MarketEdge AM Comments

Nov 20, 2023

(Phil Knuth)

Good Morning.  Corn futures were steady/mostly unchanged while soybean futures were higher overnight.  December corn finished the overnight session up a half of a penny, settling at 4.6750.  January soybeans were up 11 ½ cents, settling at 13.5175.  In the outside markets, as of 7:30am:  The US Dollar Index is off 330 points, trading at 103.585.  December crude oil is up $1.53, trading at $77.42 per barrel.  Precious metals are lower, except palladium.  Industrial metals are lower, except copper.  The Electronic Mini-DJIA is off 16 points, trading at 34,996.  After a lower open overnight, soybean futures rebounded off of new two-week lows, supported by a weaker US Dollar, sharply higher crude oil futures, and weak feedgrains.  Soybean futures were certainly due for a recovery following ugly chart performances Wednesday, Thursday, and Friday, and the outside markets set the perfect stage for just that overnight.  Meanwhile, the Brazilian weather forecast is not a friendly futures story.  The dry growing regions of Central and Northern Brazil that are of the most concern are on tap to receive widespread rainfall of 1.00-2.50” this week.  Brazilian soybean planting progress is reported to be 68% complete.  This figure is a seven point advancement week-over-week but is still lagging 12 points behind last year’s pace.  The results of the Argentine presidential election announced yesterday may not impact grain and oilseed futures straightaway, but should certainly be watched closely.  The Argentine populus overwhelmingly voted to ditch the status quo and elect Libertarian Javier Milei as the next president.  He beat the “establishment” Peronist candidate, Sergio Massa, 56% to 44%.  Milei has promised to make sweeping changes to the Argentine economy that will no doubt have an impact on trade going forward.  He has pledged to close the Central Bank, move away from the Argentine peso in favor of the US Dollar, and drastically cut government spending across the board.  How quickly and effectively these changes can be carried out remains a huge question mark.  Milei does not have the backing of Congress, which is still made up primarily of Peronists and conservative parties that have dominated Argentine politics for seventy years.  Whether or not Milei’s policies will be successful or effective is certainly yet to be seen, however, this outright rejection of “politics as usual” in the country that boasts South America’s second largest economy and has many deep-rooted problems to solve is headline-worthy this morning.  On Friday, the funds sold 5000 contracts of corn, sold 8000 contracts of soybeans, and sold 2000 contracts of wheat.  They are now estimated to be net short 180,640 contracts of corn, net long 77,240 contracts of soybeans, and net short 109,450 contracts of wheat.  From a chart perspective, December corn finds initial support at the low charted overnight, 4.6450, followed by the multi-year contract low charted one week ago, 4.61.  Initial resistance is at 4.70, followed by a cluster of resistance from 4.80 to 4.8125, which includes the highs from November 3rd, 6th, 8th, 14th, and 15th.  January soybeans find initial support at the new two-week low charted overnight, 13.27, followed by the psychological 13.00 mark.  Initial resistance is at 13.5550, the overnight high, followed by the 2 ½ month high charted on Wednesday, 13.9850.  Opening calls are mixed.
Have a great Monday.

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