Lower output expectations bullish for oats price

Dmitry Lukashov IFC Markets

USDA forecasts lower US oats production. Will the oats prices continue rising?

The US Department of Agriculture National Agricultural Statistics Service ( NASS ) Small Grains Summary projected 2019/20 oat production at 54.2 million bushels, 6.2 million below last month’s for comparable States. The decline was due both lower yield and planting projections. Average yield is estimated at 64.4 bushels per acre, down 2.0 bushels from last month’s forecast. And harvested area is projected 67,000 acres lower at 842,000 acres. Lower production is bullish for oats price.

On the daily timeframe the OATS: D1 is above the 200-day moving average MA(200) which is rising .

The Parabolic indicator gives a sell signal.
The Donchian channel indicates uptrend: it is narrowing up.
The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
The RSI oscillator is rising but has not reached the overbought zone.

We believe the bullish momentum will continue. A pending order to buy can be placed above the level 296.4. The stop loss can be placed below the lower Donchian boundary at 285.1. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (285.1) without reaching the order (296.4), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

Order	Buy
Buy stop	Above 296.4
Stop loss	Below 285.1

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Author

Dmitry Lukashov

IFC Markets

Dimtry Lukashov is the senior analyst of IFC Markets. He started his professional career in the financial market as a trader interested in stocks and obligations.

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