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Veteran Advisor

We Gonna Get A Rally?

And that was the question of the weekend. A farmer that knows my occupation, wanted to know if we were going to get a rally. He seemed to be referring to the corn market. He actually is fairly well positioned with his old-crop sales. I was impressed (compared with all of the old-crop corn that is believed to be still on farms). He was really talking about getting some new-crop sold.

So, what did I say? First, I admitted I really don't know. But, it seems like a weather event is what the conventional wisdom believes will have to happen to get that "rally". Or, if the June Acreage Report shows an actual big acreage shift away from corn. Maybe that sparks a fire.

In my back pocket, I really think I have the answer to a rally. On a piece of paper are five letters. What do you think the letters spell?

 

 

Mike

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Advisor

Re: We Gonna Get A Rally?

I'm agnostic but still giving it the benefit of the doubt given seasonals and charts.

 

Still haven't fully fleshed out the defensive plan B should there be a technical failure- if that occurs in this timeframe following a failed attempt to rally it will need to be respected.

 

That's tricky, too, though, as C and W are a lot closer to that point than S and funds are long S vs. very short C. I guess you take it one market at a time.

 

Probably going to put on some form of ratio put spread should that happen. Nothing very enticing there but I'd rather be short vol than long it right here.

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Advisor

Re: We Gonna Get A Rally?

Ok, I'll bite the hook. CHINA.  I believe a better chance would be DROUGHT.  In my little chunk of the woods we are at 3.65" for the year and that is way below normal.  We have a dry windy week ahead.  A dry Spring is great and does not mean a dry Summer.  Just thinking out  loud here.

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Veteran Advisor

Re: We Gonna Get A Rally?

If you missed it:

On Friday, the CFTC Report showed the funds getting even further net short in the corn market than the trade expected. On the week of Tuesday, April 5, 2016, the funds sold a net –59,00 on the week, now making them a net 175,000 short overall. For the rest of the grains, activity was not as surprising. Fund activity was much less minor in the rest of the grains. Producers and merchants added 62,300 net long corn, along with 4,000 net long soybeans and 10,000 net long soymeal.

 

Mike

 

 

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Senior Contributor

Re: We Gonna Get A Rally?

Don't know where you are located but I got a picture on the weekend that claimed to be from'north of Watseka, Illinois' that showed a dust storm withwhat looked like ditches full of soil or maybe just soil covered snow?

Indications were that it was dry there.

Can I trust the internet?

Can anyone confirm?

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Veteran Advisor

Re: We Gonna Get A Rally?

CHINA is a good guess, but no. That is not my first thought. But, certainly CHINA-buying could be a market mover.

 

Mike

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Veteran Advisor

Re: We Gonna Get A Rally?

The old Watergate admonition = "follow the money" = FUNDS??

 

How's the dollar doing today?

 

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Veteran Advisor

Re: We Gonna Get A Rally?

lsc76cat,

 

You are correct. I've asked the chicken and the egg question, regarding the funds. So, do the funds shift their weight first, or do they do it after the market turns? I'm told the funds will shift on what the charts are telling them.

 

Mike

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Veteran Advisor

Re: We Gonna Get A Rally?

There is a lot of talk that a depreciating U.S. Dollar could be the catalyst for an ag commodities rally. Some believe that it is already happening. What happens though if the Fed Reserve implements PIRP. So, PIRP would follow NIRP and ZIRP. None of the IRP's have been hugely successful, other than keeping the foreign currencies on a downward spiral, as they try to undercut ( stay competitive) with the U.S. Dollar.

 

Admit it, can you define the following:

 

ZIRP=

 

PIRP=

 

NIRP=

 

Mike

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Veteran Advisor

Re: We Gonna Get A Rally?

Zero Interest Rate Policy

Negative/Positive Interest Rate Policy

http://blogs.wsj.com/moneybeat/2016/04/11/watching-the-feds-pirp-walk/

 

 

AKA  SHELL GAMES!!

 

 

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