Headlines:
- hardening metal prices eclipse softening grains
On a day noted for the passage of the moon across the sun in the US, grains were eclipsed by metals, with wheat futures plumbing fresh contract lows on both sides of the Atlantic, while Chicago corn dropped to its lowest in nearly a year. The dollar, in dropping 0.5% against a basket of currencies, offered hope to values of dollar-denominated exports across the board, making them more affordable. But it was metals – base and precious – which proved best at capturing this tailwind, with copper hitting $6,549 a tonne, its highest in nearly three years, and gold up $5 at $1m289 an ounce to test two-month highs. Zinc touched $3,180.50 a tonne in London, its highest since October 2007, supported by ideas of a substantial market deficit this year.
- Hedge funds pile up bearish bets on ags, as supply hopes revive
Hedge funds slashed their bullish position in agricultural commodities, as they piled on short bets at the fastest rate in nearly two years – with only lean hogs and arabica coffee escaping the charge. Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 173,212 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows. The plunge in the net long – the extent to which long bets, which profit when values rise, exceed short holdings, which benefit when prices fall – was one of the fastest on records going back to 2006. And it reflected active selling in all three ag sectors – grains, soft commodities and livestock – with the number of new short bets far exceeding long bets close, to take open interest (i.e., the number of live contracts) back above 1.5m.
Summary:
The Pro Farmer Tour is underway this week and the trade is looking to see what kind of conformation will be derived from having boots on the ground as to how the USDA estimates match up with what the Tour findings. Corn ranged from 3.75 to 4 cents down on the day and in doing so it reached new life of contract lows for the September contract and came very close to doing the same on the December contract. The prospect of improved crop conditions weighed down the market because of forecast for moist conditions. Export inspections were also well below trade estimates. Soybean futures were also down across the board but their losses were mixed ranging from 1.75 to 5 cents down on the day. As with Corn, traders have the potential of beneficial weather on their radar. Export inspections came in well above trade estimates. The USDA reported export sales of 463,000 tons of Soybeans sold to unknown destinations for the 2017-18 marketing year and 198,000 tons sold to China for 2017-18 marketing year this morning. Wheat continues to get hammered under the weight of the large global supply. It was down ranging from 5.75 to 6.75 cents. Today’s crop progress report is expected to show a 1% increase in good to excellent ratings in the Spring Wheat crop.
