AM Comments 07/20/16
Wednesday, July 20, 2016, 1:07 PM
Submitted by: Dustin Weiner
After yesterday’s beating in the market thanks in large part to mild(er) weather forecasts for next week – our markets are steady to a few cents higher this morning. Yesterday’s heavy rains that clipped most of Iowa are giving us plenty of moisture as we brace for the high heat starting today. Other than the somewhat surprising heavy rains yesterday, there doesn’t appear to be any major deviations from yesterday’s weather maps. Models still show extreme temperatures this week which are expected to ease back towards normal by next week.
The outside markets today are mixed with the financial markets higher (US equities are rallying to all-time highs) while the $US is higher and crude oil is lower. The $US is at a 4-month high after learning yesterday that June U.S. housing starts were better than expected. Things could get interesting again as some are now speculating that with this recent strong economic data the Fed could once again talk about raising interest rates.
The saying ‘low prices cure low prices’ could start to come into play as there are many in the trade discussing additional Chinese buying interest in US soybeans. We are also hearing that the vessel lineup at our US ports for soybeans is expanding quickly. All of that export demand which ran soybean prices up a few months ago is starting to ship! However, when you cram that much business into a relatively tight window you do run the risk of not performing (and losing some of the business). Assuming the U.S. can execute on all of the exports on the books, the world S&D for beans will likely remain tight which means A) this high volatility isn’t going anywhere and B) will be stuck talking about weather (U.S. growing season and SA planting season) for the foreseeable future…
After yesterday’s sell-off the funds are net short corn (combining both futures and options) which is probably a touch friendly to the market long term. For today we expect to once again follow weather changes, but we are also keeping an eye on the charts as both corn and soybeans are sitting right near their July lows. If we can hold those lows we may get a chance to see a small technical short covering rally. If not, the funds could continue to stand on it and push things lower.
Corn steady to 2 cents higher
Have a great day!
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