There are problems developing with South American weather as Argentina remains too wet to get the final 25% of the wheat crop harvested and there are regions in Uruguay, Paraguay and Brazil which are getting too much rain and/or too little rain which is a mild concern as the bean crop has been enjoying great weather until the past week………….things aren’t perfect anymore! In contrast, the weather in the United States remains mild as the National Weather Service suggests in its 6 to 10 day forecast that the Heartland will continue enjoying above normal temperatures and above normal precipitation………..
It’s an ugly fact of life that price action in our markets has become heavily influenced by the political climate in Washington, Brussels, Singapore, London, New York and Frankfort………………The uncertainty of if and when the partial shutdown of US government services ends has stymied trade…………….Do we receive the USDA reports next Friday? An announcement may come out tomorrow from the Agency to let us know if they have enough time if an agreement is reached by tomorrow………………………..It’s anyone’s guess as to when we are told of the government’s economists and statisticians opinion and calculation of grain stocks, winter wheat acreage, crop production and supply/demand estimates……………..The trade will make do and carry on and what might be concerning to the powers that be in Washington and New York is that the trade might do better without government interjection! “I’m from the government and I’m here to help” might be questioned by some but the market has relied on the belief that the USDA is an independent and honest arbiter. Some have doubt!
If we do not get government reports we’ll have to rely on basis levels, receipts and shipment reports{(Government inspections are paid on a fee basis and the trade relies on inspections before accepting and unloading so these reports should continue)(If they don’t then there’s an opportunity for an independent private agency to step in and provide a reliable service)} and foreign agencies similar to the USDA to provide us the necessary information to calculate and determine trading strategies.
South American weather, Federal Reserve policy, trade talk progress, political peace or warfare will have an impact on flat price action but, spreads might continue to trade under the belief that there’s plenty of corn and beans around while wheat may have a quality situation in addition to tight world stocks/use ratios…………….Russia has given the trade a cause to pause as they’ve talked the market down this past week and some have equated this to the “Crazy Ivan” move implemented by the submarine commander Ramius in “The Hunt for Red October”. Wheat spreads have the potential for extreme volatility and this may occur when the US winter wheat crop comes out of dormancy……………………..Hopefully, the USDA and DC will be back in business by the time we approach March deliveries!
The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.
Join
My Mailing List
Steve Bruce
Walsh Trading
312 985 0156
888 391 7894 toll free
312 256 0109 fax
sbruce@walshtrading.com
www.walshtrading.com
Walsh Trading
53 W Jackson Suite 750
Chicago, Il 60604
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the
Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for
all investors. Therefore, individuals should carefully consider their financial
condition in deciding whether to trade. Option traders should be aware that the
exercise of a long option will result in a futures position. The valuation of
futures and options may fluctuate, and as a result, clients may lose more than
their original investment. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF
FUTURE RESULTS.
All information, communications, publications, and reports, including this
specific material, used and distributed by Walsh Trading, Inc.
(“WTI”) shall be construed as a solicitation for entering into a
derivatives transaction. WTI does not distribute research reports, employ
research analysts, or maintain a research department as defined in CFTC
Regulation 1.71.