Bobby Coats and Bert Greenwalt attend Ag council of Arkansas meeting
Bobby Coats and Bert Greenwalt, agricultural economists with the University of Arkansas and Arkansas State University, catch up at the Agricultural Council of Arkansas annual meeting in Little Rock.

Dollar bear supportive of commodity prices

The dollar has a bullish bias given global economic, social, political and military challenges, but present macro factors favor more dollar weakness than strength.

What to expect from the markets this week, August 7, 2017

Market “Near Term” Snap Shot

  • Rice: Bullish bias remains, but corrective price action desirable
  • Cotton: Bottoming process underway
  • Soybeans: Cautiously bullish, but this week’s price action may provide insight into whether recent price action was corrective or prices continue to move to their previous lows
  • Corn: If corn can finish this week above $3.69 given global economic dynamics this market near term is more bullish than bearish
  • Wheat: Global macro dynamics a key consideration in not being overly bearish wheat, soybeans, corn and rice
  • 10-year Treasury Yield: Range bound, but bullish bias or lower yield remains
  • S. Dollar: Near term some correction of downside move should be anticipated before moving lower
  • Oil $WTIC: A market that appears to be headed to previous highs in the $55 area
  • $CRB Commodity Index: Will global reflation efforts be enough to keep this index from revisiting previous lows? Do not rule out a revisit to previous lows, but this index is building a base to move higher
  • S&P 500: Prices still moving higher, but a cautionary time period
  • Global Equities: A cautionary time period, trend remains up
  • Feeder and Live Cattle: Consolidating before moving higher   

In addition to the following “Expanded near Term Market Outlook Considerations for Week Beginning August 7, 2017,” you can read the slideshow by clicking on the download button at the end of this file.

This Week’s Select Summary Considerations:

  • 10-Year US Treasury Yield:
    • Range bound 2.1 to 2.6
    • We enter the week with the 10-Year US Treasury Yield slightly bullish with a potentially lower yield
    • The larger trend remains bullish or lower yield
    • Most likely Demand, Economic Weakness, Event Risk Concerns, or Other Market Concerns/Factors will take yields lower to 2 or below before significant move higher
  • US Dollar Index:
    • This week likely brings some corrective activity of the present ongoing decline, before likely resuming its downside advance lower to 87 or lower
    • Given global macro considerations coupled with no significant global anomaly event this index may have some serious weakness
    • Big Picture: The dollar has a bullish bias given global economic, social, political and military challenges, but present macro factors favor more dollar weakness than strength
  • CRB Index:
    • Will global reflation efforts be enough to keep this index from revisiting previous lows? Do not rule out a revisit to previous lows, but this index is building a base to move higher
    • Bigger Picture: Though spastic, global macro and growth forces in general remain supportive of the commodity sector
    • Between Fed off-again and on-again accommodation and/or misdirectional verbal guidance, building uncertainties surrounding fiscal, trade and regulatory policy stimulative activities, the $CRB Commodity Index: a key economic indicator, has struggled
  • $WTIC Light Crude Oil:
    • A market that appears to be headed to previous highs in the $55 area
    • Market structure, geopolitical considerations and building possibilities of a Venezuelan civil war remain supportive
    • A complex, volatile and an uncertain market that deserves a great deal of respect in a world with building economic, social, political and homeland security uncertainties
  • Soybeans:
    • Cautiously bullish, but this week’s price action may provide insight into whether recent price action was corrective or prices continue to move to their previous lows
    • Global macro forces likely price supportive, but price needs to move through $10.21 and hold to open the door to higher prices
  • Corn:
    • If corn can finish this week above $3.69 given global economic dynamics this market near term is more bullish than bearish
  • Long Grain Rice:
    • Bullish bias remains, but corrective price action desirable
    • This is a highly complex market with an array of factors impacting price from 2017-2018 beginning stocks; 2017 acreage, production and quality uncertainties; present underlying aggregate commodity sector dynamics; problematic global economic momentum, geopolitical uncertainties, and/or global agronomic outlook
  • Cotton:
    • Price needs to confirm that a bottom is place
  • Wheat:
    • An amazingly ugly chart after a run-up in price
    • Global macro forces a key consideration in not being overly bearish wheat, soybeans, corn and rice
  • SPY SPDR S&P 500 ETF:
    • Prices still moving higher, but a cautionary time period
    • Allow price action to provide guidance
  • QQQ NASDAQ Power Shares:
    • Remain cautious of this index
    • Allow price action to provide guidance
  • EFA iShares ETF - Global Equities Excluding U.S. and Canada:
    • A cautionary time period
    • Trend remains up
    • Allow price action to provide guidance
  • EEM iShares ETF, Emerging Market Equities:
    • A cautionary time period
    • Trend remains up
    • Allow price action to provide guidance
  1. Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected]

DISCLAIMER-FOR-EDUCATIONAL-PURPOSES

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