Market developments are creating issues for bulls, analyst says

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For at the least six months the Randys on the incorrect facet of the world have been clamoring for a market prime – primarily as a result of they have been wrongly bought a very long time in the past – after which the market actually began to rally.

In virtually each species of life (even ants), researchers have discovered that there are a couple of that appear to determine issues out shortly, after which there are the remaining. That is why when the pandemic hit and shares fell, the bulk doubtless liquidated to the low or close to the low (in the event that they did something) and turned their 401K to 201K.

The market instantly rallied – and now shares are reaching new highs.

The Randys on the incorrect facet of the advertising world do not do significantly better.

At present, the market has been unable to maneuver greater for the previous six weeks, caught at outdated highs. Corn has potential prime head and shoulder formation over the previous six weeks, with soybeans being double prime formation 5 weeks aside, which is of concern to technical merchants as effectively. Numerous different elements confirming the incidence of a market peak embrace declining open curiosity as massive speculative merchants proceed to shut out lengthy positions. Small merchants are likely to push the market greater in in a single day buying and selling and low quantity durations, solely to run into huge gross sales / liquidations by massive merchants.

We’ve a divergence between the values ​​of the outdated and the brand new cultures, the working bear spreads (the brand new harvest wins over the values ​​of the outdated cultures). This isn’t the signal of a dynamic, demand-driven bull market. However, it’s the signal of an rising bear market.

In my thoughts, this creates issues for the bulls available in the market. Add to that the non-public forecasts of SAM’s crop restoration to attain near-trend yields (for instance, 132 mmt of Brazilian soybeans towards 120 to 125 in January). If you need a confirming issue, simply begin studying Mistaken-Facet Randys’ ideas. If it is a prime, they need to be speaking about one other leg greater – they’ve a knack for staying on the incorrect facet of the market.

For now, the SAM local weather stays largely favorable in Brazil, with beneath regular temperatures and above regular rainfall – at the least favorable for the rising crop, but it surely’s not an excellent climate. for crops. Argentina has a forecast of adversity, however with largely above regular temperatures and beneath regular rainfall more likely to additional stress crops over the following two weeks. The climate in america is changeable, with above regular temperatures returning over the following two weeks and little or no precipitation within the western Corn Belt. Drought continues to be alive and effectively within the western cornbelt / plains.

Wheat and soybean exports are slowing, whereas corn continues to be acceptable. Wheat exports are 4% behind regular in comparison with simply 2% final week, with the USDA forecasting they’ll improve by 2%. Corn exports are up 81% (up from 80% final week), with the USDA estimating corn exports solely elevated by 46%. Soybean exports are + 76% this week (down 1% from final week) towards USDA estimating + 34% for the yr. The soybean harvest in Brazil is 25% achieved in comparison with 40% final yr, so they’re experiencing harvest delays, with most harvest estimates round 132 mmt in Brazil and 46 mmt in Argentina, because the Argentinian harvest is just evaluated at 15% G / E towards 19% within the final week and 64% final yr.

Maize costs are decrease than expectations of bigger SAM exports. Planting has began within the Northern Hemisphere, with 3% of the Texas corn crop seeded in comparison with a mean of seven%. Brazil’s second crop maize is 39% sown in comparison with 67% final yr, and the later they plant the extra dangerous the crop, so it turns into excessive. Corn from Argentina is dry with scores of 30% G / E in comparison with 24% final week and 59% final yr (unhealthy however bettering). Might wheat finds some help with decrease HRW crop rankings, with Kansas at 37% G / E (down 3%), Oklahoma at 46% (-2%) and Texas at 28% (-2%). Matif wheat futures have reached new highs in eight years due to decrease provides. Is it the flip of wheat to turn out to be the market chief?


Ray might be reached at [email protected]
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Ray is President of Progressive Ag Advertising, Inc., a number one advertising firm within the nation. Go to progressiveag.com for rankings and hyperlinks to information from Prime Producer Journal and Agweb.com.

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