MarketEdge AM Comments

May 17, 2023

(Phil Knuth)

Good Morning.  Corn and soybean futures were sharply lower overnight.  July corn finished the overnight session off 13 ½ cents, settling at 5.6775.  July soybeans were off 11 ¾ cents, settling at 13.5225.  In the outside markets, as of 7:35am:  The US Dollar Index is up 343 points, trading at 102.907.  June crude oil is unchanged, trading at $70.86 per barrel.  Precious metals are lower, except platinum.  Industrial metals are mixed.  The Electronic Mini-DJIA is up 139 points, trading at 33,199.  Corn and soybean futures followed through from yesterday’s disastrous close overnight.  Both corn and soybean futures are now currently trading at multi-month lows.  Once the ball starting rolling down the hill yesterday, it really picked up steam when managed money piled on, actively liquidating long soybean positions and adding onto what was already a large net short corn position.  Aside from weather/late planting/prevent plant concerns in North Dakota, unfortunately there is little/no fundamental news out there that could inspire a rally, at this point.  The crop went into the ground fast with nearly ideal conditions and the weather forecast for the foreseeable future is favorable.  So, the Chicago mindset is that we are already shaping up for a large 2023 crop.  Couple the expectation of a large crop with already struggling demand and there you have the recipe for disaster that caused the behavior of the markets yesterday and overnight.  Yesterday, the funds sold 8000 contracts of corn, sold 15,000 contracts of soybeans, and sold 3000 contracts of wheat.  They are now estimated to be net short 116,505 contracts of corn, net long 25,765 contracts of soybeans, and net short 115,650 contracts of wheat.  From a chart perspective, July corn blasted down through the key May 3rd low overnight, charting a new 16-month low at 5.6475.  That level now stands as initial support, followed by the 5.50 area.  Initial resistance is at 5.8275, the overnight high, followed by this week’s high charted on Monday, 5.9875, and then the psychological 6.00 mark, which was also last Monday’s high.  July soybeans filled in the July 26th chart gap overnight, charting a new 9 ½ month low at 13.4825.  That level now stands as initial support, followed by the psychological 13.00 level.  Initial resistance is at 13.6575, the overnight high, followed by 14.00.  Opening calls are lower.
Have a great Wednesday.

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