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3 Big Things Today, August 31, 2020

Soybeans, Grains Surge Overnight; Speculators Cut Bearish Bets on Corn.

1. Soybean and Grain Futures Surge Overnight on Lack of Rain

Soybean and grain futures surged in overnight trading on concerns about the lack of rain in much of the Corn Belt.

Little to no rain has fallen in much of Nebraska, Iowa, northern Missouri, and pretty much all of Illinois in the past two weeks, according to the National Weather Service’s precipitation page.

In Iowa, about 61% is suffering from some sort of drought condition, according to the U.S. Drought Monitor.

Some 6.5% of the state is seeing an “extreme drought,” which indicates imminent crop losses, dry pastures, and increased infestations of pests and crop diseases, the monitor said.

About 69% of the U.S. soybean crop was in good or excellent condition at the start of last week, down from 72% seven days earlier, according to the Department of Agriculture. It reported that 4% percent of the crop was dropping leaves while 92% was setting pods, the USDA said.

About 64% of U.S. corn, meanwhile, earned top ratings last week, down from 69% just seven days earlier, the agency said, and 5% of the crop was mature; 44% was dented.

The USDA will update its crop progress report this afternoon.

Soybean futures for November delivery jumped 14¼¢ to $9.64¾ a bushel overnight on the Chicago Board of Trade. Soymeal gained $3.90 to $313.60 a short ton, and soy oil added 0.54¢ to 33.78¢ a pound.

Corn futures for December delivery were up 4¾¢ to $3.64 a bushel.

Wheat futures for September delivery added 9¼¢ to $5.58 a bushel, while Kansas City futures gained 7¾¢ to $4.80 a bushel.

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2. Speculative Investors Cut Bearish Bets in Corn Futures

Money managers cut their net-short positions, or bets on lower prices, in corn futures last week, according to the Commodity Futures Trading Commission.

Speculators held a net-short of 71,166 corn futures contracts in the seven days that ended on August 25, down from 128,111 contracts a week earlier, the CFTC said in a report.

That’s the smallest such position since the week that ended on March 10.

Investors are less confident in the size of the U.S. corn crop as dry weather expands throughout the Midwest. Warm weather and a lack of precipitation has investors on edge.

Positions in soybeans were little changed as hedge funds and other large money managers reduced their net-long positions, or bets on higher prices, to 104,276 futures contracts last week.

That’s down from 106,394 contracts a week earlier, CFTC data show.

In wheat, investors shifted to a net-long position of 1,331 soft-red winter futures from a net-short position of 15,149 contracts a week earlier.

That’s the largest such position since the seven days that ended on May 12, the government said.

Speculators also reduced their net-short position in soft-red winter wheat, holding a bearish position of 21,091 futures contracts last week. That’s down from 27,754 contracts a week earlier and the smallest such position since July 21, the CFTC said.

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.


3. Rain Forecast For Iowa While Extremely Dry Weather Expected in North Dakota

Some much-needed rain is expected in parts of Iowa today, though severe weather isn’t expected, according to the National Weather Service.

“Showers and thunderstorms will move across the (state) this morning and into the afternoon,” the NWS said in a report early this morning.

Storms may be possible in parts of Iowa, where rain is severely needed, on Tuesday as well, the agency said in its report.

In the northern Plains, meanwhile, extremely low humidity and strong winds are creating tinderbox-like conditions in parts of North Dakota.

Relative humidity will be as low as 20% while sustained winds are seen from 25 to 30 mph with gusts of up to 45 mph, the NWS said.

“Any fires that ignite could spread rapidly and become difficult to control or suppress,” the agency said.

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