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3 Big Things Today, July 18, 2022

Grains, Soybeans Rise Overnight; Investors Cut Net-Longs Across the Board

1. Soybeans, Grains Surge in Overnight Trading

Soybean and grain futures were all higher in overnight trading as extreme heat remains over the central U.S.

Heat indexes from North Dakota all the way into southern Texas will hit triple digits over the next two days, extending a heat wave that's been hanging over the region, according to data from the National Weather Service.

Little or no rain has fallen in parts of North Dakota, Minnesota and Iowa in the past week, the NWS said. The same goes for much of Kansas, Missouri, Oklahoma and Arkansas.

As the rain dries up, excessively hot weather has moved in.

Index values are forecast to reach as high as 112 degrees Fahrenheit in some parts of Oklahoma today, the agency said.

Wheat futures jumped in overnight trading amid strong export sales and ongoing uncertainty about global exports.

Export sales of wheat in the seven days that ended on July 7 jumped to 1.02 million metric tons, up from 286,385 tons a week earlier, according to the U.S. Department of Agriculture.

Excluding the first week of each marketing year when data is often skewed, that's the highest weekly sales total for wheat since February 2019, USDA data show.

Exports and availability of grain from Ukraine is still uncertain, though talks took a positive turn this morning.

Josep Borrell, the chief diplomat for the European Union, said he is hoping for a deal that would allow Ukrainian wheat, corn and other agricultural products to ship from the beleaguered country, which has been under attack by Russia forces since February, according to several media reports.

Exports from Ukraine are necessary to curb a widening global hunger crisis. The deal would reportedly allow ships loaded with Ukrainian agricultural products through blockades.

Soybean futures for November delivery surged 25 3/4¢ to $13.68 a bushel overnight on the Chicago Board of Trade. Soymeal added $3.30 to $394.90 a short ton, while soybean oil futures gained 1.31¢ to 59.54¢ a pound.

Corn futures for December delivery were up 6 1/2¢ to $6.10 a bushel.

Wheat for September delivery jumped 12 1/4¢ to $7.89 a bushel while Kansas City futures gained 5 1/4¢ to $8.42 ¾ a bushel.

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2. Investors Cut Net-Long Positions in Grains and Beans

Money managers cut their net-long positions, or bets on higher prices, in corn and beans last week, according to data from the Commodity Futures Trading Commission.

Investors on July 12 held a net-128,524 corn-futures contracts, the CFTC said in a report.

That's down from 157,976 contracts a week earlier and the smallest bullish position since Oct. 13, 2020.

Speculators also cut their net-longs in soybeans last week to 90,735 contracts from 101,697 contracts a week earlier, the agency said. That's the smallest such position since the week that ended on Dec. 21.

In wheat, hedge funds and other large investors held a net-16,324 hard-red winter contracts as of July 12, down from 21,988 contracts a week earlier and the smallest bullish position since June 22, 2021, the CFTC said.

Investors held a net-short position, or bets on lower prices, in soft-red winter wheat, up from 1,978 contracts a week earlier. That's the most bearish position since Feb. 22, the government 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.

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3. Extreme Heat Expected as Heat Indexes in Midwest Hit Triple Digits

It's going to be another scorcher in much of the central U.S. today as excessive heat warnings and heat advisories have been issued essentially from the Canadian border from Montana east through Wisconsin, south deep into southern Texas, according to the National Weather Service.

Much of the hot weather is expected to stick around the next few days.

In much of South Dakota, excessive heat warnings will be in effect this afternoon as heat indexes jump to 111 degrees Fahrenheit, the NWS said in a report early this morning.

Further south, the heat will creep in tomorrow.

In Kansas, indexes will jump as high as 107 degrees, the NWS said.

Almost all of Oklahoma will be under an excessive heat warning as values will range from 108 degrees to 112 degrees Tuesday afternoon.

"Very hot temperatures and high humidity will combine to create a dangerous situation in which heat illnesses are possible," the agency said.

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