By: Dan Hueber –
At 4:44 AM central time this morning, we officially marked the winter solstice often referred to as the Yuletide or Midwinter. It is that point we in the Northern hemisphere mark the time when the axis of the earth in relation to the sun is at its most extreme producing the least amount of daylight hours and of course in turn the greatest amount number of hours of darkness for any day within the year. This would almost seem an appropriate metaphor for the point at which we find ourselves in for much of the ag sector right now. Things are looking as dark and as bleaks as a frozen midwinter terrain but we also sit on the dawn of a gradual and new beginning that will ultimately bring us back to life (prosperity). Too poetic? Sorry, that seems to happen to me this time of year.
Maybe it is due to the fact that we regard this as the “shortest” day of the year but it would seem we are quite short on market news this morning as well. The USDA did announce additional bean sales this morning with 132k MT sold to China for the current crop year but other noteworthy information is sparse. Yet this week we will have the weekly export sales totals, and then the quarterly hog and pigs report and cattle on feed to finish out the week but I suspect only the die-hard will be left around to read them at that point. As a reminder, markets will close early this coming Friday and will remain closed until Tuesday next week.
There is one market that has continued to advance this month, which is the U.S. Dollar, and of course is not necessarily good news for commodities. Do note that we have pressed into higher highs again this week as the trade continues to digest the Trump election and the prospect for higher interest rates in the coming year and have now pushed weekly indicators into the overbought zone and to the highest point since the peak in the first quarter of 2015. By no means does that suggest that a peak is imminent but it would suggest that it is time to sit-up and pay attention. While this of course is not very specific, it would appear to me that this market is setting up to post a very major peak during the 1st quarter of 2017 and if I am correct, could be one of the best shorting opportunities in the next year. If I am correct, then yes, that would be a good thing for the commodity outlook in the year ahead. That would be a Yuletide worth celebrating.