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Transcript for: Daily Market Update – Grain Futures – 7/21/2017

Hello, traders. Good morning. I am Stephen Davis, Senior Market Strategist, RJO Futures, Friday morning. Here to talk to you about the grain markets. It’s the middle of July so it’s really, really important that we get some rain in the corn belt. Sunday night weather is going to be the driving force for the markets here coming into next week.


Recapping Last Week


Remember last week I wrote these million dollar range develop, and we’re in the same scenario here where almost the whole state of Iowa really needs a good soaking. Northwest Iowa is very sort of like the Dakota’s and Montana, very, very dry so already we’re getting some of these private forecasters lowering the yield on corn. We just need to get some rain here. That’s going to be the driving force for price direction here going forward in the short term.


The Corn Market


Our first chart of corn, you can see we’re in very good support. We’re trending higher. These are not demand driven markets, but I think corn and soybean should be bought at lower prices. We’ll see about that. Demand for corn very good, exports good. They’re building three new hog plants in Iowa. This is corn intensive so the demand is good. We don’t know the national yield of corn. Is it 168 or is it 162? That’s really, really important.


The Soybean Market


The soybean market, our next chart, daily chart of soybean continuation chart, notice that gap down below there. I find that very, very interesting. What if we don’t go back down and fill that gap? Later this fall, we’ll talk about it. I think two things I want to say about soybeans:

1)                  I think this year the harvest lows are going to be put in early so watch about that.

2)                  And it’s protein. The demand is so very, very strong so I think pullback should be bought here on the soybean.


Remember a couple weeks ago I said Canada, our neighbor to the North, their seedings of canola for the first time ever exceeded wheat planting so canola is in the same category as soybean. It’s protein. It’s what the world wants so we’ll see how this weather forecast shape up. If this ridge that’s in the corn belt continues here in August, well, soybeans are going to go to $11 and then they’re going to go to $12. Then we’ll see about that. It’s all tied to the weather so we need good rain here going forward.


The Wheat Market


Lastly, the wheat market, the five year bear market in wheat is over. We’re trading high. You can see we’ve had a nice pullback now. I don’t know if it’s over in wheat. Notice the chart here, but it’s in good support. Egypt is still the biggest wheat buyer in the world today.


They’re buying their wheat from Romania, Ukraine, and things like that. It’s a conundrum in wheat. As we do rally, perhaps we’re going to price ourselves out of some world business. I got to tell you export sales on wheat yesterday were a marketing year high so I think these end users are certainly paying attention to these higher prices in the grains that we’re talking about.


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.