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Transcript for: Daily Market Update – Grain Futures – 9/1/2017


Hello traders I am Steven Davis senior market strategist, RJO Futures in downtown Chicago. Friday September 1st here to talk to you about the grain markets. We had a rally yesterday so we’re gonna spend the next couple of minutes talking a little bit about what happened yesterday.


Corn Market

Our first chart of corn you can see a daily reversal coming off the bottom here, so this does have bullish implications in the short term here. A lot of times this strength goes on for 48 to 72 hours. A little disappointing corn and soybeans are lower after yesterday’s 12 cent gains in the row crop. I want to take a stab at what I think is gonna happen here in the corn market. Reasons for yesterday’s rally, remember last year August 31st I mentioned a week ago this is when we rallied. Looking at at the chart, less deliveries in corn, very strong export sales in corn, so these are some of the reasons a catalyst for a daily reversal up in corn. Okay the farmer, the US farmer in the last five to ten years spent a lot of time and a lot of money putting storage on their farms. So they’re gonna store corn, and look for higher prices. I think that’s what’s gonna happen. North Dakota typically produces as much corn as Ohio. This year there’s a drought in North Dakota. This is the worst basis in the Corn Belt here, in the Dakotas, so the basis is gonna improve and that’s gonna improve price discovery here in my analysis for corn. We’ll keep talking about this and see if I know what I talked about in the weeks ahead.


Soybean Market

The next chart. You don’t have the daily reversal up on a daily soybean chart here, but nonetheless it’s up past resistance it’s gonna take buying and lots of it to keep the soybean market moving higher. We’re a little bit lower here today so again when soybeans are up 12 cents yesterday you want to see it continue so we’ll see about that. The first full moon is Wednesday September 6, I noticed the low on Wednesday is gonna be 48 degrees next week. That’s not freezing temperatures but we’ll keep an eye on that. That’s important here. Soybeans, we need a long growing season. It’s still a weather market for soybean so it’s important about that. Just a little touch on NAFTA, North America Free Trade Agreement. You know in the last ten years agricultural exports to Mexico have increased 64%. Last year was 18 billion dollars of agricultural goods sold to Mexico, so you know a billion dollars here and a billion dollars there and you’re talking about real money. So this is important to keep this North American trade going in agriculture. Good for our grain markets, good for our farmers and producers.


Wheat Market

Okay our third chart is wheat here and you can see count them four days up of higher highs and higher lows. Wheat is getting really cheap. Low prices are the cure for low prices. I noticed some of the wheat prices in Kansas are below the guaranteed load rate of the government. So you know these acres are not going to go into wheat they’re gonna go into soybeans for example. That’s what’s been expanding so we’ll keep talking about that. Export sales are the key here. If we can get some exports going on wheat you may get the same type of chart pattern on corn that we had yesterday, and the technicals are gonna change here, the fundamentals are still bearish, a lot of grain in the world, so we’ll keep talking about that.


We’re closed on Monday, 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.