning April 17, 2017

To see this week’s Market Price Considerations slides, click on http://www.deltafarmpress.com/market-reports/market-price-considerations-week-beginning-april-17

This Week’s Select Summary Considerations:

10-Year US Treasury Yield:

Slightly bullish with a potentially lower yield

Geopolitical uncertainties caused yield to drop below 2.3 support area

Near term support 2.05

US Dollar Index:

More strength than weakness given global market uncertainties

Trading range developing between 95 -104

CRB Index:

Cautiously bullish as geopolitical events unfold 

Between Fed off-again and on-again accommodation and building uncertainties surrounding fiscal, trade and regulatory policy simulative activities, this key economic indicator has struggled

Bigger Picture: Global macro forces in general remain supportive, but are being tested

$WTIC Light Crude Oil:

Light Crude Oil prices likely supported by Syrian and Middle East uncertainties and building Russian and U.S. military friction, Chinese positioning, OPEC verbal guidance, and global reflation

Bigger Picture: Global economic, social, political, and military uncertainties remain supportive of prices

Soybeans:

Price floor likely in place, but consider possible corrective price action underway before prices head lower

Global events appear to be near term supportive of the rice and grain complex 

Simply stated watch the price action to define soybean price dynamics

Corn:

Corrective price action appears to have been completed with upward price momentum being regained

Rice:

Price firmness on the back of the March 31, 2017 USDA Prospective Planting Report

Expanding rice acres beyond current planting expectations likely would put downside pressure on prices

Rice producers’ overriding consideration for 2017 should be managing for a quality grain kernel

Given fundamentals, price will move in sympathy with grain prices and global economic momentum and/or agronomic outlook

Cotton:

Geopolitical uncertainties remain high, so caution is advised

That said, complex price action underway with a bullish price objective into the 84-cent area still remains in play

Wheat:

Caution is advised for all markets due to geopolitical risk uncertainty

Corrective price action completing, bullish price potential to $4.95 remains a possibility

SPY SPDR S&P 500 ETF:

Consolidation underway, allow price action to unfold

Trend remains up

QQQ NASDAQ Power Shares:

Consolidation likely

Trend remains up

EFA iShares ETF - Global Equities Excluding U.S. and Canada:

Global events need to be digested

Entering a cautionary period

Consolidating gains likely

EEM iShares ETF, Emerging Market Equities:

Global events need to be digested

Entering a cautionary period

Consolidating gains likely

  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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