Headlines:

  • Corn dives, even as dollar takes comfort in dollar dip
    Grain markets tend to see an outperformance of corn futures over wheat at this time of year, as US harvest pressure eases on the former. As Moore Research data shows. However, not this time. Corn futures for December tumbled 1.4% to finish at $3.37 ½ a bushel, a contract closing low. Meanwhile, Chicago wheat futures added 0.8% to $4.28 a bushel, sending their premium to more than $0.90 a bushel, the gap’s highest close in more than a month, and back above 40-day and 50-day moving averages. In fact, headway should have been the default position for dollar-denominated commodities on Tuesday, with the dollar tumbling by 0.7% against a basket of currencies, amid doubts over the progress of US tax reforms, after Senate Republicans announced their tax bill could be delayed to 2019. (A weaker dollar boosts the affordability of dollar-denominated assets to buyers in other currencies.) The euro also did its bit to depress the dollar, jumping on news that Germany’s economy had expanded by 0.8% in the third quarter, up from the 0.6% growth recorded in the second quarter.
  • Hedge funds lift livestock longs to record high – but coffee ‘vulnerable to short-covering’
    Hedge funds curtailed their negative position on agricultural commodity prices, as bets on rising livestock values more than outweighed selling in grains – and coffee, now deemed “significantly vulnerable to short covering”. Managed money, a proxy for speculators, reduced its net short position in futures and options in the top 13 US-traded agricultural commodities, from cattle to wheat, by 22,049 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows. However, the reduction in the net short – the extent to which short holdings, which profit when values fall, exceed long bets, which benefit when prices gain – was down nearly all to the clamor to cash in on a rally in Chicago-traded livestock prices, which have outperformed those of other AGs. The BCOM livestock sub-index is up 7.3% so far this year, compared with a fall of 10.7% in the AG index.

Summary:

The US Dollar was lower today giving up about 65 cents and falling below the $94 mark. It has been struggling to rise above overhead resistance at 95 after it reached our price objective at that level. Crude Oil futures has been range bound with some weakness after establishing what looks to be a 5-wave Elliott sequence. As the trade digests the recent November WASDE report, Corn and Beans continue to be under pressure. After succumbing to double digit losses yesterday, the drop in Beans was more tempered losing 5.50 cents. Corn was the largest percentage loser on the day giving up 1.34% (4.75 cents). We have been sharing that Wheat looks to potentially establish a low soon. Today it was able to base a bit rising 3.25 cents on the December contract but the subsequent forward contracts were mixed.

Projected improvement in South American weather played a role in putting pressure on Beans prices.