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Are cotton, soybean prices headed higher?

Considering global risks and uncertainties, reflation expectations, and the quality of this hard-asset as a speculative investment, we must consider: 1. A trading range is being defined; 2. A price bottom is in place with higher highs and lower lows; or 3. We are still in search of a price bottom. -- Bobby Coats on soybeans

Chart 1. $UST10Y - 10-Year US Treasury Yield

Primary Consideration:

  • Near-term, the 10-Year Treasury likely consolidates, before searching for a higher yield possibly in the 2.75 to 3.00 area.
  • The Bond market topped (low yield) back in July anticipating that domestic and global fiscal policy stimulus activities (infrastructure, etc.) would be elevated to a level to compliment ongoing monetary policy and drive a higher level of global growth.
  • Trumpflation expected to be friendly to business (tax and regulatory relief), near term favors investing in equities and the dollar, followed by investments in commodities over bonds and utilities.

Charts 2 - 4. Soybeans

Primary Consideration:

  • Neutral Soybeans – Possible Trading Range Being Defined
  • Considering global risks and uncertainties, reflation expectations, and the quality of this hard-asset as a speculative investment, we must consider: 1. A trading range is being defined; 2. A price bottom is in place with higher highs and lower lows; or 3. We are still in search of a price bottom

Additional Thought:

  • Market participants appear to be building a risk appetite. If this market does not show weakness at $10.49, then shorts should be mentally vigilant of price action.  

Charts 5 – 6. Corn

Primary consideration:

  • Neutral Corn
  • Coiling in preparation of making a major move either higher or lower. This market is similar to soybeans in that:
    • A trading range is being defined;
    • a price bottom is in place and potentially heading to $4.15; or
    • Still in search of a price bottom potentially at $2.75

Chart 7. Rice

Primary consideration:

  • Neutral Rice
  • Bottoming process underway

Chart 10. Cotton

Primary Consideration:

  • Bullish prices likely into the 84-cent area 

Chart 11. Wheat

Primary Consideration:

  • Forming a price bottom
  • Price weakness into the $3.80 area a possibility

Chart 12. Copper

Primary Consideration:

  • Bullish
  • Corrective price action needed (not required)
  • Bullish until price action tells us otherwise

Chart 13. $WTIC

Primary Consideration:

  • Neutral - Light Crude Oil
  • Bullish above $52, but potential downside to $34 still remains
  • OPEC guidance likely defines price low near term
  • A challenging market for a number of economic and geopolitical reasons

Chart 14. CRB Index

Primary consideration:

  • If OPEC cannot provide bullish oil guidance by Nov. 30, this index will remain under downside pressure and select commodities will likely become highly speculative.

Charts 15 - 16. Power Shares US Dollar Index and Dow Jones Industrial Average,

Weekly Charts

Primary Considerations:

  • Dollar and Dow Jones Industrial's remain “Bullish”
  • Dollar running into fairly strong resistance; consolidation likely, but expect more dollar strength than weakness 
  • Global Government and Central Bank intervention activities will define dollar strength or weakness over the next 3 to 12 months

Charts 17 – 18. Australian Dollar and ETF – EWA Equity iShares, Weekly Charts

Primary Consideration:

  • Neutral – Potentially Bullish, Australian dollar and equity market found support last week
  • Generally a weakening Australian currency implies weakening demand for their commodity based economy and vice-versa

Charts 19 - 20. Canadian Dollar and EWC (ETF) Equity iShares, Weekly Charts

Primary Consideration:

  • Canadian Equities showing signs of price strength, while Canadian Dollar softens
  • Canadian dollar weakness likely indicates lagging demand for Canadian commodities
  • Near term bearish indicator for their commodity prices in the aggregate

Charts 21 - 22. Canadian Dollar and EWC (ETF) Equity iShares, Weekly Charts

Primary Consideration:

  • Euro likely to have more weakness than strength near term, while the EuroNext 100 is neutral, but trying to capitalize on currency weakness
  • European Union economic weakness and political and social uncertainty problematic for the Euro currency

Charts 23 - 24. Japanese Yen Trust and ETF: EWJ (ETF) Equity iShares, Weekly Charts

Primary Consideration:

  • Expect more Yen currency weakness than strength, while the EWJ shows strength
  • Dollar shows strength, while the Yen shows weakness, presently and vise-versa

Charts Book Index – http://deltafarmpress.com/datasheet/weeks-commodity-and-financial-chart-analyses

Chart 1. $UST10Y - 10-Year US Treasury Yield, Monthly Chart, November 2014 – Nov. 25, 2016

Chart 2. Soybeans, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 3. Soybeans, Daily Chart, May 2016 – Nov. 25, 2016

Chart 4. Soybeans, Monthly Chart, May 2016 – Nov. 25, 2016

Chart 5. Corn, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 6. Corn, Daily Chart, May 2016 – Nov. 25, 2016

Chart 7. Rice, Weekly Chart, October 2013 – Nov. 25, 2016

Chart 8. Rice, Daily Chart, February 2016 – Nov. 25, 2016

Chart 9. Cotton, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 10. Cotton, Daily Chart, May 2016 – Nov. 25, 2016

Chart 11. Wheat, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 12. Copper, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 13. $WTIC, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 14. $CRB Reuters/Jefferies CRB Index, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 15. Power Shares US Dollar Index, Weekly Chart, November 2013 – Nov. 25, 2016

Chart 16. Dow Jones Industrial Average - iShares, Weekly Chart, August 2014 – Nov. 25, 2016

Chart 17. Australian Dollar, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 18. EWA - iShares, Weekly Chart, August 2014 – Nov. 25, 2016

Chart 19. Canadian Dollar, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 20. EWC - iShares, Weekly Chart, August 2014 – Nov. 25, 2016

Chart 21. EURO Trust, Weekly Chart, October 2013 – Nov. 25, 2016

Chart 22. EuroNext 100 Index, Weekly Chart, August 2014 – Nov. 25, 2016

Chart 23. Japanese Yen Trust, Weekly Chart, September 2013 – Nov. 25, 2016

Chart 24. EWJ - iShares, Weekly Chart, August 2014 – Nov. 25, 2016

Chart 25. EFA – iShares (Global excluding U.S. and Canada), Weekly Chart, November 2014 – Nov. 25, 2016

Chart 26. Emerging Markets (EEM – iShares), Weekly Chart, November 2014 – Nov. 25, 2016

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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