Headlines:
- HEDGE FUNDS COOL TOWARDS GRAINS – BUT IN SOFTS, BULLISH BETS AT 8-YEAR TOP
HEDGE FUNDS‘ LOVE AFFAIR WITH GRAINS HAS BEGUN TO COOL, EVEN AS THEY RAISED BULLISH SOFT COMMODITY BETTING TO A SIX–YEAR HIGH, LEAVING THEM VULNERABLE TO THE MARKET TURBULENCE WHICH HAS FOLLOWED THE UK VOTE TO QUIT THE EU. 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 HOGS, BY MORE THAN 60,000 CONTRACTS IN THE WEEK TO LAST TUESDAY, ACCORDING TO DATA FROM THE COMMODITY FUTURES TRADING COMMISSION REGULATOR. THAT REPRESENTED THE FIRST CUT IN A MONTH IN THE NET LONG – THE EXTENT TO WHICH LONG POSITIONS, WHICH PROFIT WHEN VALUES RISE, EXCEED SHORT BETS, WHICH BENEFIT WHEN PRICES FALL. AND IT WAS ACCOMPANIED BY A SHARP DROP IN OPEN INTEREST –THE NUMBER OF LIVE CONTRACTS – OF NEARLY 200,000 CONTRACTS TO 1.43M LOTS, IMPLYING A REVERSAL OF THE INFLOWS WHICH HAD MARKED THE SECTOR, WITH ENHANCED WEATHER CONCERNS, AND SOFT RETURNS FROM EQUITIES, DRIVING EXTRA CASH INTO AGRICULTURAL COMMODITIES.. - WEEKLY CROP PROGRESS WILL BE RELEASED TODAY AT 4:00PM EST
- USDA ACREAGE REPORT IS SCHEDULED FOR JUNE 30TH
- FIRST NOTICE DAY FOR JULY GRAIN AND OILSEED FUTURES IS THURSDAY, JUNE 30TH
Summary:
General consensus was that the selloff last week in Corn and Soybeans may have been a bit overdone. Soybean managed to put up a double digit rally but Corn barely eked into positive territory. Wheat continues to be under assault especially given the mounting strength of the US Dollar which was up about 100 basis points today as it tested the high made on Friday. Signs of strong demand is the rational that surfaced for the strength in Beans today. The USDA announced the 150k metric tons of Soybeans to unknown destinations of which 132k is slated for the 2015-16 marking year and 18k for the 2016-17 marketing year.
July Corn gained 1.25 cents and December Corn was up 0.50 cent. Soybean’s gains were impressive today. July was up 33.50 cents and November was up 28.75 cents. July Wheat was down 7.75 cents. Thursday is both first notice date for the July contracts and scheduled release date for the USDA quarterly supply/demand report. Next week will be a shortened week because of the Independence holiday and historically volume can be a bit lighter. The report on Thursday will be an important one to watch.
The equity markets suffered some more post Brexit response. The S&P 500 was down about 25 points or 1.24% and the Dow was down about 260 or 1.50%. The US Dollar and Gold have really benefited from Brexit. Gold has now reached levels last seen in March of 2014.
