From the Desk of Ian Culley @IanCulley
The most important crop report of the year has hit.
Yes, it’s generated quite the buzz over the past few weeks, as grain markets ripped higher in anticipation.
Some observers even speculated that Friday’s report was the most important in the history of the agrarian economy.
So let’s round down, be conservative, and call it the most important crop report in 5,000 years.
Seriously, though, it was a big deal, as acreage estimates for soybeans represent the largest miss since the report's inception – or, like, ever, in history.
More importantly for traders and investors, the report brought increased volatility.
If you’re like me and prefer to sit out these kinds of days, you’re patiently waiting for the dust to settle.
Meanwhile, if you’re at all put off by the volatility of these futures contracts, I have a vehicle that promises a much smoother ride…
Let’s talk about Archer Daniels Midland $ADM, “supermarket to the world.”
The $41B commodity behemoth has more than 100 years of experience in the grain markets.
And, as JC pointed out on Friday’s episode of The Morning Show, the ADM chart tends to follow corn futures.
Regardless, I like the setup right now:
ADM has been on our radar since it completed a monster base in February 2021, doubling in little over a year.
Fast-forward to today, and it’s retesting a key extension level and its summer 2022 lows.
Those former lows mark an excellent area to define risk.
I like owning ADM as long as it trades above 70, targeting 93.
To be clear, I want nothing to do with this stock if it slips below my risk level.
It’s this simple: Grain markets are heating up, and ADM is a banner way to express a bullish thesis.
Stay tuned for a deep dive into the grain contracts next week.
Until then, enjoy a safe and happy Fourth of July!
COT Heatmap Highlights
- Commercial hedgers hold a new record-long position in Palladium.
- Commercials carry their largest net-long position in three years for Brent and WTI Crude Oil.
- And commercials are within six percent of a three-year extreme net-long position for the Japanese yen.
Click here to download the All Star Charts COT Heatmap.
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