Commodities Markets Report. Week 8 2023
Max Schulz
February 20, 2023
5 minutes read
Note that due to President’s Day in the USA markets will be closed on Feb 20th and regular trade will commence on 21st of February.
Global weather review
- La Nina is not weakening this spring according to recent forecast it may last to autumn 2023. La Nina implies hot and dry summer for Argentina, USA and wet for Brazil.
- There is a huge risk of drought that may hurt soybeans in Argentina and USA in spring and summer, whereas too wet weather in Brazil may prevent proper crop development.
- Similar climatic situation occurred in 1934 and 2012 both were accompanied by La Nina and were followed by drought in Argentina and USA, and too wet Brazil. We see high level of correlation compared to 2023 based on globall sea surface temperatures.
- A hot-dry weather in Argentina/USA, could keep soybean, soybean meal, wheat and corn prices in an uptrend.
- Too wet weather in Brazil poses threat to soybean, soybean meal, wheat and corn crops and thus is bullish.
- If we compare 2012 and 2023 prices of soybean and soybean meal, wheat and corn prices it has high level of resemblance which we will show on next slides.
- For soybean and soybean meal level of resemblance is particularly high.
- Wheat and corn market given current weather setting are undervalued.
Wheat 2012 vs 2023
Soybean 2012 vs 2023
Soybean Meal 2012 vs 2023
Corn 2012 vs 2023
Dollar Index
We expect that DX reached its bottom. This is proved by DX surpassing high of last week and holding on to weekly high. Expecting further DX appreciation.
Commodities Index
Special Market Situation
SMS - refers to a set of market indicators (COT data) that indicates major market turnarounds. For example, if market is oversold it is likely moving average will go up, if market is overbought downward movement is expected.
Special situation trade setups are selected based on 10+ years of trading experience, but there are no guarantees that any trade will prove profitable or will not produce a loss. A trade may require more than one entry attempt. You alone are responsible for your trading decisions. It is up to you to control the risk by using stop losses.
This special situation does not claim immediate practical application. Actionable buy and sell signals are published on our website charts every week.
You can get more information here.
Wheat
Commercial insiders hold their largest net long position in 2.5 years. Funds are holding their largest net short total in 3.6 years, tagging wheat as speculatively oversold.
Looking forward to leveling up 794^4.
Natural Gas
Commercial insiders hold their largest net long position in 2.8 years and funds hold their largest net short total in the same period, categorizing natural gas as speculatively oversold
Euro FX
Commercial insiders hold their largest net short (most bearish) position in 2.0 years.
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