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3 Big Things Today, May 18, 2020

Wheat Lower, Beans Higher Overnight; Investors Raise Bearish Bets on Corn.

1. Wheat Futures Lower, Soybeans Higher Overnight

Wheat futures were lower overnight as weather in several growing countries remains favorable, while soybean futures were higher.

Rain fell in several wheat-producing areas including the so-called Black Sea region.

Showers in Ukraine over the weekend and through this week likely will benefit wheat and corn in the country, while rains are expected to extend into southern Russia this week, which will limit plant stress, according to Commodity Weather Group.

In Australia, meanwhile, precipitation has been limited, which could slow germination in about a third of the Wheat Belt, CWG said.

Wheat futures for July delivery fell 3½¢ to $4.96¾ a bushel overnight on the Chicago Board of Trade, and Kansas City futures lost 3¼¢ to $4.49 a bushel.

Soybeans, meanwhile, were higher on signs of overseas demand.

China bought 198,000 metric tons from U.S. supplies last week, the USDA said on Thursday. The Asian nation also bought 20,000 tons of soybean oil for delivery this year.

On Wednesday, the USDA said separately that China bought 396,000 metric tons of soybeans, half for delivery in the current marketing year and half for delivery in the 2020-2021 year. 

Soybean futures rose 5¾¢ to $8.44¼ a bushel overnight, while soy meal fell 20¢ to $287.60 a short ton, and soy oil rose 0.34¢ to 26.92¢ a pound. 

Corn futures for May delivery added 1¼¢ to $3.20½ a bushel.

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2. Investors Raise Net Shorts in Corn While Bumping Bullish Bean Bets

Money managers increase their net-short positions, or bets on lower prices, on corn last week while also becoming more bullish on beans.

Speculators raised their net shorts on corn to 214,679 futures contracts in the week that ended on May 12, according to the Commodity Futures Trading Commission.

That’s up from 189,741 futures contracts a week earlier and the largest bearish position in corn futures since May 14, 2019, according to CFTC data.

Investors, meanwhile, raised their net-long positions, or bets on higher prices, in soybeans last week to the highest in six months. They held a net-long of 31,037 futures contracts last week, up from 9,486 a week earlier, the largest such position since Nov. 5.

Some demand news from China likely has investors more positive on soybeans, while the outlook for corn is less promising due to shutdowns at meatpacking plants in the U.S. and demand destruction for ethanol.  

In wheat, money managers reduced their bearish bets on hard red winter to 3,549 futures contracts as of May 12, down from 7,679 contracts a week earlier, the CFTC said.

The net-long position in soft red winter wheat declined slightly to 6,215 futures contracts from 6,295 the previous week, the agency 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. Flood Warnings and Watches in Effect For States Near Lake Michigan

Flood warnings and watches are in effect for parts of northern Illinois, almost all of Michigan, and much of eastern Indiana and western Ohio this morning.

Lake Michigan will be at record-high levels, which, combined with waves and a storm surged, could put onlookers along the Illinois shore at risk from large waves, according to the National Weather Service.

In western and central Michigan, a band of heavy rain overnight is leading to flooding in some counties, the NWS said in a report. The runoff from the precipitation likely will cause small creeks, streams, streets, and underpasses to flood, the agency said.

In northern Indiana and Ohio, meanwhile, a flood watch is in effect as rain is forecast off and on into the evening with another 2 inches expected on top of what’s already fallen.

“River flooding will continue along … especially at low-lying places,” the NWS said. “Flood-prone locations, such as creeks, low spots, and poor drainage areas may be impacted.”

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