MarketEdge AM Comments

Jul 14, 2023

(Phil Knuth)

Good Morning.  Corn and soybean futures were higher overnight.  September corn finished the overnight session up 8 ¾ cents, settling at 5.0225.  August crude oil is up 4 ¾ cents, settling at 14.8950.  In the outside markets, as of 7:40am:  The US Dollar Index is up 120 points, trading at 99.890.  August crude oil is off 19 cents, trading at $76.70 per barrel.  Precious metals are higher, except palladium.  Industrial metals are mixed.  The Electronic Mini-DJIA is up 171 points, trading at 34,761.  Feedgrains were the upside leader overnight.  Wheat futures are supported by the unstable Black Sea Export Agreement, which is set to expire on Monday.  This story is the gift that keeps on giving.  Every time this temporary arrangement is set to expire, it is questionable, at best, if it will be renewed.  This time around, renewal looks unlikely.  Corn futures are most definitely following wheat, however, after a two bearish corn reports from USDA in just the last couple of weeks, it is interesting to see the strength in corn futures yesterday and overnight.  Although there is no clear, definitive “story” to point to in order to explain the behavior of corn futures in the last 36 hours, there are a couple of assumptions we can make.  One has to do with weather, of course.  The extended forecast models for the Corn Belt are now trending drier, which could impact production as we are in the middle of the critical pollination timeframe.  The other assumption has to do with the US Dollar Index.  Though it recovered somewhat overnight, it has been in a freefall for the last few sessions.  A weaker US Dollar is supportive to commodities across the board.  So, weather may, indeed, be playing a role in this corn rally, but macroeconomic influence from the US Dollar is more than likely the key factor at play.  Yesterday, the funds bought 10,000 contracts of corn, bought 12,000 contracts of soybeans, and bought 4000 contracts of wheat.  They are now estimated to be net short 360 contracts of corn, net long 94,190 contracts of soybeans, and net short 52,400 contracts of wheat.  This afternoon’s CFTC Commitment of Traders Report will show actual managed money positions as of Tuesday.  From a chart perspective, September corn pushed through key resistance, at the psychological 5.00 mark, overnight.  Until the September contract closes above the key 5.00 level, it remains as initial resistance, followed by the overnight high, 5.0725.  Initial support lies at the overnight low, 4.91, followed by the double-low from yesterday and Wednesday that is also a two-year contract low, 4.74.  August soybeans face initial resistance at the overnight high, 14.9875, followed closely by the psychological 15.00 mark, and then the four-month high charted last Monday, 15.0475.  Initial support lies at 14.70, the overnight low, followed by the 14.40 area, and then 14.25, the low charted one week ago.  Opening calls are higher.
Have a great Friday and an even better weekend. 

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