Commodity Price Drivers: Outside Funds, Weather, Wheat Status

May 15, 2017 04:32 PM

Although the week in grain prices is expected to be pretty uneventful, Angie Setzer of Citizens Elevator advises paying attention to the activity of outside funds in commodities.

“What I’m really going to start to pay attention to, aside from weather, is just the overall attitude toward commodities,” Setzer tells “AgDay” host Clinton Griffiths on the Agribusiness Update segment for Monday, May 15, 2017. “I’d really like to see us start to get some solid support underneath those energies and metals, kind of get an idea as to where we’re heading from an economic standpoint and whether or not we could see some of these folks start to leave those outside market long positions they’ve been getting into, then hopefully come into commodities. Because I think for them it would be a great investment opportunity from a seasonal standpoint. And with what’s going on overall in the corn-wheat complex, especially. But I’ll just really be watching weather and overall attitudes of the outside investors that we really need.”

Strong grain demand revealed in the latest supply-and-demand data points from USDA suggests there are opportunities for U.S. producers, adds Naomi Blohm of Stewart-Peterson.

“If there are any weather issues that do emerge this summer, if we’re below trendline on corn or soybeans, watch out,” Blohm says. “This market price has every reason to rally because that demand is so fantastic.”

 Wheat is an unknown thanks to weather that damaged some of the crop.

“There are some real issues,” says Setzer, who is based in Charlotte, Mich. “As a trader—a physical trader because I buy the physical and turn it into cash—I am sitting here on the sidelines not making any moves because I don’t know what to expect after we had a cold snap in Michigan last week.”

Also keep an eye on livestock markets, Blohm adds.

“Keep an eye on the cattle market and the hog market,” Blohm says. “I’m thinking that the hog prices are getting a little toppy here near this $80 level, so I would be aggressive on some hedges at that point.”

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Spell Check

Greensburg, IN
5/17/2017 11:00 AM

  I must have saw a different supply & demand report than these two young ladies. Demand still strong you say? On soybeans - yes. But corn going forward - this report should of raise a red flag , as exports were lowered 15.7% for the 2017/18 marketing year. Some are fearful this number could get worse, as Brazil & Argentina crops are growing in size each month we have walked forward making the U.S. the residual seller in world market (meaning U.S. will carry the excess supplies). Plus throw in Trump card (pun intended) and we could see our most loyal customer Mexico say ADIOS. Outside (Macro) market could help as the U.S. dollar is finally starting to break-down, that could swing investment dollars out of equities into commodities. I do agree watch the metal & crude market first. Grain will be a long distance 3rd. Weather next month maybe our last chance (hope) for any scares...You still have to be a seller on any rallies. (and the market knows it).


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