Headlines:

  • Return of US weather fears revives grains, a bit
    One of the main early pressures on grain prices – an improved US weather outlook – reversed a bit, allowing futures a bit more buoyancy. But the other main burden – the huge buying by hedge funds in the complex, creating worries of an overhang of long bets – remained a deterrent to higher prices. And soybeans encountered an extra setback, in terms of monthly US crush data from industry group NOPA which came in, at 138.074m bushels for June, well below expectations. Traders had forecast a 143.093m-bushel number, and even that was well below the 149.246m bushels recorded for May. Last year, US crushers processed 145.050m bushels of the oilseed.
  • Hedge funds buy grains at record pace, as weather woes threaten crops
    Expectations grew of a pullback in grain prices after data showed hedge funds having already been “much, much more active” in buying than had been expected, provoking doubts over appetite for further purchases. Managed money, a proxy for speculators, hiked its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by 330,023 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows. However, the surge in buying – the second largest on data going back to 2006, and which drove hedge funds back to a net long in ags – again disguised a stark divergence in hedge funds’ attitude towards soft commodities and grains. In New York-traded soft commodities, such as coffee, cocoa and cotton, managed money raised to a record 183,600 lots its net short – the extent to which short holdings, which profit when values fall, exceed long bets, which benefit when prices gain. By contrast, in the main grains, including the soy complex, speculators swung net bullish in positioning by a record 341,025 contracts – enough to put them back in a net long position for the first time in four months.

Summary:

Corn and Soybean both posted a higher high and higher low on the day compared to the price action from Friday. September Corn finished where it closed on Friday and December Corn was off a tick. September Beans gave up 3.25 cents and November Beans finished 3.75 cents lower from its previous close. Over the past several days, weather forecasts have been the main driver for market movement. Recent crop rating reports for Corn and Soybean coming in at 10-11% in the Poor to Very Poor category suggests that bullish movement might be in the cards for both commodities. The Wheat crop rating was at a staggering 39% in the Poor to Very Poor category rating point to Wheat possibly having the highest probability of moving higher over the next few months.

The trading overall was mixed and choppy today. The trade was still consolidating the big declines from last week after having had the weekend to mull things over. Reports showed that inspections were mixed. The Wheat number kept inspections right on pace with USDA estimates. The Corn number kept inspections about 14 million bushels ahead of the USDA export pace. Finally, Soybean inspections were not very good. They came in at 2nd lowest totals of the marketing year.