The market is jittery as rumors and innuendos over a Chinese trade deal have sparked short covering and end user buying interest and there’s confusion and doubt over a deal and the timing thereof as political posturing has one side coloring the pact as “not a done deal”.
It’s difficult to predict the whims and wishes of politicians and their minions! Regardless, it is an ugly fact of life that they have a major impact on the macroeconomics of the market………………………………………………….The microeconomics of the grain world are a little less schizophrenic and the USDA will issue its November production and supply/demand reports next Thursday and the trade will have a little more confidence with the figures given harvest progress………………………………As usual, we preach the Gospel of going into the reports as even and open minded as possible because we have been surprised by the last three reports…………………………………………South American and Australian weather will become more of a market factor and as of this writing things have not been stellar which might make all markets, especially wheat, a little more nervous than usual………………………………………………………………………
Something which has not been center stage the past few weeks because of the election has been the monetary policy of our Federal Reserve and other Central Banks and the impact on our markets……………………………..If we are staying in a period of quantitative tightening then we may have to revise our parameters of what “normal” prices are in grains and oilseeds…………………………………………………..The helicopter money years of 2008 to 2016 may have been the impetus for grains to rally to all time highs………………………………We may be returning to a period when corn over $4, wheat over $6 and beans over $10 are considered expensive…………………………………It would be nice to return to a monetary policy following the Austrian and Chicago Schools and have consistent growth in the money supply and allowing the free market to determine interest rates…………………………………this is probably a dream as New York and Washington have grown used to having ultimate control………………………………………………………Tuesday’s election is important on many levels and if the present make up of Congress remains we may see a little more confidence from the present Administration to influence the Federal Reserve…………………
Bean deliveries are current and Dreyfus has shown up as a stopper of the November deliveries……………………..Traditionally, this may be supportive as smart guys are thinking that nearby spreads are wide enough……… Please, remember that daily storage costs go up starting with the November 2019 beans(SS) and December 2019 corn(CT)………………………………We remain vigilant watching wheat basis levels as last week’s surprise tender by Egypt awoke the trade from its post harvest doldrums…………………………………..Presently, it’s all quiet on the western front! On a side note, we might not know the balance of the Senate until November 27 as Mississippi requires a special run off if one candidate on the November 6 election does not achieve a 50% vote total……………Mike Espy, the former USDA Secretary is in the mix yet, smart guys are saying that the Republican will carry the seat!
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.
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.