For the past two weeks, the futures market has been adding a lot of risk premium to prices, and the weather forecast continues to predict less than ideal crop conditions. In this week’s Bower Trading Market Strategy report, Ben Kasch said this week will be more of the same. “The weather looks threatening in the far western Corn Belt . The crops in this area are suffering and production is getting smaller,” he stated. “The adverse conditions are moving East, with parts of Iowa and Central Illinois making it onto the drought map.” He added that, in the eastern Corn Belt, the issue is too much rain, “We have guys who had had to replant 2 and 3 times, and now they are getting hit with heavy rain.” With these situations, he sees the market putting more risk premium into prices, “It could be a very volatile week.”
Over the weekend, parts of Indiana saw more heavy rain, with 2 and 3 inch totals. There is more rain in the Indiana forecast for this week, followed by several weeks of hot and dry conditions right in the midst of pollinating. Kasch said the market will be focused on the weather almost exclusively this week.
According to Kasch, commodity funds, which have been short the market all spring, are quickly changing their position. That will add to market volatility, “There is a lot of restructuring going on as far as funds go, and it will continue as long as we have these weather concerns.” He said the funds will not be comfortable holding their short positions with the chance of hot dry conditions in the middle of pollination.
For more market strategy information, contact Bower Trading at 800-533-8045 or bowertrading.com.
This material has been prepared by a sales or trading employee or agent of Bower Trading Inc and is, or is in the nature of, a solicitation. This material is not a research report prepared by Bower Trading Inc. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.
DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Bower Trading Inc believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.
