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3 Big Things Today, June 1, 2020

Wheat Futures Lower Overnight; Speculators Bump Bearish Corn Bets to One-Year High.

1. Wheat Futures Lower Overnight on Global Weather

Wheat futures were lower in overnight trading on forecasts for mostly favorable conditions in global production areas.

In the U.S. Northern Plains where spring wheat is being planted, some rainfall is expected this week, according to the National Weather Service, which may help recently planted crops. Some severe weather is expected in the region.

Precipitation also is expected in Ukraine and Russia, which will help wheat growth in the countries, Commodity Weather Group said in a report. Southern Argentina also will see rain.

Still, wheat output in Ukraine is expected to be lower than previously forecast due to dry weather in the country. Production is pegged at 23.3 million metric tons, down from the previous outlook for 26 million tons, Reuters reported last week, citing the state-run weather forecaster.

Investors also are keeping an eye on U.S.-China trade relations after President Donald Trump on Friday made moves to eliminate protections for Hong Kong since it’s no longer autonomous. The president, however, stopped short of altering or ending the Phase One trade agreement the countries signed in January.

Wheat futures for July delivery fell 3½¢ to $5.17¼ a bushel overnight on the Chicago Board of Trade, while Kansas City futures lost 5½¢ to $4.65 a bushel. 

Soybean futures fell ¾¢ to $8.40 a bushel overnight on the Chicago Board of Trade. Soy meal futures gained 10¢ to $283.30 a short ton, and soy oil rose 0.04¢ to 27.42¢ a pound.

Corn futures were down ¼¢ to $3.25½ a bushel overnight.

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2. Speculators Raise Net-Short Positions in Corn While Lowering Bullish Bets on Beans

Investors pushed their net-short positions, or bets on lower prices, in corn futures to a fresh one-year high last week while curbing their bullish bets on soybeans.

Speculators held a net-short position of 277,038 corn futures contracts as of May 26, up from 246,059 contracts a week earlier and the largest such positions since May 14, 2019, according to the Commodity Futures Trading Commission.

Money managers reduced their net-long positions, or bets on higher prices, in soybean futures to 7,014 contracts, down from 11,985 contracts a week earlier, the CFTC said in a report. That’s the smallest such position in about a month.

Investors have become more bearish on corn and less bearish on beans amid concerns about demand as the COVID-19 pandemic curbs use for feed and ethanol and on worries about the escalation of tensions with China.

In wheat, investors held a net-short position of 8,475 contracts for soft red winter futures on the Chicago Board of Trade. That’s down from 11,390 futures contracts a week earlier, the CFTC said in its report.

Speculators held a net-short position of 25,658 hard red winter wheat contracts as of May 26, up from 15,103 contracts and the largest bearish position since November 19, according to the government.

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. Hot Weather Expected in Iowa This Week, While Flooding Continues in the Midwest

Hot, rainy weather is headed for parts the Midwest this week, according to the National Weather Service.

“Very warm and humid air will make a return” to parts of Iowa and northern Illinois this week with heat indexes on Tuesday reaching into the upper 90s, the NWS said in a report early this morning.

Along with the high temperatures, there’ll be a chance for thunderstorms, some of which may become severe, the agency said. Strong storms are forecast for Tuesday and Wednesday.

Farther south, flood warnings are in effect along the Missouri and Mississippi rivers through Missouri and along the state’s border with Illinois.

The Mississippi River near St. Louis was already at 31.8 feet at about 8:30 p.m. yesterday, above its flood stage of 30 feet. Minor flooding is forecast as the river is expected to top out at 32.2 feet tomorrow then fall back below flood stage on Thursday.

More concerning, however, is the Illinois River that’s already at 31 feet, well above flood stage of 23 feet at La Grange, Illinois, the NWS said. Near Havana, Illinois, the river is already at 23.4 feet, topping flood stage of 14 feet.

Major flooding is already occurring along the river, though levels are expected to fall to 22.6 feet by Tuesday morning, the agency said.

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