MarketEdge AM Comments

Jul 31, 2023

(Phil Knuth)

Good Morning.  Corn and soybean futures were sharply lower overnight.  September corn finished the overnight session off 14 ¼ cents, settling at 5.0675.  November soybeans were off 29 ½ cents, settling at 13.53.  In the outside markets, as of 8:00am:  The US Dollar Index is up 48 points, trading at 101.670.  September crude oil is up 76 cents, trading at $81.34 per barrel.  Precious metals are all higher.  Industrial metals are all higher.  The Electronic Mini-DJIA is up 63 points, trading at 35,655.  All three of the main row-crops traded in Chicago (corn, soybeans, and wheat) were under pressure overnight in reaction to weekend rainfall across the heart of the Corn Belt, a favorable extended forecast for the month of August, and a lack of fresh news regarding the Russia/Ukraine situation.  Let’s start with the two former Soviet republics, Russia and Ukraine.  Since the expiration of the Black Sea Export Agreement and the subsequent air strikes conducted by Russia targeting key Ukrainian export hubs, news from the region has been light.  This lack of activity has pressured futures despite the fact that the war and export situation in the region has not gotten any better.  Traders have reacted to the general lack of fresh news from the Black Sea region with a “no news is good news” attitude and the path of least resistance for futures has been lower as a result.  Now, let’s shift to weather.  Widespread rainfall across the heart of the Corn Belt over the weekend and a shift to cooler temperatures and more consistent precipitation in the extended forecast are weighing on futures this morning.  If the current forecast delivers, the month of August should be next to ideal for crop development.  As a result, traders are inclined to remove weather risk premium from futures.  On Friday, the funds sold 10,000 contracts of corn, sold 8000 contracts of soybeans, and sold 5000 contracts of wheat.  They are now estimated to be net short 945 contracts of corn, net long 101,785 contracts of soybeans, and net short 62,110 contracts of wheat.  From a chart perspective, September corn gapped lower overnight.  Initial resistance is found at the tiny chart gap created last night, 5.1625-5.1675, followed by 5.50.  Initial support lies at 5.05, the overnight low, followed by the psychological 5.00 mark, and then 4.74, the double-low from July 12th and 13th that is also a two-year contract low.  November soybeans also gapped lower overnight.  Initial resistance is found at the chart gap created last night, 13.7550-13.79, followed by the psychological 14.00 mark.  Initial support lies at 13.5050, the overnight low, followed by 13.25, and then 13.1550, the low for the month charted on the 7th.  Opening calls are lower.
Have a great Monday.

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