3 Big Things Today, August 26

Soybean Futures Jump Overnight; Money Managers Turn Bearish on Corn

1. Soybeans, Corn Jump Overnight on Output Estimates, Japan Deal

Soybeans and corn jumped in overnight trading on forecasts for lower U.S. yield and production and on a fresh trade deal with Japan.

The Pro Farmer crop tour that ended on Friday projected soybean yields at 46.1 bushels an acre and production at 3.497 billion bushels. Corn yield was seen at 163.3 bushels an acre with production of 13.358 billion bushels, Pro Farmer said.

Both are well below forecasts made earlier this month by the U.S. Department of Agriculture.

Estimates from the agency on Aug. 12 pegged soybean yield at 48.5 bushels an acre with output at 3.68 billion bushels. Corn yield was forecast by the government at 169.5 bushels an acre with production at 13.901 billion bushels.

The U.S. and Japan tentatively agreed to a trade deal over the weekend. President Donald Trump said the Asian nation would buy large amounts of U.S. corn, but didn’t give specifics. Japan also would buy beef, pork, wheat, ethanol and dairy products.

Japanese Prime Minister Shinzo Abe said there’s work to be done on the agreement. Still, a deal is expected to be signed next month, according to media reports.

Soybean futures for November delivery surged 13 3/4¢ to $8.70 ¼ a bushel overnight on the Chicago Board of Trade. Soymeal gained $2.60 to $298 a short ton while soybean oil added 0.17¢ to 28.87¢ a pound.

Corn futures for December delivery rose 3 1/4¢ to $3.71 a bushel.

Wheat for September delivery added 1/4¢ to $4.78 a bushel, while Kansas City futures added 3/4¢ to $4.05 ½ a bushel.

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2. Speculative Investors Turn Bearish on Corn, Increase Net-Shorts in Soybeans

Money managers turned bearish on corn last week while increasing their net-short positions, or bets on lower prices, in soybeans.

Speculators were net-short by 82,266 corn futures contracts in the week that ended on Aug. 20, according to the Commodity Futures Trading Commission.

That’s a shift from a net-long position, or bets on higher prices, of 21,527 contracts the previous week, and the biggest bearish position since May, the CFTC said in a report.

Large funds and other speculators also were more bearish on soybeans, raising their net-short positions to 76,820 futures contracts last week, up from 67,203 contracts the previous week and the largest bearish position since the seven days that ended on June 11.

Investors likely were more bearish on corn and soybeans amid an ongoing trade war with China, which has escalated quickly. China said last week it would put tariffs on another $75 billion worth of U.S. goods including soybeans and crude oil.

Money managers also increased their net-short positions in hard-red winter wheat to 40,404 futures contracts, up from 36,435 the previous week and the largest such position in almost three months.

Speculators turned bearish on soft-red winter wheat and now hold a net-short position of 4,248 futures contracts, a turn from the previous week’s 4,000 net-long positions. That’s the first time investors have been negative on soft-red winter contracts since June 4, according to the CFTC.

The weekly Commitment of Traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Heat Advisories, Warnings in Effect in Oklahoma, Texas With Indexes Around 113 Degrees

Heat advisories and excessive heat warnings are in effect for much the eastern half of Oklahoma and almost all of Texas this morning, according to the National Weather Service.

In eastern Oklahoma, heat indexes are expected to hit 113 degrees Fahrenheit this afternoon, the NWS said in a report early this morning.

“The combination of hot temperatures and high humidity will create a dangerous situation in which heat illnesses are possible,” the agency said in its report.

In east Texas into southwestern Arkansas, heat indexes are pegged from 105 to 100 degrees.

Further north, scattered thunderstorms are expected in parts of eastern Nebraska and almost all of Iowa this afternoon. Some of the storms will be strong with large hail and gusty wind possible, the NWS said.

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