MarketEdge AM Comments

Sep 01, 2023

(Phil Knuth)

Good Morning.  Corn and soybean futures were higher overnight.  December corn finished the overnight session up 6 cents, settling at 4.8425.  November soybeans were up 13 ¾ cents, settling at 13.8250.  In the outside markets, as of 7:45am:  The US Dollar Index is off 320 points, trading at 103.302.  October crude oil is up 73 cents, trading at $84.36 per barrel.  Precious metals are all higher.  Industrial metals are mixed.  The Electronic Mini-DJIA is up 133 points, trading at 34,924.  A hot and dry forecast for the US Midwest for the first half of September and a weaker US Dollar Index supported futures overnight.  Although it is questionable what (if any) impact a hot and dry first part of the month of September will have on corn yield potential, it is certainly valid to add some weather risk premium to soybean futures given this forecast.  While the lion’s share of the corn crop is at/near the end of its critical kernel development stage, most of the soybean crop is still busy filling pods.  A couple more meaningful rains and some cooler temperatures would really help to finish out this year’s soybean crop.  Unfortunately, the current forecast does not allow for much in the way of precipitation or relief from heat.  Of course, nobody can tell for certain what impact the weather will have on crop production potential until combines roll, however, with as tight as the domestic soybean balance sheet already is, traders must take even the hint of the possibility of lower than currently forecasted soybean yields seriously.  In observance of Labor Day, the Chicago Board of Trade will be closed on Monday.  Trading will resume with the regular Monday night electronic trading session at 7pm.  Yesterday, the funds sold 1000 contracts of corn, sold 12,000 contracts of soybeans, and sold 2000 contracts of wheat.  They are now estimated to be net short 121,610 contracts of corn, net long 59,280 contracts of soybeans, and net short 91,010 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 faces initial resistance at 4.8450, the overnight high, followed by this week’s high charted on Tuesday, 4.9950, and of course the psychological 5.00 mark.  Initial support lies at yesterday’s low, 4.7675, followed by the two-year contract low charted on August 16th, 4.7350.  November soybeans face initial resistance at the overnight high, 13.84, followed by the psychological 14.00 level, and then the one-month high charted on Monday, 14.0950.  Initial support lies at 13.6650, the overnight low, followed by 13.50, and then 13.3250, the two-week low charted last Wednesday.  Opening calls are higher.
Have a great Friday and a fun, safe Labor Day Weekend!

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