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MARKET COMMENTARY

Weekly Market Recap August 3, 2018

Friday, August 3, 2018, 3:08 PM
Submitted by: Landus Cooperative


Good afternoon –

 

Corn up 3 cents

Soybeans up 5 cents

Wheat down 3/4 of a cent

 

Continued strength into the weekly close today with corn finishing up 3 cents and soybeans up 5 cents on this Friday afternoon. In the last 15 trading sessions, corn has closed positively for 13 of them; soybeans have closed in the green for 11 of them. Wheat, being the strongest performer of the three (in % terms), has seen positive closes 8 out of the last 15 sessions. In fact, wheat has been the pack leader for some time now as questions continue to mount over the quality of the Black Sea and Australian crops.

 

Staring us in the face is the perception of a large crop with limited demand, particularly for soybeans. Earlier this week, the Trump Administration announced strengthening ties with European soybean buyers. November beans topped off at 9.22 on Tuesday following that news, but has since settled the week at 9.02. The market needs proof – right now, there’s just a lot of talk. For corn, the outlook for exports is good and spot margins for ethanol, cattle, and hogs are all in the black. If harvest was happening today, I would subscribe to many of the private yield estimates hitting news wires. However, we are a solid 60 days from corn harvest and are staring at a warmer/dryer outlook in August. August can make or break a soybean crop (pod fill) so let’s hope we get enough moisture to finish this year off. There’s still lots of time and weather risk between now and October.

 

From a chart/technical perspective, corn has its work cut out. We are floating in “over bought” territory on the stochastics. There is a 50% retracement level of resistance at $3.90 on Dec and the 72, 100, 150, and 200 day moving averages are all huddled in the $3.92 to $3.95 range (Dec corn closed at $3.8425). If corn makes a run at $4.00, it will undoubtedly hit some staunch hedge pressure. Soybeans are also near “over bought” territory. Nov futures closed above the 38% retracement level on Tuesday, but failed to hold that level.

 

Nearby corn and soybean basis are both under some pressure as the early July basis peak and subsequent futures rally has encouraged both commercial and producer grain to move. In some domestic crush markets, inverted soybean bids are moving toward flat (or even carry) bid structures, indicating adequate coverage at the plant level into September.

 

The Commitment of Traders report this afternoon showed a significant shrink in funds short position, confirming fund short covering. Soybean net positions held steady week-on-week. Next week, we get the Aug USDA WASDE report at 11 AM on Friday.

 

Have a great weekend!

 

 

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