Daily Morning Report

Grain traders and most Americans are setting their sites on the upcoming July Fourth holiday weekend. The summer respite will find barbecuing, baseball, boating and other summertime pleasures the order of the day–capped off by evening fireworks displays.

But after the Fourth of July holiday period, grain traders will even more keenly focus on the critical timeframe that occurs after the holiday. Indeed, mid- to late-July typically finds the hottest weather of the year in the Corn Belt. This time period coincides with the
extreme-heat-sensitive pollination stage of corn crop development. August is the most critical growing month for U.S. soybeans. U.S. wheat harvest is also wrapping up in July.

Already this year the grain markets have experienced serious weather market rallies, mainly due to too much rainfall either delaying planting progress or drowning out already-planted fields. The U.S. hard red winter and soft red winter wheat crops are experiencing some harvesting delays and quality problems due to recent soggy weather in those regions.

Here is what Conrad Leslie, the longtime and highly respected crop forecaster and market commentator, told me a few years ago: “Following the July Fourth holiday period, those who are interested in soybean and corn prices and production estimates look to the skies for the next two months for weather developments. Historical statistics indicate crops can
either improve or decline….”

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Grain traders are still trying to digest the surprising USDA reports last Friday that showed a sharp drop in U.S. soybean acres and a rise in corn acres. That data pushed corn prices sharply lower and soybean prices moderately higher. Wheat was pulled lower by the big drop in corn prices. Significant chart damage was inflicted in corn futures, as the price uptrend on the daily chart was negated. Weather in the midwest U.S. now leans toward favoring the bears, as drier and warmer conditions over the weekend and in the coming days will benefit the crops. Historically, the first trading day for the grains after the U.S. Independence Day, which comes this Friday, is extra important. Grain price trends can be reversed or existing trends accelerate during the critical early-July timeframe. Stay tuned!–Jim

Monday, July 1–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mostly higher overnight. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The U.S. indexes today are at or near record highs amid keener risk appetite among traders and investors worldwide.

The weekend Group of 20 meetings taking place in Japan featured a face-to-face meeting between U.S. President Trump and Chinese President Xi regarding their trade war. That meeting saw the U.S. back off on some of its threatened sanctions, while China said it would buy more U.S. agricultural products, and both sides agreed to restart trade negotiations. This was deemed a positive by the marketplace, but most agree much heavy lifting needs to be done to get a complete and final U.S.-China trade agreement.

Also, President Trump made a surprise visit to North Korea over the weekend and met with North Korean leader Kim Jong Un. The U.S. and North Korea said they would resume talks on North Korea’s nuclear program.

Gold dropped just over $20 to start the trading week and trading month, on the positive news on the geopolitical fronts. U.S. government bond yields also rose Monday but European bond yields dipped.

There was a mixed bag of economic data coming out Europe Monday. The Euro zone May unemployment rate dropped to 7.5%, which is the lowest in over 10 years. However, U.K. manufacturing growth was the slowest in six years. The Eurozone manufacturing purchasing managers index (PMI) came in at 47.8 in June, which was just a bit better than expectations, but any reading below 50.0 suggests contraction in the sector.

The key “outside markets” today see Nymex crude oil prices solidly higher, hitting a five-month high and trading around $60.00 a barrel. The OPEC oil cartel over the weekend reached a deal to keep its production curtailed. Meantime, the U.S. dollar index is higher in early U.S. trading.

U.S. economic data due for release Monday includes the U.S. manufacturing PMI, the ISM manufacturing report on business, the global manufacturing PMI and construction spending.

–Jim

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Friday, June 28–Jim Wyckoff’s Morning Markets Report

Asian stock markets were mostly weaker overnight, while European stock indexes were mostly firmer. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins.

Many markets are quieter and pausing amid the Group of 20 confab taking place in Japan that will feature a face-to-face meeting between U.S. President Trump and Chinese President Xi late Friday or this weekend. China has laid out several conditions for the U.S. to make a trade deal, but Trump may not accept them, including lifting sanctions on China telecommunications giant Huawei. The outcome of the U.S.-China summit meeting is still very uncertain and could have major implications for many markets come Monday morning.

In overnight news, the Euro zone June consumer price index came in at up 1.2%, year-on-year, which was in line with market expectations but still too low for the liking of the European Central Bank. This inflation report is one more element falling into the camp of the Euro zone monetary policy doves who want to see the ECB inject more stimulus into the economy.

The key “outside markets” today see Nymex crude oil prices near steady and trading around $59.50 a barrel. Meantime, the U.S. dollar index is modestly lower in early U.S. trading.

U.S. economic data due for release Friday includes personal income and outlays, the ISM Chicago business survey, and the University of Michigan consumer sentiment survey.

–Jim

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Thursday, June 27–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward mixed openings when the New York day session begins.

There are new developments in the U.S.-China trade war. Just ahead of the late-week meeting between U.S. President Trump and Chinese President Xi in Japan at the G20 confab, Xi has reportedly told Trump he’s ready to settle the trade war, but has laid out several conditions that Trump may not accept, including lifting sanctions on China telecommunications giant Huawei. So far today markets have not reacted much to this news, as traders are not sure if this is a positive or a negative for reaching a final deal. The outcome of the U.S.-China summit meeting is still very uncertain and could have major implications for many markets.

In other news, Bitcoin is posting strong losses of around $2,000 today after hitting a 17-month high Wednesday.

The key “outside markets” today see Nymex crude oil prices weaker and trading around $58.75 a barrel. Meantime, the U.S. dollar index is slightly up on a corrective bounce and some chart consolidation after hitting a three-month low Tuesday.

U.S. economic data due for release Thursday includes the weekly jobless claims report, the third estimate of first-quarter GDP, pending home sales and the Kansas City Fed manufacturing survey.

–Jim

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Wednesday, June 26–Jim Wyckoff’s Morning Markets Report

Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed toward higher openings when the New York day session begins.

The markets were just slightly rattled Tuesday afternoon when Federal Reserve Chairman Jerome Powell said the Fed will not be pressured into cutting U.S. interest rates without the economic data to back any cut. U.S. stocks backed off a bit on Powell’s remarks.

A main focus of the marketplace at mid-week is the late-week meeting between U.S. President Trump and Chinese President Xi in Japan at the G20 confab—possibly after all the markets are closed on Friday. The two will discuss their ongoing trade war. The outcome of that meeting is uncertain and could have major implications for many markets. As has been the case since the trade war began, there are conflicting comments coming from the U.S. side. Reports attributed to U.S. trade officials Tuesday played down any significant progress to be expected at the summit meeting, other than a pledge that both sides will keep talking. The U.S. stock markets has somewhat reacted positively Wednesday morning to a comment from U.S. Treasury Secretary Mnuchin today, saying a U.S.-China trade deal is “90 percent done.”

The Iran-U.S. confrontation has turned to a war of words this week. Both sides are tossing harsh rhetoric at each other. This situation is bullish for safe-haven gold and for crude oil, and is not likely to de-escalate any time soon.

In other news, Bitcoin is posting gains of over $1,000 today and trading around $12,500. Part of the buying in the crypto currency is tied to the recent news that FaceBook is launching its own digital currency.

The key “outside markets” today see Nymex crude oil prices higher, at a four-week high, and trading around $58.85 a barrel. Meantime, the U.S. dollar index is firmer on a corrective bounce after hitting a three-month low Tuesday.

U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, durable goods orders, advance economic indicators and the weekly DOE liquid energy stocks report.

–Jim

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