If you have any questions or would like to discuss the markets further, please feel free to contact me at 800-367-7181 or sdavis@rjofutures.com.


Transcript for: Daily Market Update – Grain Futures – 12/15/2017

Hello traders I am Stephen Davis Senior Market Strategist at RJO Futures. It’s Friday morning here in downtown Chicago her to talk to you about the grain markets.


Corn Market

We’ll start with the corn market. We had the December WASDE report this week with world agricultural cultural supply and demand estimates and there’s nothing in here. That was friendly to the market. The funds are short two hundred and fifteen thousand contracts of corn and the USDA really gave them no reason to change that. The carryout on corn is 2.4 billion, that’s a lot of corn in our country so the fundamentals are bearish here.  The technicals on our first chart here today is a daily chart of corn. You can see down at contract lows trending lower here I’d be a little bit careful about being short. A lot of times we get short covering realities and sometimes some of the biggest rallies are short covering rally, so look for that. But really and truly exports are the key here. We’ve got a lot of corn to sell and we need to sell to the world.  We’ll see the demand story can pickup down here at lower prices.  


Soybean Market

Okay, the soybean market. The same kind of thing.  Burdensome supplies of soybeans here in North America. Our next chart is a daily chart of soybeans. What a rally last week in soybeans and you can see they’ve always been volatile and they’ll continue to be volatile. We’ve seen rallies like this before and history says we’ll see them again. So, there’s predicted to be very good rains in Argentina in southern Brazil next week. If these rains don’t materialize you’ll see this soybean market right back into a rallying back to these levels that we saw last week. Soybean meal exports yesterday stellar number blew the doors off of any analyst’s estimates for soybean meal. That’s a good story.  We’ll see if that can continue as well. Ok, last year at this time South America really moved forward into the next few months into their harvesting in very good shape, their soybean crops got better and better. So we’ll see if that will continue. China continues to buy a lot of U.S. soybeans. We need the rest of the world to get in here and buy US soybeans. Perhaps they will, it’s protein that the world wants, so we’ll keep talking about that.


Wheat Market

Also now, the wheat market here again burdensome supplies in this WASDE report this week on wheat. Russia European Union really pushing the exports out here challenging US exports of wheat. One positive is we’re getting cost effective here in hard red winter Wheat, the high premium wheat that the Kansas farmers grow. We’re down into some of the lowest levels here with world competitors. Russia the big Russia Wheat producer, they produce a majority of spring wheat so watch and see if Kansas City wheat the hard red winter wheat Export sales don’t continue in here. That’s a good story. You can see the wheat chart is similar to corn in very good support. And we’ll just see where we go from here.


Goldman Sachs Report

Ok, Goldman Sachs’s says in 2018 commodities are going to be the better asset Compared to other assets that we trade here. They’re looking for a 10 percent return. Goldman points to backwardation, why this is going to happen. With backwardation you hear a lot in the crude oil market where the front months are higher than the back months. So if this were to happen for example in soybean meal I’m going to get on here and talk about this. Typically commodity markets are contango where the front months and then the back months are higher because of cost of carry and insurance things like that so kind of interesting take out of Goldman Sachs here on commodities in 2018 and if these grain markets are lower in January like a lot of analysts say they’re going to be this would be a good entry level for the funds coming in and buying our grains. 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.