3 Big Things Today, October 26, 2020

Wheat Futures Lower Overnight; Investors Raise Bullish Corn Bets to 19-Month High.

1. Wheat Plunges as Blanket of Snow Moves Into Southern Plains

Wheat futures plunged in overnight trading as beneficial snow makes its way to the southern Plains and as speculators likely sold contracts after Friday’s gains.

A storm system is moving into the southern Plains bringing several inches of snow to the region, which may provide a protective blanket to protect hard-red winter wheat in the region from bitterly cold weather this winter.

About 77% of the U.S. winter wheat crop was planted as of last week, according to the Department of Agriculture.

Some 84% of growers in Kansas, the biggest producer of the grain, had their hard-red winter varieties in the ground at the start of last week. In Oklahoma, 74% was planted.

Bitterly cold weather threatened recently emerged wheat plants in the southern Plains last week, but the covering snow should help protect the crop from any freezes, at least in the near term.

About half of the U.S. winter crop had emerged last week, while in Kansas, 61% had made it out of the ground. In Oklahoma, 47% had emerged.

The USDA will update its crop progress report today.

Investors who were long the market, or had bet that prices would rise, may be selling their wheat contracts and liquidating their positions after Friday’s 10¢ price gains.

Wheat futures for September delivery fell 8¾¢ to 6.24 a bushel overnight on the Chicago Board of Trade while Kansas City futures dropped 13¼¢ to $5.56½ a bushel.

Corn futures for December delivery lost 2¢ to $4.17¼ a bushel.

Soybean futures for December delivery rose ¼¢ to $10.84 a bushel. Soymeal fell $2.30 to $384.10 a short ton, and soy oil added 0.54¢ to 34.65¢ a pound.

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2. Investors Push Net-Long Positions in Corn to Highest in 19 Months

Money managers pushed their net-long positions, or bets on higher prices, on corn futures to the highest level in 19 months last week while also increasing bullish bets on beans, according to the Commodity Futures Trading Commission.

Investors held a net 211,575 corn futures contracts as of Oct. 20, the CFTC said in a report.

That’s up from 156,928 contracts a week earlier and the highest level since March 2018, government data show.

Speculators also raised their net-long positions in soybeans to 227,647 futures contracts last week, up from 219,379 contracts seven days earlier.

Investors have been adding to their net-longs for the past several months as demand for agricultural products improves and on adverse weather in several producing countries.

In wheat, money managers increased their net-longs in soft-red winter futures to 51,848 contracts last week, up from 40,221 seven days earlier.

That’s the biggest bullish position for the grain since February.

Hedge funds and other large investors pushed their net-long positions in hard-red winter futures to 36,379 contracts, up from 31,105 contracts a week earlier, the agency said.

That’s the largest such position for hard-red winter wheat since August 2017, according to the CFTC.

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. Winter Weather With Snow and Ice Expected in Much of the Southern Plains

Winter storm warnings and winter weather advisories are in effect for much of the southern Plains including all of Kansas and the Oklahoma and Texas panhandles, according to the National Weather Service.

As much as 4 inches of snow is expected across the eastern Texas panhandle with up to 10 inches forecast in parts of the Oklahoma panhandle, the NWS said in a report early this morning.

“Ice accumulation of around 0.10 of an inch is also possible, especially across the eastern Texas panhandle,” the agency said.

The entire state of Kansas is under a winter weather advisory as snow and ice accumulate today. Roads are expected to be slippery in much of Kansas and in the western half of Oklahoma, according to the NWS.

Farther north, a winter storm warning also has been issued for parts of central Nebraska today. Accumulations of up to 2 inches are expected in several countries in the state, mostly south of Interstate 80, the agency said.

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