Daily comment for Friday, July 17

Crude ran higher again today on the Iran situation, and a missile strike on Odessa alongside continued attacks on Black Sea grain vessels added a fresh war premium into wheat and corn. TStorm left its ratings unchanged today, still neutral on corn, soybeans, and winter wheat, a smaller factor in today's move than the war and demand headlines.

The fresh Commitment of Traders report also came out this afternoon, and it showed funds piling on more length across the board, not just short covering.

Key Points/Developments

Technicals: Dec corn is working from above both its 50 and 200 day moving averages now, closing at 467 1/2 today after tagging fresh highs for the week. The 471 level is the next hurdle we are watching, clearing it opens the low 480s, then 490 and the spring high near 500, while support underneath sits at 465, then 457 and 447.

Nov beans did clear the 1197 to 1200 resistance we had been watching, closing at 1203 today for what looks like its best weekly close of this move. The one year high near 1214 is next, then 1250, while support now shifts up to that old 1197 to 1200 zone, then 1185 underneath.

Weather: TStorm left its ratings unchanged again today, corn, soybeans, and winter wheat all still neutral. Their overall read continues to be that a genuinely hotter stretch through the back half of July and into August is what it would take to bring their yield guess down from the 185 area, already a couple bushels above USDA's own number. The noon update flagged an emerging east west divide over the next couple weeks, rain reaching the eastern Corn Belt behind Tuesday's cool front while the Plains and western Corn Belt stay arid, then the ridge building back hot out there after that.

Markets/Trading Implications

Corn working back above its moving averages is the encouraging part, and if it can clear 471 decisively we would treat that as a real technical trigger, not just another poke at resistance. Funds continuing to add length here despite the market's trouble building momentum tells us they are not in a hurry to walk away from this trade.

Beans are the one that actually broke through this week, closing above the 1197 to 1200 zone we had flagged. With China still showing up as a buyer and old crop tightening a bit against new crop in the spread, we would treat this as more than just short term noise.

As good as the week was, however, follow remains key especially with domestic weather seemingly improving.

We did talk through adding some cash sales this week, but ultimately decided to sit tight with both corn and soybeans holding above their 50 and 200 day averages. We would rather let the weekend weather runs and Monday's crop condition update settle some of this first, so still comfortable holding our 40% recommendation on new crop corn and soybeans for now. Every situation is a little different, so give us a call and we can talk through where you stand.

Other Notes

• Weekly changes: Dec corn up 6 1/2, Nov soybeans up 12 1/4, Sep Chicago wheat up 42 1/2, and Dec cotton down 2.91.
• USDA confirmed another 340,000 metric tons of new soybean sales today, with a chunk of that likely China through the unknown destination category. Our sense is China's commitment so far sits around 2.5 to 2.75 million metric tons against their 25 million ton target, still roughly on the pace they would need.
• A note from our cotton team on the week:
  It was ultimately a disappointing week in Dec cotton futures, with Monday’s market seeing support at 8120 and resistance at 8300. Tuesday the market was hovering around 81, while news of China releasing 400 mt of their stock cotton had folks looking for a bullish move. However, there was very little reaction in the markets and after trading sideways/slightly lower, markets fell to around 80 cents Thursday morning. The export report on Thursday caused some selling off, with exports down 48% from last week and 64% from the 4-week average. Mexico cancelled 4700 RB for the upcoming year which will be something to watch. Spreads have narrowed but we are still in a carry of 130 points from Dec to March. Dec closed at 78.63, a loss of 292 pts for the week.

Static Notes

• The Commitment of Traders report released today, covering positions through Tuesday, July 14, showed funds adding to their bullish bets across the board. Corn's net long jumped to 43k contracts, up about 31k on the week, soybeans' net long grew to 73k, up a more modest 4k, and wheat saw the biggest shift, funds trimming their net short from 62k down to 37k, a 25k swing.
  What stands out to us is the price action underneath those numbers, corn and beans were actually lower over the reporting week itself, corn down 4 cents and beans down 7, yet funds were net buyers into that weakness, while wheat was the opposite, already up 26 cents over the same stretch as the short covering accelerated. All three then kept climbing into the back half of the week, corn up 7 more, beans up 12, and wheat another 38, which tells us the buying likely did not stop at Tuesday's cutoff.

Have a great weekend!

Clayton and Taylor

RISK DISCLAIMER:
Trading in futures products entails significant risks of loss which must be understood prior to trading and may not be appropriate for all investors.
Please contact your account representative for more information on these risks. Past performance of actual trades or strategies cited herein is not necessarily indicative of future performance.