Tuesday was a mostly negative day for our markets. Spot corn closed down 2, spot soybeans closed down 5 1/2, spot winter wheat closed up 1 1/4 and spot spring wheat closed down 4. In the overnight trade corn and soybeans are now positive with the wheat sector negative. Oil closed down $1.32 yesterday at $77.50 per barrel. It is stronger in trading this morning with it now valued at $77.72 per barrel. Our dollar had a low yesterday morning of $0.694 US and then trended higher going up to $0.698 US in the overnight trade. It has eased back just a bit this morning with it currently valued at $0.697 US.
The markets pulled back yesterday after a couple of strong positive trading days. As the analysts like to say the markets were a little over bought as they probably rose too far too fast.
Managed money has moved their corn position form a large short position (looking for prices to do down) last July to a large long position (looking for prices to go up) currently. The swing was from roughly 300,000 contracts on the short side to 300,000 contracts on the long side. The swing in their investments has corresponded with about a $1 increase on the CBOT in the corn market over the same time period. History has shown us that when speculative funds build such a large position sometime in the future they will liquidate it and the market will turn back the other way. What that time frame turns out to be is always open for discussion.
Some similar things are occurring in the soybean market. Managed money held a short position in this market until just the last week. They have now liquidated all the short position as soybean prices have rallied and now hold a small long position in the market. They are betting that lower production will come from Argentina based on the current weather stresses.
Looking at Argentina they are experiencing some extreme heat this week. However, rain events are forecasted to occur over much of the agricultural areas later this week. These events are not enough to end the current dry spell but should help their growing crops immensely. This forecast really is a big negative for both corn and soybean futures at this time.
If you would like to talk about the markets or price some of your crop for the future or in store, please reach out to us via phone or email to info@northgowergrains.com. Prices quoted herein are for product at our elevator.
Delores Seiter | 613-880-7458
Bob Orr | 613-720-1271
Office | 613-489-0956
