China Plantings On Track And Commodity Prices Stall

08:10AM Apr 23, 2014
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Overnight trade showed followthrough bearish trade of soybeans (-6 JUL), and hesitation by corn near the 5 day average that was near $5.01 JUL futures. And wheat traded lower overnight to a level a bit beneath the 40 day average near $6.77 JUL SRW Chicago. JUL cotton was lower overnight and traded to the 5 day average near 92.38. And the consider overnight stalling of JUN hogs, and lower JUN cattle, and there is support to the trader opinion that so far this week commodity trading was not robust.

Today, we learned that China planted nearly 24% of grains which was a bit faster pace than last year, and planted nearly 29% of oilseeds. China also planted nearly 38% of expected cotton acreage for a pace of 2.3% faster than previous year. It seems weather has been accommodative and farmers made the most of the trend. Now add the cancellation of soybean and corn imports, plus a slower China economic pace, and trader talk can only be summarized as not all that bullish for commodities prices. In other news, Brazil soybeans sold to China by Marubeni were said to be diverted to the U.S.

Traders are discussing the stalling of the 2014 price uptrend for several commodities including the DJUBS commodities index (a basket of commodities). Those of a technical bullish perspective do not want to see the index decline under 136.14 or last week's low.

Rich Posson's business cycle model suggests soybeans can trade a swing higher by next week but now there is concern of only recovery rather than a new price high for the year. Whereas the model stance had already been bearish wheat and was seeking to be bearish corn. At this time it seems grains, livestock, and cotton should be more on the bearish watch list than otherwise. And this includes energy markets. Stay tuned. On the other hand is the stock market model script that offers a rally into May, whereas commodities can be lower priced for at least a portion of May.