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3 Big Things Today, July 23

Grains, Beans Little Changed Overnight; Money Managers Most Bearish in Six Months.

1. Grains, Beans Little Changed Overnight on China Vs. Demand Last Week

Grains and soybeans were little changed overnight as investors weigh continued worries about the escalating trade war with China against strong export sales last week.

The U.S. kicked off the trade spat with the Asian nation by imposing tariffs on $34 billion worth of Chinese goods earlier this month. China retaliated with duties on an equal amount of U.S. goods.

President Trump asked the U.S. Trade Representative to find another $200 billion worth of Chinese goods that could be taxed earlier this month. Last week, he said on CNBC that he’s prepared to put tariffs on more than $500 billion worth of Chinese goods, which encompasses almost everything imported from the Asian country.

China, meanwhile, has been actively devaluing its currency in a bid to draw buyers of its goods. A weaker currency makes a country’s wares more attractive.

Export sales of corn, soybeans, and wheat last week all rose, according to the USDA. Corn demand has been especially strong lately, and despite China’s absence from the list of buyers, soybean demand held up last week.

A heat wave in much of the southern Midwest also may be underpinning prices.

Corn futures for December delivery rose 1¼¢ to $3.70¼ a bushel overnight on the Chicago Board of Trade.

Soybean futures for November delivery added ¼¢ to $8.65 a bushel overnight. Soy meal was unchanged at $324.60 a short ton, and soy oil fell  0.01¢ to 28.53¢ a pound.

Wheat for September delivery rose 1¼¢ to $5.17¼ a bushel, while Kansas City futures gained 2¾¢ to $5.11¼ a bushel.

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2. Money Managers Push Bearish Bets on Corn, Soybeans to Six-Month High

Bets on lower corn and soybean prices both rose to the highest level in almost six months, according to the Commodity Futures Trading Commission.

Money managers pushed their net-short positions, or bets on lower prices, in corn to 165,965 futures contracts in the week that ended on July 17, up from 14,0944 contracts a week earlier, the CFTC said in a report.

That’s the biggest such position since the week that ended on January 20.

Investors were net short by 72,009 soybean contracts as of last week, up from 189,536 seven days earlier and also the biggest bearish position since the seven days that ended on January 20, according to the government.

Investors have become more bearish on corn and soybeans in recent weeks amid the escalating trade dispute with China that’s hurting overseas demand, and extremely high crop ratings for this time of year.

Speculators, however, are still bullish on wheat.

Money managers held a net-long position, or bets on higher prices, of 566 contracts last week, the CFTC said. That’s a shift from a net-short position of 1,266 contracts the prior week.

Investors held a net-long position of 16,274 contracts in hard red winter wheat, and while that’s down from 18,405 contracts seven days earlier, it’s still fairly bullish relative to positions held in major crops.  

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3. Heat Wave in Southern Midwest Subsides, Makes Way For 90s, Possibly Rain This Week

The heat wave that was hovered over the southern Midwest is now limited to mostly central and southern Texas with rainfall and cooler temperatures expected in parts of Oklahoma and Arkansas that baked over the weekend.

Heat indexes in parts of the states were forecast to reach as high as 115˚F. over the weekend. The hot weather, however, will make way for cooler temperatures in the 90s today and potentially some rain and thunderstorms later this week.

“Rain and thunderstorm chances will begin to increase across parts of the area beginning Thursday in conjunction with an approaching cold front,” the National Weather Service said in a report early Monday morning. “An upper level trough axis will move into the Plains towards the weekend, which will increase rain chances, especially across northeast Oklahoma and northwest Arkansas this weekend.”

Farther north, storms are expected in parts of Iowa today, though they’re not expected to be severe, the NWS said. The storms will bring rain fall from about Interstate 80 all the way to the state’s border with Minnesota.

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