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Market Report


Markets 10:25am 2/8/16

Dow -371.49
S&P -43.72
Nasdaq -125.83

Wall Street is having another rough day as the Dow is down more than 300 points in early trading amid a fresh slide in oil prices below the key $30 per barrel mark and continued fears about slowing global growth.

The rocky start to 2016 for stocks looks set to continue as investors contend with well-known yet persistent headwinds ranging from continued price declines in oil, concerns about the impact of China’s slowing growth on the U.S. and other world economies, and questions surrounding the timing of interest rate hikes from the U.S. Federal Reserve.  A Sunday meeting between Saudi Arabia and Venezuela ended without any plans for production cuts, damaging hopes that the world’s major exporters will cooperate on output cuts.

In the ethanol, we have RBOB gasoline trading -45 cents cheaper than ethanol futures, which is not promising for ethanol.

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Grain Markets 10:28am 2/8/16

Mar Corn -1’4 @ 3.64’2
Mar Beans -3’0 @ 8.64’4

 

USDA Report on Tuesday 2/9/16 at 11:00am

 

Funds:  An interesting topic is the funds short position.  I mentioned 1/11 the funds were record short, and I also mentioned my concerns on 1/18 seen below:

 

“shorts will have to cover at some point and we may have a shot at a bear market rally.  Manage your risk and be prepared for the unknown.  Spec funds have added 150,000 new shorts since Dec 16th.  With everyone suggesting we “Sell the rally’s” the farmer is likely to hold pricing down as they sell these bounces.  With farmers long the physical, and funds short the board a chance at a significant rally will be difficult without a major story.  I am not saying we cannot have a rally in a bear market, just that it will probably be short lived as farmers look for opportunities to move grain.  This makes short covering an easy proposition for the funds, versus making the funds over pay and driving up price.”

 

On Jan 26th the net fund position on corn dropped from -160,153 to -91,929.  The short position continued to decrease until just a couple of days ago.  Currently estimated at -84,788 as of Friday.  Looking at the charts below the orange line represents manage money/funds.  Note that historically the funds are still very short.  This represents an opportunity in the event of a scare causing a rapid short covering.  Notice in the charts below, when funds cover, they historically do it in a big way.  Keeping in mind my comments from 1/18, a slow short covering may not be as supportive to the grain market.

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Recommendations:  After the USDA report, ProEdge will be releasing official client recommendations.  Expect to see this information late next week via email.

 

Weather:image004

It looks to remain cold through President’s Day then trending warmers in the 11 to 15 day.

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For Fun:

The Denver Bronco were victorious defeating the Carolina Panthers 24 to 10 in the 50th Super Bowl.  Highlight video seen here:https://youtu.be/DR0qOk_pcyg

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

 

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About katcountryhub
I am a graduate of Northeast Community College with a degree in journalism. I am married to Jeff Gilliland. We have two grown children, Justin and Whitney and four grandchildren, Grayce, Grayhm, Charli and Penelope. I will be covering Lyons, Decatur, Bancroft and Rosalie and am hoping to expand my horizons as time progresses!

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