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3 Big Things Today, May 16, 2022

Wheat Futures Jump Overnight; Investors Cut Net-Longs in Corn, Beans.

1. Wheat Futures Surge in Overnight Trading

Wheat futures jumped in overnight trading after India said it will restrict exports of the grain, another blow to world supplies.

Soybean and corn futures surged, following wheat higher.

India has emerged as an alternate supplier in the wake of the Russian attacks on Ukraine – two of the world’s largest exporters of wheat.

The government on Friday said it would halt exports in a bid to ensure domestic supplies and the needs of the country’s neighbors. India’s wheat crop has been devastated by a heat wave, curbing production of the grain.

Wheat shipments still will be allowed to certain countries, but the list is small.

India’s announcement comes at a critical time.

The war in Ukraine rages on with no end in sight, leaving little chance wheat exports will begin flowing from the country. Supplies from Russia, the world’s biggest exporter of the grain, are being restricted or shunned globally as they continue their attacks on Ukraine.

In the U.S., meanwhile, extremely dry weather has hit the hard-red winter crop.

Little to no rain has fallen in much of the southern Plains including western Kansas, all of eastern Colorado, and the Oklahoma and Texas panhandles in the past week, according to the National Weather Service’s precipitation page.

Wheat for May delivery jumped 50½¢ to $12.28 a bushel overnight on the Chicago Board of Trade while Kansas City futures surged 50¢ to $13.32 a bushel.

Soybean futures for July delivery added 15¢ to $16.61½ a bushel. Soymeal rose $5.40 to $414.70 a short ton, while soybean oil futures added 0.49¢ to 84.28¢ a pound.

Corn futures were up 17½¢ to $7.98¾ a bushel.

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2. Speculators Cut Net-Longs in Corn and Beans, Raise Bullish Bets on Wheat

Money managers slashed 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 held a net-313,391 corn-futures contracts in the seven days that ended on May 10, the CFTC said in a report.

That’s down from 327,802 contracts a week earlier and the smallest bullish position since the week that ended on February 15.

Speculators held 126,551 soybean-futures contracts last week, down from 148,011 contracts the previous week, marking the smallest such position since January 25, the agency said.

In wheat, hedge funds and other large investors held a net-41,948 hard-red winter futures contracts, up from 39,537 contracts a week earlier.

Investors also raised their bullish bets on soft-red winter wheat, holding 15,913 futures contracts as of May 10. That’s up from 10,702 contracts the previous week and the largest such position since April 12, the CFTC said in its report.

The weekly Commitments 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. Dry Weather to Persist in Much of the Southern Plains

Dry weather continues in much of the southern Plains as fire-weather watches have been issued in the region, according to the National Weather Service.

Winds today will be sustained from 10 to 20 mph with gusts of up to 30 mph, the NWS said in a report early this morning.

Relative humidity will drop as low as 5% in some areas and 10% in others.

“Any fires that develop can spread rapidly,” the NWS said. “Outdoor burning is discouraged.”

In northern Illinois and Indiana, meanwhile, dry weather also may create tinderbox-like conditions. Winds will gust to around 30 mph, creating “an enhanced fire risk,” the agency said.

Starting tomorrow, however, thunderstorms will roll through parts of the region throughout the week. For now, the NWS said, the best chance for severe weather is Friday.

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