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.

Seasonality and North Korea weigh heavy on markets

Last week's soybean price action may provide insight as to where prices go from here.

What to expect from the markets this week, Aug. 14, 2017

Note: To see the slide show accompanying this analysis, click on the download button at the end of the file.

Market “Near Term” Snap Shot

  • Rice: Bullish bias remains, but potentially near term strong global equity and commodity price headwinds are problematic.
  • Cotton: Price needs to confirm that a bottom is in place, otherwise some serious price weakness could emerge given current global economic uncertainties.
  • Soybeans: This week’s price action may provide insight into whether current price action was: First corrective and price now moves higher or secondly prices continue to move to their previous lows.
  • Corn: This week’s price action may provide insight into whether current price action was corrective and price now move higher or price next continues to move to their previous 2016 lows of $3.15.
  • Wheat: Near term wheat has the potential to build a base from which to move higher. That said, near-term market seasonality and a combination of global economic, political and military uncertainties are weighing heavy on this and an array of other global markets.
  • 10-year Treasury Yield: We enter the week with the 10-Year U.S. Treasury Yield slightly bullish with a potentially lower yield as many U.S. and global equity markets consolidate or correct for a period, North Korean nuclear uncertainties and other potential flash-point anomaly events.
  • U.S. Dollar: This week likely brings some corrective activity of the present ongoing decline, before likely resuming its downside advance lower to 87 or lower.
  • Oil $WTIC: A market that appears to be headed back into the $52 to $55 area.
  • $CRB Commodity Index: Will global reflation efforts be enough to keep this index from revisiting previous lows? Do not rule out a revisit to previous lows, but this index is building a base to move higher.
  • S&P 500: A cautionary time period with momentum waning.
  • Global Equities: Remain cautious of this index.
  • Feeder Cattle: Consolidating before moving higher.  

In addition to the following “Expanded near-term market outlook considerations for week beginning Aug. 14.”

  • Download slide show for charts and expanded details, click download button below.

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 as many U.S. and global equity markets consolidate or correct for a period, North Korean nuclear uncertainties, and other potential flash-point anomaly events
    • Big Picture: The larger trend remains bullish or lower yield
    • Most likely Demand, Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors will take yields lower to 2 or below before significant move higher
  • S. Dollar Index:
    • This week likely brings some corrective activity of the present ongoing decline, before likely resuming its downside advance lower to 87 or lower
    • Given global macro considerations coupled with no significant global anomaly event this index may have some serious weakness
  • CRB Index:
    • Will global reflation efforts be enough to keep this index from revisiting previous lows? Do not rule out a revisit to previous lows, but this index is building a base to move higher.
    • Bigger Picture: Though spastic, global macro and growth forces in general remain supportive of the commodity sector
    • 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:
    • A market that appears to be headed back into the $52 to $55 area
    • North Korea, market structure, geopolitical considerations and building possibilities of a Venezuelan civil war remain supportive
    • 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.
  • Soybeans:
    • This week’s price action may provide insight into whether current price action was: First, corrective and price now moves higher or second, prices continue to move to their previous lows.
    • Assume until price action proves otherwise that the bottoming process has not yet completed, and a retest of the $9.00 area or lower is still a possibility.
  • Corn:
    • This week’s price action may provide insight into whether current price action was corrective and price now move higher or price next continues to move to their previous 2016 lows of $3.15.
  • Long Grain Rice:
    • Bullish bias remains, but potentially near term strong global equity and commodity price headwinds are problematic.
  • Cotton:
    • Price needs to confirm that a bottom is in place, otherwise some serious price weakness could emerge given current global economic uncertainties.
  • Wheat:
    • Near term wheat has the potential to build a base from which to move higher. That said, Near-term market seasonality and a combination of global economic, political and military uncertainties are weighing heavy on this and an array of other global markets.
  • SPY SPDR S&P 500 ETF:
    • A cautionary time period with momentum waning.
    • Allow price action to provide guidance.
  • QQQ NASDAQ Power Shares:
    • Remain cautious of this index
    • Allow price action to provide guidance
  • EFA iShares ETF - Global Equities Excluding U.S. and Canada:
    • Remain cautious of this index
    • Allow price action to provide guidance
  • EEM iShares ETF, Emerging Market Equities:
    • A cautionary time period
    • Allow price action to provide guidance

 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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