RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Senior Market Strategist, Steve Davis discusses the grain futures markets. 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 – 12/22/2017

Good morning traders, I am Stephen Davis senior market strategist at RJO Futures, Friday morning here to talk to you about the grain market.


Corn Market

Okay, the corn market has lower prices. We saw very good exports this week and stellar for the corn market.  I think that’s the key here going forward. We’ve got a lot of corn to sell and exports are very, very important. Our first chart of corn here today you can see we’re bouncing a little bit so I think the million dollar question in corn as we wind down the trading year is the funds are short a few hundred thousand contracts in corn and are they going to cover those short positions or are they going to add to them. Remember last week I said the USDA December crop really gave no indication for these funds to cover their shorts. Corn inventories; corn stockpiles growing so we’ll see what the fund position does here as we wind down the year. I think ethanol is worth mentioning each week certainly U.S. ethanol, India, China. You know these big populated countries they’re interested in their smog control of their air and what better use in corn. India, more sugar based ethanol but certainly they’re talking more and more about ethanol and I think you’ll see that sooner or later. China is going to be buying US corn to fuel up their ethanol plants.


Soybean Market

Okay, the soybean market well I think it’s safe to say that the bulls got Thanksgiving and the bears got Christmas. Here you can see the chart of soybeans with seven days of lower highs and lower lows. You can see that what happened certainly is a lack of buyers here. These rains came in Argentina and prices were pressured down. These rains in Argentina they’re not drought ending so we’re going to need more normal rains in the months ahead. Keep in mind two months from now is when all the soybeans pollinate in Argentina and Brazil and it is a La Nina year. This is well documented, these funds are short corn and they know that in a La Nina you got a 70% chance of lower yields in Argentina and southern Brazil for example. So we’ll see if we don’t get buyers down here at lower prices. Okay, China announcements, USDA sales to China of soybean sales this morning. We need that every day next year going forward. A little chatter this week – China is commenting that they don’t want for materials of more than one percent in the soybeans that they buy from USA. Well that’s some chatter that’s negative in here. Keep in mind again China is notorious for saying statements driving soybeans down and coming in and buying them at lower prices. We ship a lot of soybeans out of the Pacific Northwest. I think there’s one percent foreign materials out of that and then the majority of our soybeans go out of the Gulf and there is about 2% foreign materials out of the Gulf, so something to keep an eye on.


Wheat Market

The wheat market. Our next chart you can see low prices here. It’s dry in the plains. We’ve got less acres of hard red winter wheat. There are some fundamentals that would make wheat rally a little bit and it’s not so. When you get bullish news and markets don’t rally they’re not bullish and this just reconfirms the emphasis that Russia’s wheat exports are the driving force in world wheat price discovery.


Okay, grains close at 12:05pm today and we reopen Tuesday morning at 8:30. From all of us here at our RJO Futures Merry Christmas and Happy Holidays to all of you and let’s enjoy the one true gift that we have, our families. Thank you. 

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.