Louis W. Rose IV
CME Dec corn futures lost 8 cents last week to finish at 327; the contract lost 23½ cents in July. Our proprietary model (timely predictions available in our complete weekly report) called for a finish on the week that was to be near unchanged to higher Vs the previous Friday’s settlement, which proved to be incorrect.
The corn market finished lower on the week on worsening US export data, enhanced Wuhan pandemic concerns and increased nervousness regarding US – China relations. Weakness in US currency and Chinese buying may have helped to mitigate weekly losses.
Domestically, the condition of this season’s crop remains strong as timely rains have helped the crop develop ahead of its normal schedule. Mostly benign weather conditions are expected to prevail across most major US producing regions this week.
Net export sales and shipments were notably lower Vs the previous sales period, with sales being net negative, at approximately (1.2M) and 38M bu, respectively. Both sales and shipments were off the weekly pace required to match the USDA’s export projection. The US is 97% committed and 84% shipped Vs the USDA’s target.
Internationally, the safrinha harvest across Brazil has continues to move forward amid dry conditions with most estimates of yield and production moving lower. China has purchased large quantities of SU corn recently, despite enhanced diplomatic tensions with the US.
CFTC Commitments of Traders data for the week ending July 28 (futures only) showed that the trade trimmed its aggregate net short position to approximately 333M bu while large specs increased their aggregate net short position to around 791M bu. Potential for a sharp spike or rally at the hands of spec short covering remains in the market.
For an in-depth analysis of CFCT data see our weekly CFTC analysis and commentary.
For this week, the weekly technical analysis for and money flow into the Dec contract remain bearish. Weather reports, news regarding US – China relations and pandemic concerns will likely be major market-moving factors for corn and soybeans this week.
CME Nov soybeans lost 6¾ cents last week, finishing at 892½; the Nov contract picked up 10¼ cents in July. Our proprietary model called for a finish on the week that was to be near unchanged to higher Vs the previous Friday’s settlement, which proved to be incorrect.
CME soybeans finished modestly lower on a continued mostly favorable outlook for this season’s US production and weakening old crop US export sales. Weakening US currency and strong new crop export business may have lent support to the market.
Domestically, as with corn, the condition of this season’s crop remains strong, with development, on average, proceeding at a faster than normal pace. Also (as with corn) mostly favorable weather conditions are expected across most major US producing regions this week.
Net export sales were lower (and disappointing) Vs the previous assay period while shipments were higher at approximately 9M and 25M bu, respectively. Sales met the average weekly pace required to match the USDA’s export projection while shipments were again well off the pace requirement. The US is 104% committed and 88% shipped Vs the USDA’s target.
Internationally, business and rumors of business from China continue to be reported, which is supportive. However, US - China tensions remain palpable.
CFTC Commitments of Traders data for the week ending July 28 (futures only) showed that the trade trimmed their aggregate net short position to approximately 1.19B bu while large specs reduced their aggregate net long position to around 296M bu.
For this week, the weekly technical analysis for and money flow into the Nov contract are bullish with the market now in an overbought condition.
CME SRW Sept futures lost 8¼ on the week to settle at 531¼. Our proprietary model called for a finish on the week that was to be near unchanged to lower Vs the previous Friday’s settlement, which proved correct. Still, the Sept contract gained almost 40 cents in July.
CME SRW futures were lower on the week, seemingly, in sympathy with beans and (especially) corn. Decent US export data and a significant weakening of US currency also likely mitigated weekly losses.
Domestically, US harvest progress continues to move forward, with the crop most recently estimated at 85% harvested. Recent (and current) strength in wheat futures holds potential to entice increased area committed to winter wheat sowing this fall.
Net all wheat sales were higher Vs the previous sales period while shipments were off slightly at approximately 25M and 19M bu, respectively. Both sales and shipments were ahead of the average weekly pace required to meet the USDA’s export projection. The US is 37% committed and 15% shipped Vs the USDA’s projection.
Internationally, evidence continues to mount regarding lower than originally expected production across the EU this season as harvest operations progress. Concerns remain regarding this season’s Black Sea area production (especially Ukraine); potential export restrictions on this season’s Russian crop are feared.
CFTC Commitments of Traders data for the week ending July 28 (futures only) showed that the trade reduced their aggregate net short position to approximately 360M bu while large specs reduced their net long to near flat, around 4M bu.
For this week, the weekly technical analysis for the Sept contract remains bullish, with money flow turning supportive. It continues to look as if CME wheat is likely to find staunch resistance near 550.
Have a great week!
This Market Report constitutes copyrighted material and may not be reproduced in any manner, either in part or in whole, without prior written consent from Rose Commodity Group. However, redistribution via forwarding of the full link to the report is permitted. Quotations (limit 3) from the report are permitted, so long as they are accompanied by attribution to Rose Commodity Group and a link to the full report.
This publication is presented for informational purposes only. While the information contained herein is believed to be accurate and factual, the possibility of error exists. Commodity trading is an inherently risky proposition and there is no guarantee that trades based on the information enclosed herein will result in profitable outcomes.
This post was written by Louis Rose