metmike: Looks like a gap and crap buying exhaustion formation on the charts:
The new-crop contracts both notched new highs overnight and are still up on the day, but they are well off the overnight highs by mid-session Thursday. Dec #corn reached $4.93 and Nov #soybeans hit $12.85.
Gap and Crap buying exhaustion formation
Started by metmike - Aug. 30, 2019, 6:12 p.m.
New crop prices did poorly on Thursday but not as bad as the massive buying exhaustion formation for old crop. Bear spreading(nearby contracts losing on distant contracts is usually pretty bearish).
However, the market speculators might only be re-configuring where they want their money, putting most of it on the new crop, that has the greatest potential for an explosive move higher.
December Corn was the only commodity/month that held the gap higher from Wednesday Night but it still closed below the March high of 485.75, closing at 482 which would be a bearish (inverted)hammer formation on the charts.
However, some people think that this is a bullish formation.
I think what matters is the perception of the weather.
Or if you were lucky enough to be on the winning side of a limit move, you took some profit and come back to fight another day.
Not me Jim.
I stopped having a position thru any kind of report 2 decades ago.
However, one time I actually put on a position ahead of a report. I think it was the October 1993 USDA production report but might have been November.
I was using a broker at the time, Jim Bower of Bower trading who had tons of farmer clients. This was back when information was not as available to everybody. It was after the Great Flooding of 1993 but the Eastern Belt had drought and heat and their yields just made it worse.
Extremely knowledgeable guy too. He was off the charts bullish because he said that every farmer he spoke with had much lower yields than what the USDA had...........ALL of them.
This was during harvest, when seasonally, harvest pressure frequently causes prices to fall.
As he predicted, the October/November 1993 USDA report was a bullish shocker and we went lock limit up immediately after it was released.
I got out too early, I think that I sold/covered at limit up that day or on the open the next morning but only put that trade on for the knee jerk reaction of the market to the report...........no other reason.
Back in those days, old timers remember that the market opened at 9:30 am and closed at 1:15pm. Those were the most fun days because your trading was all done in less than 4 hours...............but you could get stuck in a weather position when the market was closed.
USDA reports were released ................when the market was closed! back then. I thought it was at 8:30 am, an hour before the open but might be off. So you had to cover the day before if you wanted out before the report.
You can see all the changes/deviations of USDA yield estimates going back to 1965 by going to page 35 of this publication. Lots of other great, similar information for all crops.
Weather has turned bullish Minn wheat/KC wheat.........mainly because most of it will miss/missed the good rains this week and it turns dry for a long time after that.....especially in the drought MWE areas.
Probably not cold enough for any damage next week in the Plains because the KE wheat is not developed enough and temps will not drop much below freezing.
--NAO pattern is usually pretty dry for the N/C Plains/Upper Midwest.
The Spring wheat is being planted into the driest soils in the country.
This is why I don't think the cold is going to hurt the Winter Wheat:
Kansas: Winter wheat jointed was 10%, behind 18% last year and 22% for the five-year average"
Rain total the next 7 days......week 1.
Rain outlook for week 2:
Just some anecdotal observance from my own experience. I have golfed in a league on Tuesday or Wednesday nights for years, at a course that is about 15 minutes from where I live. Normally this time of year, it is of course, cool. But normally it is so wet that much of the course is roped off to keep carts out of certain areas and you have to be careful where you walk.
Not this year. It's already dusty and most of the ponds are at best a foot or two low and some are half dry. Again, it's anecdotal, but there is no doubt it has been dry. Of course, the will speed planting as farmers have been busy, but if the rain doesn't come, as has been mentioned here plenty, it's going to be a heck of a ride.
The 6-10/8-14 day forecasts may be dry for awhile and drought fears ARE getting amplified now that this weeks nice rain maker is winding down!
Some decent SNOW(mixed with rains) coming to the dry spots of the Spring/Minn wheat(ND/MN) early this week are putting pressure on the MWE wheat this evening. Some precip for the KC Winter Wheat also but not as much and not as needed.
This is more moisture than was expected last week. After this event, it turns dry again.
Snowfall the next 2 days below:
Precip is over for the Spring Wheat areas in severe drought.
Now it stays mostly dry for the next 2 weeks............very bullish.
Still some rain for KS this week but the KC Winter Wheat does not care about that today.