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Transcript for: Daily Market Update – Grain Futures – 8/11/2017

Hello, I am Stephen Davis. Senior market strategist, RJO Futures. It’s Friday morning August 11th, one day after the August 10th crop report. Here to talk to you about the grain markets this morning.


Corn Market

Okay this crop report yesterday just a shocking higher production, higher yield report. It really caught the trade off guard here. My goodness. This is quite a surprise here the USDA, really big yields, big production on corn and soybeans. It’s really interesting that the independent forecasters are quite a bit away from the USDA forecast. So we’ll see how we come together here in the weeks and months ahead and who is right. Back to the corn market, our first chart here today we’re going to look at weekly charts. You’ve got a weekly reversal down in corn so technically this is not good. My work would say corn would be lower the next five to 10 business days. So after this report yesterday the fundamentals are bearish on corn, the technicals are bearish on corn, and when these two forces come together it’s a pressure on corn prices moving lower. So we’ll see what happens. One caveat is weather here and the weather that we get going forward to finish these crops is really going to go a long way on the balance sheets and price here for corn. Looking ahead to December ’18, exports of ethanol made from our corn could be a driving force for demand for corn. Remember this is an industry eight years ago that didn’t exist so I like that a great deal. Another thing Brazil’s got all this corn this year so it’s Brazil versus USA in corn exports and we got our work cut out for us, so we need demand to continue. Earlier in the week corn gapped higher, we started the week with export announcements of USDA, our USA corn to unknown destinations, soybeans to unknown destinations, so that’s a good sign, we need that to continue.


Soybean Market

Just a shocking yield report from the USDA on soybeans. So whether you agree again or disagree with it, and there’s a lot of growing season left here. Soybeans are made in August. Well it is August, so some of these corn belts some of major areas we need a good soaking rain and like we’ve been saying these clouds have been moving around and rain has not been hitting the ground. So we really need a good soaking rain here in the Corn Belt to help the soybean. Nonetheless, very big yields reported by USDA yesterday. Our next chart, a weekly chart on soybean. Now notice you don’t have the reversal down like you do in corn but you’ve got one two three weeks of lower highs and lower lows in the bean market. Really puts us into very good support. Watch the Chinese, they’re notorious to come in here by US soybeans on breaks and we’re lower than we were earlier in the week.


Wheat Market

Nothing bullish about wheat yesterday in the report. Global wheat stocks continued to climb. Here’s our next chart, a weekly chart of wheat and you can see six weeks, and you can’t make this stuff up, of lower highs and lower lows. So we’re pricing ourselves back in the world market, look for exports of US wheat to continue.


Okay so everybody have an excellent weekend, and Sunday night weather will set the tone early next week.

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.