All my opinions as usual below. So we are in week 4 off my Olive line buy levels in grains and deferred livestock contracts that to me tested souls but now are up and running higher. Most of the bullish factors are still in place in my view. Bad US Hard wheat crop and potential global supply demand decrease. A mentor once told me “the smarter you are, the earlier you will be. Now learn to control it”. So now after 1st almost hitting limit a week ago (my signal) we are moving sharply higher as funds continue to buy long and EU weather news sparks the real bears concern in my view. Wheat supply is made till next July.
How do you get back on board if you sold initial rallies? Yesterday we finally smashed above 597 which was the low in AM session so I have buy and sell signals at specific ranges in KC wheat to consider. Sure it’s a crap shoot but the day trader pyramiders use opening range for pivot? I said last week on 30c wheat from the spike highs if looking to buy a 6% break. It sounds crazy but if the bulls take hold, these pullbacks maybe the only time to buy low. My 1983 drought rain forecasts are playing but no heat to accompany the lack of moisture in some areas. To describe, 1983 weather analog, was very wet and cool late spring and early summer. By the time we got to August of 83 , it turned hot and dry late. This year very wet May and June timeframe in Northern Illinois. July very dry in N Illinois with 1.14 inches being reported at O’Hare for the month of July. August so far has been dry until yesterday as rains hit parts of ILL yesterday with more potential to follow in the next few days. Can beans grow, fill pods without water if needed rains don’t show?
Live Cattle- dull action to me, just playing between support and resistance trend lines as we currently sit in near a top part of a 35 week range in a few deferred contracts, (Dec 18, Feb 19).
Coffee- Last week May hit my olive line buy at 115.50. Back months offer different value signals. Funds almost record short according COT data. Over 113.30 in Sept might squeeze shorts but needs to clear.
Nov beans vs Dec KC wheat now –This one bean vs. 2 Kc wheat contract spread is$3.40 ish new lows. Is this ratio spread going to -$7.00 beans under wheat! I offered these suggestion months ago, maybe longer. I’m always early but these are potential extremes I look for.
Hogs- in my view the importance of a tight stop limit is the key if you take a position long. Some are long due to large macro buy levels in LHZ18. August got under an OLB yesterday and sunk further. In my view Wait for the next 3.00 lower OLB in my opinion and forget what cash does. Really, does it matter and are not, hogs averaged into expiry? Not my game but Dec failed on the buying of that China hoof item at a few lines by highs. Buy stops did not get hit to add longs in case we ran higher. That is a way to play wheat maybe. Patterns are accumulating longs in wheat. It just turns buying size offers all way up. Watch opening again. We do have grain don’t we still? Yes. Don’t let emotion make you pay up. I do have levels if pricing crop this rally. The best time for me to chat is when it’s slow.
Corn- I am not that bold to say do not hedge corn. I am just long term bullish and this last break held higher lows from year before. Basis December 18 corn futures. 384-386 an area now. Buy down spikes in my view. Feed needs were covered by olives, macro TLs 362-352 an olive line buy. Oats- exploded higher yesterday and the market is higher on month and it adds 15c now posting red diamond pattern on intraday charts.
Buy breaks across-the-board is my opinion in grains. Is this that moonshot when I posited beans could hit 12? Expect the unexpected is one of my rules.
Alan R. Palmer
Strategist – Senior Technical Analyst
Phone: 312.957.8248 or 888.391.7894
Email: arp@walshtrading.com