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hardnox
Advisor

punky comms

Was always suspicious of the bit of Trump trade (risk on in everything) and that seems to be fading pretty generally.

 

Also suspicious of OPEC mau-mauing the oil market (the master commodity) up a bit on talk of unspecified production cuts. The glut continues and drillers are migrating out of some higher cost plays and into the Permian to pick some low hanging fruit. US production is strong.

 

Even though the funds are still very short grains and got popped a little on Monday I don't seeing it being sustained in the near term if recent extended forecasts verify.

 

My guess would be that we settle back some more and funds continue to get a bit shorter. But odds are good that something, sometime this summer, is going to trigger a sizable rally simply based on their short covering and then swinging to the long side. Whether it would have any legs beyond that I can't know, but typically not.

 

I haven't a clue when, what, how- if anyone knows they can tell me.

 

But I guess I'm not real interested in selling into the hole.

 

BTW- in a not at all uncommon phenomenon, meats are on fire as the commodities in general remain weak. They'll do that.

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4 Replies
hardnox
Advisor

Re: punky comms

In '15 and '16 just turning the funds around on a bit of threat was good for about .80 in corn.

 

Beans about 1.50 in '15, close to 3 last year but that was kicked off by the Arg floods so don't see anything of that magnitude at tis moment. Given aces and stocks I'd guess it would take some serious late dryness to do that.

 

FWIW.

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JimMeade
Veteran Advisor

Re: punky comms

I'd thought the bean prices runup last year were due to a total misreading of the chance of a La Nina.

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hardnox
Advisor

Re: punky comms

Beans popped the first 1.50 or so when ARG estimates got cut by 6-8 mmt from the flooding- corn didn't do so much proportionately. BRA got trimmed a bit from late dry.

 

Then, yes, the la nina tale got some legs when some people started hyping a dry 30 day forecast, which did not come to pass.

 

Best guess is that if we turn the funds around it will come off some major region getting dry and a hot dry forecast.  Odds are good, not certain.

 

FWIW, I don't see any indications that would make me expect a major hot, dry episode this year. That's about a 1:8 or 10 deal, but scares are maybe triple that. So I'll sell if it gives it to me- if it turns out to be the real deal there's a couple more crop years to take advantage.

 

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JimMeade
Veteran Advisor

Re: punky comms

I'm primed for a rally up to the 4th of July.  After that I'll be less optimistic.  What scares me is if soybean production and demand is as projected and we don;t get a rally, I should be selling right now.  Will I know when to quit hoping for a rally and sell before the price slips out from underneath me?  I'm not always very good at that.  The closer it gets to the 4th the more I'd better be willing to sell if nothing is popping.  That is assuming prices will stay about where they are.  If they start edging down a nickel a day, I could find myself outside the candy store window looking in.

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