MarketEdge AM Comments
Sep 22, 2023
(Phil Knuth)
Good Morning. Corn and soybean futures finished the overnight session mixed. December corn was off a half of a penny, settling at 4.7475. November soybeans were up 6 ½ cents, settling at 13.0025. In the outside markets, as of 7:40am: The US Dollar Index is up 90 points, trading at 105.448. November crude oil was up $1.06, trading at $90.69 per barrel. Precious metals are all higher. Industrial metals are lower, except copper. The Electronic Mini-DJIA is up 65 points, trading at 34,402. Trading volume was light to moderate overnight, with soybeans, once again, the volume leader. Soybean futures attempted a feeble recovery after yesterday’s technical meltdown, however, there is no help out there from the demand standpoint to justify a meaningful rally and the destruction done to the charts yesterday will be hard to overcome. Although the final national average soybean yield figure remains a giant question mark and this uncertainty is supportive, traders are more focused on the dismal demand picture. Plentiful Brazilian supplies still available to the world market at a discount to the US and Mississippi River logistical issues are really hurting the US soybean export program. This was evident in yesterday morning’s Export Sales Report. Weekly soybean sales bookings failed to meet even the very lowest of trade estimates. Current export sales are running well behind the pace projected by USDA. One may argue that we are only two weeks into the current marketing year so the pace of exports really shouldn’t matter, however, a valid challenge to this opinion is, how much better is it really going to get going forward in order to catch up to USDA’s forecast? The Chinese are actively buying Brazilian cargoes in the Sep/Oct/Nov timeframe. That is typically the window of opportunity for the US as Brazilian supplies are usually drawn down by now. This year is different due to the large crop that Brazil raised this year. That leaves the US with a tiny December/January export window before new crop South American supplies are available. Essentially, the “sweet spot” for US soybean exports has shrunk from five months to maybe only two, even perhaps less. Yesterday, the funds sold 6000 contracts of corn, sold 12,000 contracts of soybeans, and sold 7000 contracts of wheat. They are now estimated to be net short 144,160 contracts of corn, net long 43,475 contracts of soybeans, and net short 94,230 contracts of wheat. This afternoon’s CFTC Commitment of Traders Report will show actual managed money positions as of Tuesday. From a chart perspective, December corn finds initial support at yesterday’s low, 4.74, followed by the two-year contract low charted on Tuesday, 4.6775. Initial resistance is at 4.83, the high for the week charted on Wednesday, followed by 4.8675, the double high from last Monday and Tuesday, and then 4.9025, the three-week high charted on September 6th. November soybeans charted fresh six-week lows both yesterday and overnight. The overnight low, 12.9250, stands as initial support, followed by 12.8225, the nearly three-month low charted on August 8th, and then 12.5675, the three-month low charted on June 28th. Initial resistance is at the psychological 13.00 mark, followed by 13.2275, Wednesday’s high, and then 13.50. Opening calls are steady/mixed.
Have a great Friday and an even better weekend.
Good Morning. Corn and soybean futures finished the overnight session mixed. December corn was off a half of a penny, settling at 4.7475. November soybeans were up 6 ½ cents, settling at 13.0025. In the outside markets, as of 7:40am: The US Dollar Index is up 90 points, trading at 105.448. November crude oil was up $1.06, trading at $90.69 per barrel. Precious metals are all higher. Industrial metals are lower, except copper. The Electronic Mini-DJIA is up 65 points, trading at 34,402. Trading volume was light to moderate overnight, with soybeans, once again, the volume leader. Soybean futures attempted a feeble recovery after yesterday’s technical meltdown, however, there is no help out there from the demand standpoint to justify a meaningful rally and the destruction done to the charts yesterday will be hard to overcome. Although the final national average soybean yield figure remains a giant question mark and this uncertainty is supportive, traders are more focused on the dismal demand picture. Plentiful Brazilian supplies still available to the world market at a discount to the US and Mississippi River logistical issues are really hurting the US soybean export program. This was evident in yesterday morning’s Export Sales Report. Weekly soybean sales bookings failed to meet even the very lowest of trade estimates. Current export sales are running well behind the pace projected by USDA. One may argue that we are only two weeks into the current marketing year so the pace of exports really shouldn’t matter, however, a valid challenge to this opinion is, how much better is it really going to get going forward in order to catch up to USDA’s forecast? The Chinese are actively buying Brazilian cargoes in the Sep/Oct/Nov timeframe. That is typically the window of opportunity for the US as Brazilian supplies are usually drawn down by now. This year is different due to the large crop that Brazil raised this year. That leaves the US with a tiny December/January export window before new crop South American supplies are available. Essentially, the “sweet spot” for US soybean exports has shrunk from five months to maybe only two, even perhaps less. Yesterday, the funds sold 6000 contracts of corn, sold 12,000 contracts of soybeans, and sold 7000 contracts of wheat. They are now estimated to be net short 144,160 contracts of corn, net long 43,475 contracts of soybeans, and net short 94,230 contracts of wheat. This afternoon’s CFTC Commitment of Traders Report will show actual managed money positions as of Tuesday. From a chart perspective, December corn finds initial support at yesterday’s low, 4.74, followed by the two-year contract low charted on Tuesday, 4.6775. Initial resistance is at 4.83, the high for the week charted on Wednesday, followed by 4.8675, the double high from last Monday and Tuesday, and then 4.9025, the three-week high charted on September 6th. November soybeans charted fresh six-week lows both yesterday and overnight. The overnight low, 12.9250, stands as initial support, followed by 12.8225, the nearly three-month low charted on August 8th, and then 12.5675, the three-month low charted on June 28th. Initial resistance is at the psychological 13.00 mark, followed by 13.2275, Wednesday’s high, and then 13.50. Opening calls are steady/mixed.
Have a great Friday and an even better weekend.