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Agricultural Commodities

ZW: Wheat to Rebound with Fed Rate Cuts and Dollar DevaluationCBOT: Wheat Futures ( CBOT:ZW1! ) On Friday, July 12th, the United States Department of Agriculture (USDA) released its latest World Agricultural Supply and Demand Estimates (WASDE). (Note: The WASDE report is published monthly and provides annual forecasts for global supply and use of wheat, rice, coarse grains, oilseeds and cotton, as well as the U.S. supply and use of sugar, meat, poultry eggs and milk. Today’s analysis will focus on wheat.) USDA’s balance sheet update for the 2023/24 US wheat crop showed a carryout of 702 million bushels (mbu), as exports were taken to 707 mbu. For the new crop, USDA raises the wheat stocks by 98 mbu to 856 mbu. Some of the increases was a larger carryover, but most came in the form of higher production. USDA raised the wheat crop by 133 mbu to 2.008 billion bushels (bbu). Harvested acres was raised from 38.0 to 38.8 million acres. Yield per harvested acres was raised by 2.4 bushels per acre (bpa) to 51.8 bpa. Winter wheat was up 46 mbu to 1.341 bbu, as the Hard Red Wheat (HRW) total was projected at 763 mbu (+37 mbu), with Soft Red Wheat (SRW) at 344 mbu (+2 mbu) and white winter at 234 mbu (+8 mbu). The initial other spring wheat figure was tallied at 577.8 mbu, more than 56 mbu above market estimate. Global wheat stocks were raised by 4.97 million metric tons (MMT) to 257.24 MMT, with a bulk from the US, as both Canadian and Argentine wheat production were raised. Wheat Futures drop across three futures markets, CBOT, KCBT and MGEX, after WASDE shows higher production. • Jul 24 CBOT Wheat closed at $5.38, down 16 1/4 cents, • Sep 24 CBOT Wheat closed at $5.50 3/4, down 20 1/2 cents, • Jul 24 KCBT Wheat closed at $6.04, up 12 3/4 cents, • Sep 24 KCBT Wheat closed at $5.67 3/4, down 16 cents, • Jul 24 MGEX Wheat closed at $6.21, unchanged, • Sep 24 MGEX Wheat closed at $5.97 1/2, down 21 1/4 cents The weekly CFTC Commitment of Traders report showed CBOT wheat speculative traders net short 69,137 contracts as of July 9th, a reduction of 4,837-contract on the week. In KC wheat, they were trimming 2,292 contracts to 40,811 contracts by July 9th. In my opinion, the futures market has quickly absorbed the bearish WASDE report. With wheat trading at historical low levels, a rebound may be brewing in the next few months. Traditionally, August is the time to hedge weather risks in agricultural commodities. If summer weather in the Midwest and Great Plain regions turns out to be less than ideal, the previously expected higher yield will have to be adjusted downward, reducing total production. In today’s market, how could the expected Fed rate cuts impact commodities? Last Tuesday, July 9th, Fed Chair Jerome Powell appeared in a Senate Banking, Housing, and Urban Affairs Committee hearing on Capitol Hill. The Fed Chair expressed concern that holding interest rates too high for too long could jeopardize economic growth. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.” “At the same time, in light of the progress made both in lowering inflation and in cooling the labor market over the past two years, elevated inflation is not the only risk we face,” he said in prepared remarks. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment.”. The prospect for quicker rate cuts increased immediately after these dovish remarks. According to CME Group FedWatch Tool, the probability of a 25bp rate cut in September is now 90.3%. Futures traders look for 3-4 rate cuts by the end of the year, with a 53.8% probability for the Fed Funds rate lowering to the 4.25%-4.75% range. (www.cmegroup.com) Would the lower interest rates be bullish for commodities like wheat? Firstly, lower interest rates will reduce borrowing costs. This will help business grow, with more jobs, income and consumption coming along the way. At the end, it will help increase the demand for commodities such as wheat. Secondly, as a major agricultural commodity, wheat is priced in the US dollar and traded in the global market. In previous writings I explained that lower interest rates would result in currency depreciation, as prescribed by the Interest Rate Parity theory (IRP). For foreign buyers, dollar depreciation means an appreciation of their local currency. The cost of importing wheat will be lowered when converted in local currency. Lower costs help increase the demand for wheat. Trading with CBOT Wheat Futures The 3-year price chart for CBOT wheat futures shows three distinguished patterns: • From February to April 2022, wheat prices nearly doubled from about $7 to $13. This was driven by geopolitical crisis and the fear of global supply shortage. • From May 2022 to July 2023, the Fed implemented 11 consecutive hikes, which helped cut wheat prices by half to about $6. • From August 2023 to present, as the Fed kept interest rates unchanged in seven FOMC meetings, wheat prices moved sideways in the $5.50-$7.00 range. As we can see here, Fed policy and geopolitical crisis have an outsized impact on wheat prices, as compared with fundamental supply and demand. In my opinion, the supply and demand factors are already priced in the market. However, the impacts from Fed rate cuts and outcome of the upcoming presidential election are not yet fully grasped by the market. The expected Fed loosening cycle would have the opposite effect of the Fed hikes. Wheat prices could potentially move up the $7.00-$9.00 by 2025. On July 12th, the March 2025 contract of CBOT wheat futures (ZWH5) settled at $5.975 per bushel. Each contract has a notional value of 5,000 bushels, or $29,875 at market prices. Buying (long) or selling (short) one contract requires an initial margin of $2,000 at the time of writing. CBOT lists 15 monthly contracts of Mar, May, Jul, Sep, and Dec. Wheat traders could take up positions two years from now, for the month of July 2026. Trading on the 3rd or 4th contract month would satisfy the liquidity requirements while allowing time for market-impacting variables to change, based on my experience. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT:ZW1!Long
by JimHuangChicago
1
Grain Market and Bread Prices - Its Potential TrendIn today’s tutorial, we will track the potential prices of this important staple, wheat, which is used to make our bread. In these studies, we will use a combination of technical analysis and fundamental developments to support this view. Chicago SRW Wheat Futures & Options Ticker: ZW Minimum fluctuation: 1/4 of one cent (0.0025) per bushel = $12.50 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
ECONOMICS:USIRYYLong
by konhow
2
Coffee Futures: Bearish Confluence Indicates Potential Short PosIn the coffee futures market, recent analysis reveals a significant bearish outlook. The Commitment of Traders (COT) report indicates that commercial traders are holding major short positions. Additionally, seasonal patterns suggest a tendency for bearish momentum during this time of the year, further reinforcing the downtrend. Technical Analysis and Confluences Supply Area and Fibonacci Levels: Price Action: The price has reached a key supply area, suggesting a potential retest and subsequent decline. Fibonacci Confluences: Various Fibonacci retracement levels align with this supply area, adding strength to the bearish case. Momentum Indicators: Overbought Conditions: On the H4 timeframe, momentum indicators such as the RSI show that the market is currently in overbought territory. This typically precedes a price correction or reversal. Seasonal Trends: Historical data indicates that coffee futures often experience bearish pressure during this period. This seasonality aligns with the current technical setup, suggesting that the market could follow its usual pattern of decline. COT Report Insights: The COT report underscores that commercial traders, often considered the "smart money," are heavily short. This position by commercial traders can be interpreted as a strong bearish signal, given their historical accuracy in forecasting market movements. Trading Strategy Given the combination of a bearish COT report, seasonal trends, and technical indicators showing overbought conditions and resistance at the supply area, we are considering opening a short position in coffee futures. Key Points for the Short Position: Entry Point: Around the current supply area, taking into account Fibonacci retracement levels. Stop Loss: Just above the supply area to manage risk. Target: Based on historical support levels and previous price actions, aiming for a significant downward move in line with seasonal and COT report signals. By aligning our strategy with these confluences, we aim to capitalize on the anticipated bearish momentum in the coffee futures market.
ICEUS:KC1!Short
by FOREXN1
2
Macro Monday 50 - The Ivory Coast~The Cocoa Centre of the WorldMacro Monday 50 The Ivory Coast ~ The Cocoa Centre of the World This week we will look at the investment opportunities presenting in the Ivory Coast which is the world’s largest producer of cocoa. This booming economy is expected to continue grow at a 6.6% GDP growth rate which competes with the likes of India (covered on a previous Macro Monday). Today we will cover the Ivory Coast Stock Index - the BRVM Composite Index, the cocoa futures market and also a little history on the west African region. We will also learn a little about the uniqueness of the cacao tree. All of this information is valuable to anyone considering investing in the cocoa markets, the Ivory Coast or West Africa. If you’re an investor seeking unique commodity exposure or seeking to plant some seeds in a sprouting economy, you’ve come to right place. I will also review cocoa through a commodity lens and why many factors present cocoa as a unique trading opportunity and a commodity worth keeping an eye on. The West Africa’s produce 70% of global Cocoa Currently 70% of the world’s cocoa beans are produced in West Africa by the Ivory Coast, Ghana, Nigeria and Cameroon. If you ate chocolate this week, it very likely came from one these countries. The Ivory Coast produced 2.2 million tons of cocoa in 2022 accounting for over 30% of the global supply of cocoa, making it the largest cocoa producer in the world. In the 2023/24 cocoa season this reduced to 1.8 million tons. Also known as Côte d’Ivoire, the Ivory Coast is joined to the east by the world’s 2nd largest cocoa producer Ghana, which produced 1.1 million tons of cocoa in 2022 (approx. 20% of the global supply). In the 2023/24 season this reduced to 820,000 tons. The recent decline of cocoa production from the two largest producers indicates the 2024 season could spawn a supply shock in cocoa, increasing the value of the commodity. Many factors have caused this decline in production some of which we will discuss later in this article. Other notable cocoa producers include Indonesia (667,000 tons), Ecuador (337,000 tons), Brazil, Peru, and the Dominican Republic. Together, all the countries combined with the aforementioned Ivory Coast and Ghana contribute the majority of the world’s cocoa supply. Cocoa is essential to the chocolate industry as are other products derived from cocoa beans. The production and trade of cocoa are vital for the economies of these countries, providing income for millions of small farmers and workers involved in the cocoa supply chain. Agriculture in these regions are driving major financial interest. Banks and telecommunications firms are growing rapidly, and all from producing one of the worlds most desired foods. Top 6 Exports from the Ivory Coast Ivory Coast’s main exports and their values in USD billions based on the most recent data from 2023: 1. Cocoa Beans: $3.33 bln 2. Gold: $2.12 bln 3. Rubber: $2.11 bln 4. Refined Petroleum: $1.88 bln. 5. Cocoa Paste: $1.08 bln. 6. Fruits and Nuts (incl cashews & coconuts): $1.2 billion. The Ivory Coast Economy is in Growth mode The GDP growth for Ivory Coast in 2024 is expected to be robust. According to the International Monetary Fund (IMF), the country’s GDP growth is forecasted at 6.6% for the year. This positive outlook is consistent with Ivory Coast’s trend of strong economic performance in recent years. The growth is driven by a diverse economy with strong sectors such as agriculture, manufacturing, and services, contributing to its status as one of the leading economies in the West African region. The French Connection In case you’re wondering in, 1893 Ivory Coast was made a French colony. In 1904, Ivory Coast became part of French West Africa. During World War I and World War II, Ivorian soldiers fought for France. The Ivory Coast is a Francophone country, and in 2024, French is spoken by 10 million people out of 28.9 million (33.61%). Abidjan is the city with the third biggest French speaking population anywhere in the world. It is also the fourth most populous city in Africa, with about 4.7million people living there. In international relations, Françafrique (English pronunciation: Frawn-sah-frique) is France's sphere of influence (or pré carré in French, meaning 'backyard') over former French and (also French-speaking) Belgian colonies in sub-Saharan Africa. At present Côte d'Ivoire is Frances leading trading partner in the CFA franc zone (WAEMU countries) and the third-largest in sub-Saharan Africa, after South Africa and Nigeria. France is Côte d'Ivoire's second-largest trading partner after China. As you can see, the Ivory Coast has very strong trading ties in Europe. Demographic Snapshot - Ivory Coast The population is c. 30 million with a median age of 19 years old. 60% of the population are under the age of 25 (as of 2020 figures) presenting a very young work abled demographic. Ivory Coast’s Booming Stock Market in 2023 The Ivory Coast had a booming stock market in 2023 and the country as a whole appears to be presenting great economic strives and monumental investment potential. Lets have a look at the Ivory Coast Stock Index. The Ivory Coast Stock Index - The BRVM Composite The Bourse Régionale des Valeurs Mobilières (BRVM) is the regional stock exchange of the member states of the West African Economic and Monetary Union (WAEMU): Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo. I have provided a map on another platform of these countries of which the link in is my profile. BRVM Composite Components The BRVM Composite is made up of 46 stocks with 39 of these companies based in the Ivory Coast and 7 based in neighboring countries. Many of the companies operate through individual subsidiary’s in each of the WAEMU countries. The Ivory Coast index provides an interesting mix of growth stocks in the Banking, cocoa production and manufacturing alongside other fruit and nuts, gold mining, telecommunications and tourism. The country is commodity rich and has the workforce to produce at scale. The BRVM trades in the West African CFA franc, which is usually abbreviated as XOF. This currency is used by the countries in the West African Economic and Monetary Union (WAEMU), providing a stable and uniform platform for financial and economic activities within the region. The BRVM experienced a remarkable year in 2023, with a notable performance that saw the share price of eight stocks climb into double digit figures. Additionally, the stock market’s total value made a historic leap, surpassing the CFA franc 8 trillion threshold (equivalent to approximately $13 billion USD) for the first time ever in Sept 2023. The BRVM Composite top 5 companies by Market Cap 1.Sonatel, AKA Societe Nationale des Telecom has a market cap of CFA 1.93T ($3.2 billion USD). Accounts for approx. 20% of the entire BRVM Stock Exchange equity market. -A major player in the telecommunications sector in West Africa, providing a range of services including fixed-line telephony, mobile communication, internet, and television. 2. Orange Côte d’Ivoire has a market cap of CFA 1.73T ($2.9 billion USD) is listed on the BRVM Stock Exchange under the ticker symbol “ORAC”. Also accounts for approx. 20% of the BRVM. -Orange Côte d’Ivoire is a subsidiary of the French group Orange and is a leader in telephony in Côte d’Ivoire, offering fixed, mobile, and internet services, as well as mobile payment services with Orange Money. 3.Societe Generale de Banques has a market cap of CFA 631 billion ($1 billion USD) -A subsidiary of the French multinational bank Société Générale, it offers a wide range of banking products and services to individuals, corporations, institutions, and professionals in Ivory Coast. 4.Ecobank (ETI) has a market cap of CFA 396 billion ($636 million USD) -Also known as Ecobank Transnational Inc. (ETI), it is a pan-African banking conglomerate with operations in 33 African countries. It serves both wholesale and retail customers and is a leading regional banking group in West Africa and Central Africa. 5.Coris Bank has a market cap of CFA 328 billion ($525 million USD) -This is the second-largest banking group in Burkina Faso, providing retail, corporate, and Islamic banking services. It also offers a variety of banking products and services, including e-banking and foreign exchange. As you can see in terms of USD these companies are only sprouting and have a lot of growth potential. These companies are obviously benefiting from major agricultural and infrastructural growth in this blooming economy. Now onto the chart. The BRVM Composite Chart is presently not available on Trading View however you can view it on Investing.com. When it becomes available here I will share it. ✅The smooth moving average on the chart is the 200 day SMA (or the 40 week moving average) which appears to have acted as float for price and is sloping upwards with diagonal support. ✅We can clearly observe an ascending triangle also which suggests much higher prices are plausible. ⬜️ At present this chart is not available on TradingView (even though it is powered by TradingView on another platform). I have requested it to be added to allow us to structure a trade more systematically. If it is added I will share the chart on TradingView so that we can monitor it more closely and create and interactive chart to track. Now lets take a look at the Cocoa Futures chart. Cocoa Futures Chart (ticker: ICEUS:CC1! ) This is the Subject Chart Above at the heading of the artical. The cocoa futures chart is trending strongly bullish. ✅We have found support off the 21 week SMA (blue line) several times since 2022 and we can expect this to continue with such a bullish trend in place. ☑️In the event price closes below the 21 week we can then start looking for a sizable correction down to $6,545. Outside of this, the chart is looking great. ✅IMO the most likely outcome is for the price to blast on up to an all-time high or consolidate sideways until the end of the Sept 2024, after which we would likely have a DSS Bressert cross and continue to move higher. Consolidation after a 375% + increase in price since Jan 2023 would be fairly standard procedure. This includes the scenario of a fall to $6,545 which I would still consider a consolidation move, however I find this less likely of an outcome. Many factors are driving the price of Cocoa up, we will look at some key factors and concerns in the cocoa market below. The Cacao Tree Requires a Specific Climate to Grow Cacao is cocoa in its raw, less-processed form. Cacao grows from trees called Theobroma cacao. Cacao trees are native to South America, West Africa, and some countries in Asia. Its quite incredible how the plant can only thrive in very specific regions called Equatorial Zones. The 3 main species of Theobroma Cacao prefer an equatorial-humid climate, with nearly year-round constant specific humid temperatures. The areas are often coastal or have coastal drafts, have low elevations and super dense humidity. The Cacoa Tree doesn’t mind the heat as much as Coffee Arabica, but it absolutely needs nearly super-saturated water vapor in the atmosphere to survive. The cacao leaf is not very glossy, so if the air is too dry, it will lose all of its water to the detriment of its fruit. Roughly 35 cacao seeds are generated from each hanging fruit which is then fermented and roasted to create our beloved chocolate taste. This process can take a few days to a number of weeks. The raw form of cacao is much more bitter and can be difficult to eat, albeit I recently discovered it is a great coffee replacement. Interestingly, Both are the seed of a fruit — the coffee "cherry" and the cacao pod that contains 35seeds or beans. While much of chocolate's flavor is developed during a lengthy fermentation process, for coffee, a short fermentation has less impact on flavor and is more a means of separating the seed from the fruit. Both Coffee and Cocoa offer natural stimulants; caffeine for coffee and theobromine for Cacao. The main Cacao crop growing season is from Oct - Mar (yielding c.80% of annual produce) and the secondary season is May to Aug which yields c. 20%. At present a tree virus is causing significant issues reducing crops by up to 50%, we will discuss this below. Cocoa Virus Killing up to 50% of Cocoa trees Unfortunately, a rapidly spreading virus threatens the health of the cacao tree and the dried seeds from which chocolate is made, jeopardizing the global supply of the world's most popular treat. As noted above, about 50% of the world's chocolate originates from cacao trees in the West Africa countries of Ivory Coast and Ghana. The damaging virus is attacking cacao trees in Ghana, resulting in harvest losses of between 15 - 50%. Spread by small insects called mealybugs that eat the leaves, buds and flowers of trees, the cacao swollen shoot virus disease (CSSVD) is among the most damaging threats to the root ingredient of chocolate. "This virus is a real threat to the global supply of chocolate" Benito Chen-Charpentier (professor of mathematics at The University of Texas at Arlington and an author of "Cacao sustainability) Ghana has lost more than 254 million cacao trees in recent years, and the best measures to address the virus are an expensive vaccine (heightening cost) that renders a smaller plant (reducing yield). Farmers are attempting to separate the plants by greater distances however, this results in a similar issue with lessor plants and reduced supply/returns. In summary the virus could cause a major global cocoa shortage causing a major supply shock to the cocoa industry, even the news of this event could cause the value of cocoa to rise. Combine this with the secondary season ending in Aug 2024 poorly, and we are setting up for a cocoa shortage coming into the cocoa demand Christmas season. Ivory Coast and Senegal Clear Leaders in West Africa Finally, I wanted to recognize that the Ivory Coast is not on their own and many of the countries around them are also thriving. The Ivory Coast and Senegal both play significant roles in the West African Economic and Monetary Union (WAEMU). The Ivory Coast is often considered the powerhouse of the union, contributing a substantial portion of the region’s GDP. It is the driving economy within WAEMU, with a notable share of the nominal GDP of the zone. On the other hand, Senegal is recognized as the second-largest economy in the WAEMU area and has been making strides in economic growth and development through initiatives like the Emerging Senegal Plan (PSE). While Dakar, Senegal, hosts the Central Bank of West African States (BCEAO), which is crucial for the financial stability and monetary policy of the WAEMU, the Ivory Coast’s economic weight within the union is also significant. Therefore, both countries can be seen as key financial centers in their own right within the WAEMU context, with the Ivory Coast leading in economic size and Senegal in its strategic role hosting the BCEAO. The Hunt for West African Brokerages I am in the process of hunting for safe and reliable brokers in the Ivory Coast and West Africa’s region. I have found some but I could not recommend them until I do some testing and get some opinions. If anyone has any information on this, I would be very happy to have it and share it with the community here. In any event, I will look for easier indexes also that include exposure to the these countries and to Cocoa. Interactive Charts on TradingView All these charts are available on my Tradingview Page and you can go to them at any stage over the next few years press play and you'll get the chart updated with the easy visual guide to see how Ireland's stock market has performed. I hope its helpful. I wrote this and consumed a whole bar of 85% Lindt Chocolate….hard to believe the journey it took to reach here. Thanks again for coming along, PUKA
ICEUS:CC1!Long
by PukaCharts
1
ICE EU:RC Robusta Coffee forecast, Buy, Target 1995 (+45.73%)Robusta Coffee Futures (ICE EU: RC) Trade : Buy Entry : 1369 Target : 1995 (626, +45.73%) Stop : 1290 (-79, -5.77%) Posted on Sunday, December 27, 2020 Note : Coffee prices are likely to rise. The price flow is very stable. It seems that someone is managing the price well. If my prediction is right, resistances (targets) could be 1627 and 2007. Support could be 1290. If they break out 2110 and secure that line, there will be a high possibility of a very big move. As said many times, commodity prices will rise very high in 2021-2025, and coffee will be one of them.
ICEEUR:RC1!Long
by Ptrade
1
Momentum Trading In Agricultural CommoditiesMomentum trading, a strategy as old as the markets themselves, has found fertile ground in the sprawling fields of agricultural commodities. As the seasons change, so do the prices of wheat, corn, soybeans, and other staples, tracing patterns as predictable as the migration of birds or the spring blossom. This paper delves into these seasonal trends, uncovering how they can serve as reliable signals for astute investors looking to harness the power of momentum trading. SEASONAL TRENDS IN AGRICULTURAL COMMODITIES Mint Finance has previously highlighted some of these seasonal trends in Corn and Soybean in detail previously In short, seasonal cycles in crop performance are linked to crop harvest cycles. Pre-harvest, inventory drawdowns tend to drive price higher while post-harvest, a glut of inventory tends to drive prices lower. Corn Corn prices start declining in June following the harvest in China (second largest corn producer) and Brazil (third largest corn producer). Prices reach their lowest in October, coinciding with the harvest in the US. Over the past five years, corn prices have increased in the first half of the year before declining sharply in late June. In 2024, indexed price performance shows prices sharply lagging the seasonal trend as we approach the date on which prices generally declined the last five years. Wheat Wheat seasonality is less pronounced than other agri-commodities due to its relatively global distribution. Still, wheat prices generally rise during the first part of the year before declining in late June as all the major producers - China, Indian, EU, Russia, and US harvest crops during this period. This year, wheat prices started the year off on a bearish note. After bottoming in early-March, prices started to rise sharply peaking in late-May. Mint Finance covered some of the factors behind this rally in a previous paper (Extreme Weather Sends Wheat Prices Surging). Prices have started to normalize in June, a few weeks before the seasonal price decline generally begins. Soybean Soybean prices generally rise during the first part of the year. In late-June, as the Brazil harvest reaches its peak, prices decline sharply. Prices remain subdued until September when the US crop is harvested. This year, prices have sharply lagged their seasonal performance. Despite the rally in early-May driven by flooding in Brazil, prices remain lower than their level at the start of 2024. Moreover, the rally following the flood-driven rally has retraced a few weeks before the seasonal price decline generally takes place. MOMENTUM TRADING IN AGRICULUTAL COMMODITIES Investors can execute momentum trading strategies by leveraging these seasonal trends. In this context, momentum trading strategy refers to a relatively simple trading strategy where investors either buy or sell a futures contract at the start of the month based on the seasonal price performance during that month. For instance, if seasonal trends show that June generally results in a price decline, the strategy would consist of going short on the commodity at the start of June and closing the position at the end of the month. Although, at face value, this strategy may seem overly simplistic, its return and accuracy are surprisingly high. The simulations are based on a position in the front-month futures, consisting of one contract of the agricultural commodity, opened at the beginning of the month and closed at the end. Corn For Corn, running the momentum trading strategy would have yielded average annual returns of USD 8,500 per year over the past five years (2019-2023). Crucially, performance of this strategy in 2024 is sharply lower as it would yield total PnL of just USD 63 this year. Wheat Similarly, for wheat, this strategy returned an average PnL of 4,650 per year during 2019-2023. So far in 2024, this strategy would have yielded USD 6,600 in wheat futures in 2024. Soybean In Soybean futures, momentum trading would have been the most successful over the past five years. This strategy would have yielded an average of USD 13,600 per year between 2019 and 2023. However, in 2024, this strategy would not have been successful as it would have resulted in a loss of USD 8,700 so far. SUMMARY AND 2024 PERFORMANCE It is clear that although this strategy is successful on a long timeframe, it is not necessarily profitable each month. For instance, the Soybean momentum trading strategy would have resulted in a loss in 2024 while Corn momentum trading strategy would have resulted in flat returns. The reason behind this divergence from seasonal trend is clear when comparing the seasonal price performance charts at the start of the paper. Fundamental factors can result in broad-based trends throughout the year which can skew returns. For instance, as Soybean prices have been declining for most of 2024, a long position would have resulted in a loss regardless of seasonal trends. As such, it is crucial to supplement this strategy using fundamental inputs on what the long-term price trend for the crop is. For a crop which is in a down-cycle, a long position would not make sense and vice versa. In the near-term, all three crop’s prices tend to decline during July based on seasonal trends. However, the outlook for corn is most bearish. The latest WASDE report , suggested that USDA expects global corn production in marketing year 2024-2025 to reach 1,220.5 million metric tons compared to a forecast of 1,219.93 million MT last month. The increase in production comes from forecast for higher output from Ukraine and Zambia more than offsetting the decline in Russia. Moreover, USDA forecasts a season average price of USD 4.4 per bushel which is lower than the current futures price of USD 4.57. Asset managers are also shifting their view on corn prices bearish once again as COT report showed asset managers increasing net short positioning last week. Both fundamental and seasonal factors support a price decline in corn over the next month. However, seasonal trends are not exact. Particularly in 2024, seasonal trends have underperformed their usual returns from the last five years. Investors can opt to use options instead of futures to express the same view of weakening prices. Options provide fixed downside risk and require only an upfront premium, avoiding the need to manage margins as futures prices fluctuate. A long put position in CME corn options expiring on August 23 (ZCU24) can be used to gain downside exposure. CME Corn puts are relatively cheaper compared to calls. Moreover, options IV (measured by the CVOL index) is lower compared to the peaks seen during the same time last year. An options position would benefit from both falling prices and rising IV. Source: CVOL A long put options position on corn futures presents fixed downside of USD 464 (USc 9.29 x 5000/100) and unlimited upside. A strike price of USc 430/bushel represents delta of -0.29. This position would break-even at USc 420/bushel. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT:ZC1!Short
by mintdotfinance
Corn,Price actions didnt hold up last week..Hello fellow traders , my regular and new friends! Welcome and thanks for dropping by my post. Turning bearish on this one..wheat could be as well..it seems like trying to push lower with the toppish pattern that you are seeing on h4... Do check out my recorded video (in trading ideas) for the week to have more explanation in place. Do Like and Boost if you have learnt something and enjoyed the content, thank you! -- Get the right tools and an experienced Guide, you WILL navigate your way out of this "Dangerous Jungle"! -- ********************************************************************* Disclaimers: The analysis shared through this channel are purely for educational and entertainment purposes only. They are by no means professional advice for individual/s to enter trades for investment or trading purposes. *********************************************************************
CShort
by Shadowing_The_Big_Boys
Corn and Wheat to look for long...why?Hello fellow traders , my regular and new friends! Welcome and thanks for dropping by my post. Why? will share my thoughts in my trading analysis this week. Technical wise yes,part of it. Do check it out ;) Do check out my recorded video (in trading ideas) for the week to have more explanation in place. Do Like and Boost if you have learnt something and enjoyed the content, thank you! -- Get the right tools and an experienced Guide, you WILL navigate your way out of this "Dangerous Jungle"! -- ********************************************************************* Disclaimers: The analysis shared through this channel are purely for educational and entertainment purposes only. They are by no means professional advice for individual/s to enter trades for investment or trading purposes. *********************************************************************
CLong
by Shadowing_The_Big_Boys
Soybeans with an attractive technical set-up#Soybeans EASYMARKETS:SOYUSD Disclaimer: easyMarkets Account on TradingView allows you to combine easyMarkets industry leading conditions, regulated trading and tight fixed spreads with TradingView's powerful social network for traders, advanced charting and analytics. Access no slippage on limit orders, tight fixed spreads, negative balance protection, no hidden fees or commission, and seamless integration. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. easyMarkets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
EASYMARKETS:SOYUSD
by easyMarkets
SOYBEAN, UPSIDE REVERSAL has started. Plant your seeds now!SOYBEAN has been a long term downtrend for quite sometime. But latest data metrics is already hinting of huge turnaround soon. Massive reversal is already in order. Long term shift has been spotted at the current. Histogram data is already suggesting weighty net positions at the current range conveying the first stage of significant price growth ahead. This elusive signal is very rare as it took 15 months before it resurfaced. Last one was on February 2023. You know it's a big deal when this happens. We are at the early stage of accumulation -- good news for those who like to seed now. Good harvest awaits. A very good one. Spotted at 1200. Interim target at 1500 Long term: 1700 TAYOR. Trade Safely.
FOREXCOM:SOYBEANLong
by JSAL
WheatUSD Oanda Buying Breakout Trend ContinuesRealising my folly from my previous trade, I recognised my faults. Recap - 1st - I traded with the Higher Time Frame and Entry Time Frame Trends, but I am actually entering on a opposing trend against the Lower Time Frame, and that is why the price never move in my intended direction after hours. The opposing trend movement is also a sign that price is tanking, and that the Big Boys might not be into this product anymore. 2nd - Trade Breakout Trends was my thang. But I subconsciously/consciously shifted my setups to Trend Following which is to buy high and sell higher. Low winrate, needs to gather a ton of trades before the results show, stressful way to trade. I recognised my fault and now I shifted myself back to Breakout Trends. I would like to add on also that, I would see this as a price game instead of a time frame game. But I also recognise that 50/60MA on the 15Minutes Time Frame is very powerful, and I called it Duck Hunting and I would be hunting ducks again, on the 15 Minutes Time Frame. Would I trade on the 4H Time Frame or the Hourly? It's a price game so as long as the price is right, and it aligns with my point 1 and 2, I would. 2019SGT 22052024
OANDA:WHEATUSDLong
by ProfessionalDuckHunter
Extreme Weather Sends Wheat Prices SurgingWheat plays a critical role in global agriculture and trade. Extreme weather has turned wheat prices bullish, rising more than 22% in a month after having languished for more than two years. After reaching their lowest level in more than three years in March 2024, prices have rebounded strongly. Wheat rally is driven by extreme weather events in multiple places compounded by supply-demand imbalances. Wheat rally is far from over. The May 2024 WASDE report painted a surprisingly positive outlook for wheat, suggesting an increase in US production. Outlook may be too optimistic, making revisions likely. Prices face risk to the upside once weather impact is comprehensively reassessed. This paper posits a long position in wheat options benefiting not only from price appreciation and from expanding volatility. WASDE PAINTS A POSITIVE WHEAT OUTLOOK Recent WASDE report provides initial forecasts for 2024/25 marketing year (MY24/25) and updates projections for the current MY. These updates are crucial for estimating ending stocks which will be carried over to the next year. Global production is expected to grow 1.3% in the upcoming MY to 798.19MT. Projections are even more optimistic for the US crop. USDA expects US wheat production in MY24/25 to be 3% higher YoY and total supplies to be almost 6% higher YoY. Source: USDA WHEAT CROPS ARE GETTING IMPACTED BY SEVERE WEATHER Russia is the largest wheat exporter commanding 24% of total global exports. Russia has been hit by severe frost and cold. Three of Russia’s key grain producing regions have declared a state of emergency, stating that May frost has caused severe damage to crops, reports Reuters . This year’s crop output will be lower. Frost linked damage follows record hot April which also harmed wheat crops. The USDA has reduced its outlook for Russian wheat production by 3.5MT which might be an underestimate given widespread damage. WASDE report was released merely two days after Russia declared emergency, leaving USDA with little to no time to assess the impact. STOCKS-TO-USE NEAR ALL-TIME-LOW Data Source: PSD Stocks to Use levels at major wheat exporters is currently at a 16-year low at 13.8%. It is expected to drop further to a record low of 12.4% in the upcoming MY24/25. Low stocks-to-use ratio suggests that supplies are tight. Ending stocks are low relative to total consumption. Low stock-to-use ratios make prices extremely sensitive to minor shocks in physical markets. MANAGED MONEY HAVE REVERSED COURSE ON WHEAT BEARISHNESS Sentiment is shifting rapidly. Asset managers have been net short on wheat futures since 2022. This trend has reversed sharply over the last month with asset managers cutting short positioning by 70%. Net short positioning is at its lowest level since October 2022. Last week, asset managers continued to reduce their short positioning (down 35% over the past month) while also increasing their long positioning. Source: CME QuikStrike Bullish sentiment prevails with a put/call ratio of 0.57 in wheat options. Calls dominate both near-term and later contracts. Recent options market trading has been bullish for later expires. Despite strong rally, implied volatility is lower than the levels seen last year and even during late 2022 signalling potential IV expansion. Source: CME CVOL HYPOTHETICAL TRADE SETUP Wheat faces multifaceted upside risks stemming from weather-driven uncertainty and damage which may not have been factored into USDA’s supply outlook. Wheat supply also faces the risk of disruption from record low stocks-to-use ratio. Wheat prices are up 22% over the last one month. A long futures position may be impacted negatively by a near-term correction. Instead, a long call position offers limited downside and substantial upside from expanding volatility and rising prices. TradingView recently launched options suite brings traders a raft of options analytical tools. Wheat options chain can be visualised clearly. Options IV across a range of expiries to identify key strike levels can also be visualised. Strategy simulator enables evaluation of various strategies intuitively by visualizing the payoff based on not only price but also expansion or contraction of IV or time-decay. The above hypothetical trade setup shows the payoff for a simple long call position in OZWU24 contract expiring on 23/August at a strike price of 750. The premium for this option as of 17/May stood at 33 cents/bushel which results in a premium of USD 1,650 for a full options contract consisting of 5,000 bushels. The above position breaks even at USc 783. If IV expands by 2%, the position would break even at USc 778. Assuming constant IV, the: • trade delivers profit of 1,850, if prices rise to 820. • option expires worthless leading to a loss of 1,650 if prices remain below strike. The options simulator features simple and intuitive interface enabling visualization of common options strategies. The tool also enables users to easily create and customize trading strategies. Alternative to a long call, the bull call spread provides a pre-determined maximum profit and loss. The long call benefits from price rise and volatility expansion. While short call offsets long call premium reducing potential losses. However, the profit potential is limited because any appreciation beyond the short call strike is negated by equivalent losses from the short position. Bull Call Spread consists of a long call at a strike of USc 680 and a short call at a higher strike of USc 700. The width of the spread is set at 2 (700-680), a wider range can offer higher upside and reward/risk ratio, but it is only viable when the expected move is large. MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
CBOT:ZW1!Long
by mintdotfinance
Inflation & Agricultural Prices - On the Rise Again Inflation is expected to rise again because the prices of staples such as wheat, rice, corn, and soybean meal have been increasing over the last two months. Additionally, we've seen a 20% increase in soybean meal prices since the low in February. Chicago SRW Wheat Futures & Options Ticker: ZW Minimum fluctuation: 1/4 of one cent (0.0025) per bushel = $12.50 Soybean Meal Futures & Options Ticker: ZM Minimum fluctuation: 0.10 per short ton = $10.00 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT:ZW1!Long
by konhow
7
Not So Little Brother ? NYSE:BROS +3.85%on 05/06/24 is a powerful contender for Starbucks customers. Living in southern California, I've started seeing DutchBros popping up around town (are they any good?). One thing for sure they've gotten right is their amplified focus on delivering the best customer experience. One thing that the NASDAQ:SBUX Starbucks former CEO Howard Schultz asked his former company to refocus on. It's so good that Tiktokers started making videos poking fun at the friendly nature of the Dutchbros employees. With all of that being said, it's working for them and very well. They've opened 159 new shops in 2023, and according to Placer.AI, "While the growth of Starbucks' foot traffic has been shrinking since last year, Dutch Bros' growth in traffic has been accelerating." also, Earnest Analytics reports, Dutch Bros. accounted for 6% of U.S. consumer spending on coffee and other premium drinks. Up from 4% at the end of 2020. Last year's revenue was up about 31% This is my Strategy: Using Bollinger Bands and Fibonacci Retracement, we see increased trade volume and volatility as the price rises above the SMA and towards the upper band. The price is currently $28.34. We can expect it to reach a price target of $31.16 (test strategy here) before retracement or reversal, as the shares may be near overbought status. This will give us a $2.82 profit per share. If sold Enter at price targets: $27.33 (low) and $29.92 (max) Hold for the price to cross $32.90 for uptrend confirmation. (FYI, analyst target maintains $33.00/share) It is one of my favorite stocks, and I'll watch its performance closely this year.
NYSE:BROSLong
by eakosah
Corn Futures:Evaluating Seasonal Trends Amidst Market VolatilityAs April unfolds, investors and traders in the corn futures market find themselves at a critical juncture marked by seasonal trends and heightened volatility. Historically, April has been a period of growth in corn prices, driven by various factors including planting intentions, weather conditions, and demand patterns. However, the current landscape presents a complex picture influenced by a myriad of geopolitical, climatic, and logistical disruptions. While the overall corn production from key sources such as the US, Brazil, Argentina, and Ukraine has remained relatively stable, the market has experienced significant turbulence. Geopolitical conflicts, including trade disputes and tensions in key producing regions, have added layers of uncertainty, impacting supply chains and trade dynamics. Severe weather events, ranging from droughts to floods, have disrupted planting schedules and crop yields, further exacerbating market volatility. Additionally, transport issues, including congestion at ports and logistical bottlenecks, have contributed to fluctuations in day-to-day prices and overall market sentiment. Amidst this backdrop, market participants are actively seeking long setups, anticipating a potential upswing in corn prices. Historical data indicating seasonal strength in April provides a compelling rationale for such positions. Moreover, underlying factors such as resilient demand from sectors including animal feed, ethanol production, and food processing continue to support a bullish outlook for corn. However, navigating the corn futures market requires careful consideration of both macroeconomic factors and micro-level dynamics. Traders must remain vigilant in monitoring weather forecasts, geopolitical developments, and supply chain disruptions for timely decision-making. Additionally, leveraging technical analysis tools and risk management strategies can help mitigate the impact of market volatility and optimize trading opportunities. In conclusion, while April historically heralds a period of price growth in corn futures, the current environment characterized by heightened volatility necessitates a nuanced approach to trading. By combining an understanding of seasonal trends with a comprehensive assessment of market fundamentals and risk factors, traders can position themselves to capitalize on potential opportunities while managing inherent uncertainties.
CBOT:ZC1!Long
by FOREXN1
1
🔥Corn Returm Bullish Trend🔥The corn market is buzzing with positive signals today , promising strong profit potential for investors. Our assessment is spot on as corn prices are exhibiting a robust recovery trend. Across all key timeframes - 4 hours, 1 day, and 1 hour - the upward trend is evident, presenting golden opportunities for investors to seize. Particularly noteworthy is the emergence of a compelling Order Block resistance zone on the 1-hour chart. This resistance zone signifies significant illiquidity at a specific price level, highlighting it as an ideal buying point to ride the upward trend. Based on our in-depth analysis, we strongly believe that this is an opportune moment for investors to initiate long positions in corn. The Order Block resistance zone on the 1-hour chart serves as a key to unlocking near-term profits. BUY LMT ZCEN24: Entry: 444''0 STP: 439''6 TP: 458
CBOT:ZCN2024Long
by MXV_AnfinTrading
1