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Transcript for: Daily Market Update – Grain Futures – 10/13/2017

Hello traders, I am Stephen Davis senior market strategist, RJO Futures. Friday morning here, you know I spend a lot of time these days, I believe we’re thinking we’re on the cusp of a new commodity cycle. And I spent a lot of time thinking about what are the winners? Who or what markets are going to be the winners in this next commodity cycle? And a lot of you are trend followers and you’re watching the softs and there’s certainly a candidate. But these grain markets that we talk about every week, it’s so basic the corn and soybean meal that feeds all the cattle and hogs and chicken and dairy cows right here in North America. That demand story is so strong and so good, so certainly some of these grain markets are candidates for winners going forward.


Corn Market

Ok we’ll start with a corn market this morning. Yesterday the October 12th crop report, this is a big report. We’ve got it out of the way now, it was neutral to bearish to corn in here. You can see our first chart of corn. Big bar yesterday up now. If we could take out yesterday’s high here in the short term, that would mean something. I think it’s the time of year now where corn exports, they really need to be robust. We got export sales this morning, they’re very very good. We need this to continue. We’ve got a lot of corn and we need to sell it to the world. You know yesterday USDA announced corn exports to Mexico. It seems like every other day USDA exports sales of corn to Mexico. Mexico’s got the biggest cattle processing plant that they’re working on there, so again this demand down to Mexico, our neighbor to the south, really important for corn exports and I think it’s going to continue. So we’ll keep talking about that. Yesterday’s report, the yields in corn were higher, the ending stocks were higher, and then acres were down four hundred thousand.


Soybean Market

Okay the headline on soybeans. Soybean markets soar yesterday so here’s our next chart of soybeans. You can see a daily reversal up. Now if we can take out yesterday’s high this is going to continue here in the short term. Why did this happen? USDA the yields on soybeans 49.5 bushels per acre. That’s what’s going on. We were looking for 50 bushels per acre, anywhere from 50 to 48, and that changes the balance sheet. And there is a lot of evidence this September to October, reduction in yield in soy is going to continue. You might see a soybean yield at 49 or 48 and that’s bullish for soybean prices. Look for higher soybean prices. I think buying them on weakness is a really really good idea. Watch soybean meal, look at the charts on soybean meal it’s soaring yesterday. Good demand story there.


Wheat Market

Then lastly, wheat. The report yesterday bearish for wheat. Here’s the chart on wheat, you can see it’s in good support. We’ll kind of see what happens.


Ok, so that’s our grain market report here today, and everybody have an excellent weekend!

Stephen Davis

Stephen E. Davis is a 25-year+ veteran of the markets, who has been a retail broker with RJO Futures since 1998. He is a graduate of the University of St. Thomas in Minnesota and started as a runner at the Mid America Commodity Exchange in 1981. Davis' past experience involved working with firms Stotler Grain, O'Connor Grain, Dean Witter, R.J. O'Brien and Rosenthal Collins. His trading floor experience in agriculture and financial markets is the foundation of his brokerage approach. Throughout his career, he has worked with clients ranging from retail clients to some very large institutional clients. "My focus is on price and my philosophy is that chart patterns will show you where the big money is made," he says. In his time as a broker, he has seen an evolution of the trading process. "As all of these markets move from the trading floor to the computer screen, we are all like locals on the trading floor-and we do not have to pay millions of dollars for our memberships." His advisory experience includes CQG, Moore Research, Dennis Gartman (The Gartman Letter), The Hightower Report, Financial Times and the Wall Street Journal.