World Food Prices Jump in Aug, Cereal Harvest Outlook Cut – FAO

The Rome-based Food and Agriculture Organization (FAO) also said in a statement that worldwide cereal harvests would come in at nearly 2.788 billion tonnes in 2021, down on its previous estimate of 2.817 billion tonnes but still up on 2020 levels.

FAO’s food price index, which tracks international prices of the most globally traded food commodities, averaged 127.4 points last month compared with 123.5 in July.

The July figure was previously given as 123.0.

On a year-on-year basis, prices were up 32.9% in August.

FAO’s cereal price index was 3.4% higher in August from the previous month, with lower harvest expectations in several major exporting countries shunting up world wheat prices by 8.8% month-on-month, while barely surged 9.0%.

By contrast, maize and international rice prices declined.

FAO’s sugar index rose 9.6% percent from July, pushed up by concerns over frost damage to crops in Brazil, the world’s largest sugar exporter. Good production prospects in India and the European Union helped mitigate these concerns to a degree. Vegetable oil prices rose 6.7%, with palm oil prices hitting historic highs due to continued concerns over production levels and resulting inventory drawdowns in Malaysia. Quotations for rapeseed oil and sunflower oil also rose.

Meat prices edged up slightly in August, as strong purchases from China supported ovine and bovine meat prices and solid import demand from East Asia and the Middle East lifted poultry prices, FAO said.

The dairy price index edged slightly lower on the month.

FAO said the fall in its estimate for world cereal production this year was triggered by persistent drought conditions in several major producing countries.

Among the major cereals, the forecast for wheat production saw the biggest downward revision — down 15.2 million tonnes since July to 769.5 million tonnes — due mainly to adverse weather conditions in the United States, Canada, Kazakhstan and Russia.

The forecast for world cereal utilization in 2021/22 was cut by 1.7 million tonnes from July to 2.809 billion tonnes, still 1.4% higher than in 2020/21.

The estimate for world cereal stocks by the close of seasons in 2021/22 was lowered by 27.0 million tonnes since July to 809 million tonnes, pointing to a decline of 0.9% on stock levels registered at the start of the period, FAO said.

For a look at all of today’s economic events, check out our economic calendar.

(Editing by Crispian Balmer)

Gold and Silver Length Cut in Half; Agriculture Bought on Weather Woes

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The summary below highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, August 10. A week where hawkish comments from Clarida, the Fed vice-chair and strong jobs report saw markets starting to price in an earlier than expected unwinding of the Fed’s massive stimulus program.

These developments helped trigger a one percent increase in the Bloomberg Dollar index while ten-year inflation protected yields jumped 16 basis points just after hitting a record low. Stocks saw another growth to value rotation while commodities traded mixed with heavy selling in precious metals being partly offset by continued buying across the agriculture sector. Energy and industrial metals also suffering setbacks on demand concerns in response the continued spreading of the delta coronavirus variant.

Commodities

The Bloomberg Spot index lost 1% during the reporting week to August 10, as the continued spreading of the delta coronavirus variant in Asia and parts of the US raised concerns about demand for key commodities such as crude oil and copper. Investment metals slumped on rising yields and dollar while the agriculture sector remained to the go to sector with adverse weather across the world providing a boost to both grains and softs.

Overall, the total net long across 24 major commodity futures was cut by 4% to 2.2 million lots with selling of crude oil, gas oil, gold, silver, and copper being only partly offset by demand for sugar, soybeans, corn, and wheat

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Energy

Continued crude oil weakness saw speculators cut their net length in WTI and Brent for a second week to an eight-month low. This in response to demand worries caused by the rapid spreading of the delta coronavirus variant, not least in China were a relatively small number of cases has led to renewed shutdowns and restrictions on movements.

The combined long was cut by 48k lots to 566k, but just like the previous week reduction, the change was solely driven by long liquidation with no signs of appetite for naked short selling. Probably due to the belief the disruption will be transitory and that OPEC and friends, if necessary, will adjust production to support the price.

Monday morning comment: Crude oil trade lower for a third day with Brent back below $70after key oil consumer China released weaker than expected retail sales and industrial production data and following Friday’s very weak sentiment reading. These developments support IEA’s latest downgrade to demand for the months ahead as a resurgent delta coronavirus variant is impactingdemand across the world. Also, in the US there are signs shale producers are ramping up activities with the number after the number of rigs last week rose by 10 to 397, marking the biggest jump since April.

Metals

Speculators more than halved their gold and silver longs during a very troubling week for precious metals. The week covered a renewed rise in bond yields following Fed vice-chair Clarida’s hawkish comments and the strong jobs report culminating in last Monday’s flash crash. In response to these for metals adverse developments, the gold net length was cut by 52% to 51k lots while the silver length collapsed by 54% to just 12k lots, a fifteen months low.

Platinum, which during the week saw its discount to gold rise to $800 from an April low at $500 saw continued selling with the recently established net short more than doubling to a 13-month high at 9k. Rangebound copper was sold for a second week with the net long dropping 19% to 32k lots, thereby reversing half the buying seen since the June low at 19k lots.

Monday morning comment:

Gold finished last week on a firmer footing after a much weaker than expected University of Michigan sentiment (see below) helped deflate some of the buildup taper angst with Treasury yields and the dollar traded lower ahead of the weekend. Both paused their retreat overnight with gold and silver drifting lower as a result. A major band of resistance has emerged between $1790 and $1815 while support needs to hold around the $1750 area.

Following last Monday’s flash crash, speculators slashed their gold and silver net longs by more than 50% leaving the market exposed to fresh buying on a break higher. This week the market will be watching a speech by Fed chair Powell, as well as minutes of the Fed’s last meeting.

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Agriculture

Continued price gains across the agriculture sector helped drive another week of speculative buying in both grains and softs. Adding to the support was the grain market gearing up for an expected price supportive monthly supply and demand report from the US Department of Agriculture last Thursday. A report that turned out to justify the recent buying, not least in wheat which surged higher on weather related production reductions in the US, Canada and Russia.

The world is potentially facing a supply issue with high protein milling wheat used for human consumption in bread, and that explains why Paris Milling wheat and Kansas HRW wheat both trade higher by more than 10% this month. Overall, the net length in Chicago and Kansas wheat was increased by 10k lots to 64k, still substantially below the interest seen in corn (254k) an soybeans complex (180k)

Sugar is another highflyer due to lower supplies from frost and drought hit regions in Brazil, and news India, the world’s second largest shipper is considering diverting canes towards the production of biofuel to curb imports of increasingly expensive crude oil. The net length in raw sugar futures rose 7% to a five-year high at 265k lots. The cotton long reached a three-year high at 73k lots while the coffee long suffered a setback after the price retraced from a multi-year high above $2/lb.

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Forex

Speculators increased bullish dollar bets in response to the early August strong jobs report and hawkish Clarida comments. The reporting week ended last Tuesday when several currencies was under pressure from a strong greenback, not least the euro which was challenging key support at €1.17. In response to these developments, the net dollar long against ten IMM currency futures and the Dollar index jumped one-third to a fresh 17-month peak at $4.8 billion.

Selling was broad but mostly concentrated in euros, Japanese yen and Aussie dollar while short covering helped flip the Sterling position back to a net long.

16olh_cot4

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

  • Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
  • Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
  • Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Commodity Weekly: Weather Woes Keep Agriculture Commodities on Top

The commodity sector, with the exception of some key food items, remains on the defensive as the current surge in virus cases in major economies clouds the short-term outlook for growth and demand. In addition, the prospect for an earlier-than-expected return to a tightening regime by the US Federal Reserve has helped put upward pressure on bond yields and the dollar, thereby reducing the appeal for investment metals, such as gold and silver.

The macro-economic outlook remains clouded by the current third Covid-19 wave which continues to spread across Asia and parts of the US, thereby creating a great deal of uncertainty with regard to the short-term demand for key growth and demand-dependent commodities from crude oil and gasoline to copper and iron ore. With this in mind, the increased possibility of the US tapering its massive asset purchase program is unlikely to be followed by others, potentially leading to rising US Treasury yields and a stronger dollar.

As in the previous week, pockets of strength remained with several key agriculture commodities continuing to find support following what up until now has been a very volatile weather season across some of the key growing regions of the world. Cold weather in parts of Brazil has hit the sugar cane crop while also causing extensive damage to the region’s coffee as well. Elsewhere, extreme heat leading to dryness have sliced the expectations for this year’s grains crop, especially corn and wheat.

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In its latest World Supply and Demand Outlook (WASDE) the US Department of Agriculture forecast the lowest US wheat harvest in 19 years with global supplies suffering a further downgrade in response to large reductions to estimates from drought-hit fields in Canada and Russia. The prospect for lower shipments from Russia, the world’s biggest exporter, saw the high protein milling wheat future traded in Paris jump to a three-month high above 255 per tons, some 35% above the five-year average.

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Gas prices in Europe rose to another record before retreating with supply concerns being somewhat offset by weaker sentiment in the broader energy market given the latest wave of Covid-19. In the US, gas prices headed for their biggest weekly loss following a bigger-than-expected weekly rise in stocks, but forecast for another incoming heatwave will likely limit the correction with tight winter supplies, just as in Europe, a risk that may continue to support prices ahead of winter.

In Europe, an unexplained reduction in flows from Russia combined with rising competition from Asia for LNG shipments has made it harder to refill already-depleted storage sites ahead of the coming winter. These developments have led to rising demand for coal, thereby forcing industrial users and utilities to buy more pollution permits, the price of which are already trading at record prices. All in all, these developments have led to surging electricity prices which eventually will be forced upon consumers, thereby adding to the already rising cost of everything.

Gold spent most of the week trying to recover from the price collapse that followed the stronger-than-expected US jobs report on August 6. The sell-off culminated during the early hours of the Asian session last Monday when the yellow metal, within a short period, tanked more than 70 dollars. Coming into August, sentiment was already hurt by gold’s inability to rally in response to the July slump in Treasury yields. A drop in yields that concluded just days before the slump when US 10-year inflation-adjusted yields hit a record low at -1.22%.

Having struggled to rally amid favorable yields, gold immediately turned lower at the first sign of higher yields and once key technical levels in the $1750 to $1765 area were taken out, the flood of sell stops during a very illiquid time of day took it briefly down to the March double bottom below $1680, where fresh bids from physical gold buyers in Asia emerged once again.

The short-term outlook remains challenged by the risk of yields and the dollar both moving higher ahead of the late August meeting of central bankers at Jackson Hole. The annual symposium which in the past has been used to send signals of changing policies or priorities to the market.

A weekly close above $1765 in gold would create a bullish candle on the chart and it may help send a supportive signal to a market still dizzy following the latest rollercoaster ride. However, in order to look for a recovery, silver needs to join in as well and, so far, it is struggling with the XAUXAG ratio trading above 75 ounces of gold to one ounce of silver, its highest level and silver’s weakest against gold since December.

Copper’s recent and price-supportive focus on potential supply disruptions in Chile eased as BHP workers at the Escondida mine, representing 5% of global output, voted to accept a final wage proposal. In recent weeks, the threat of supply disruptions have offset surging Covid-19 cases and worries about a Chinese slowdown hitting demand. With the risk of disruptions fading the market could, just like oil, see a period of sideways trading while the current virus outbreak is being brought under control.

While resistance has been established above $4.4/lb, support has been equally strong below $4.20/lb. Overall, however, we still see further upside with the price of High-Grade copper eventually reaching $5/lb, but perhaps not until 2022 when continued demand for copper towards the green transformation and infrastructure projects increasingly could leave the market undersupplied.

Crude oil remains one of the biggest losers so far this month, only surpassed by iron ore and silver. Following several months where the main focus was on OPEC+ and its ability to support prices by keeping the market relatively tight, the focus has once again reverted to an uncertain demand outlook caused by the rapid spreading of the Delta coronavirus variant, particularly in key importer China. A development that has led to growth downgrades and raise questions about the short-term demand outlook for oil and fuel products from the world’s biggest buyer.

While some of the major bulls on Wall Street see the disruption from the Delta variant being transitory and only negatively impacting demand for a couple of months, both the IEA and OPEC in their latest monthly oil market reports cut their demand outlook for the remainder of the year. The latest wave is leading to a renewed reduction in mobility around the world with the biggest concern being the flare-up in China, where a still-low number of infected has been met by an aggressive approach to contain the outbreak.

However, the flexibility exhibited by the OPEC+ group during the past year will likely prevent a deeper correction should demand growth suffer a bigger-than-expected headwind from the current outbreak. With this in mind and considering the lack of response from US producers despite high prices, we maintain a constructive view on the direction of prices into yearend.

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Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Coffee Futures Surge Due to Brazil Frosts

The pandemic’s impact on the availability of soft commodities like coffee and sugar has been real, with both soft commodities trading at multi-year highs. However, growing seasons marred by adverse conditions are worsening global supply, leading to further surges in prices.

Coffee Prices at 7-Year Highs

On the week of July 19, coffee futures soared by 20% as unseasonally cold weather in Brazil threatened the coffee crops of the world’s largest producer. By market open on Monday, July 26th, they had risen by a further 10%. This has taken coffee prices up to their highest levels since October 2014.

It started with a shortage of shipping containers earlier in the year, which gave commodities across the board a boost due to difficulties in ramping up global transportation following the lockdowns. Then, seriously dry conditions in May followed by frosty conditions in the crop’s flowering period in July, have severely stressed the country’s coffee crop. The extent of the damage has yet to be fully determined. The country’s food supply agency has estimated that around 11% of Brazil’s coffee crops have been affected by frost.

On and Off Years

Coffee plants follow a biennial crop cycle, characterised by “on” and “off” years. 2022 was due to be an “on-year” for coffee producers, an opportunity to build waning stockpiles with a bumper crop. The combination of drought and crop stress makes it highly unlikely that Brazilian producers will now have the opportunity of an on-year to rebuild stocks. This almost guarantees higher coffee prices for consumers and is also likely to affect smaller coffee businesses that don’t have the same purchasing power as the large coffee chains.

Price Action

Looking at coffee futures plotted on a monthly chart reveals the true extent of the move. Coffee futures have broken through a price level at $1.75 per pound that offered resistance back in both 2008 and 2016.

In the past decade, coffee prices have only peaked higher on two occasions. An extremely wet December at the close of 2013 was followed by Brazil’s worst drought in decades, which damaged coffee plants and led to a 5.4% downturn in production. The even more significant peak in 2011 has been attributed to a combination of factors. Poor harvests, investors trying to get ahead of price inflation following central bank responses to the 2008 financial crisis (recall that gold’s former all-time high was also in 2011), and surging global appetites for gourmet coffee have all been used to explain the surge.

At HYCM, we recently focused on coffee and sugar prices as evidence of the inflationary pressures mounting following the global response to COVID-19. Even before this recent move, the charts were suggesting a bull market that had no intentions of ending any time soon. This most recent rally has effectively set the first monthly higher-high we’ve seen in the agricultural commodity in 5 years.

Going Back Further

If you look back even further into the historical price action of coffee, you’ll notice that it’s an extremely volatile commodity that’s highly sensitive to growing conditions and consumer demand. The chart below tracks monthly coffee prices going all the way back to the 1970s. As you can see, while coffee has experienced supply/demand shocks in the mid-80s and mid-to-late-90s, the 2011 monthly close is only bested by the all-time high the commodity reached in 1977.

Back then, a severe frost in July 1975 destroyed two-thirds of the Brazilian crop. With replanted crops taking up to three years to return to full yield, you can understand why the global coffee market was so severely affected. A civil war in Angola, the fourth largest coffee producer at the time, also had the effect of removing a significant amount of the commodity from global markets.

However, when you look at the macro conditions back then, low growth and rising inflation (or stagflation as the combination was termed), you can see why a supply shock in a commodity known for being highly sensitive to weather conditions can get so out of hand.

The reason to look as far back as the 1970s is that many analysts and market commentators weighing in on the current inflation vs deflation debate see a return to 1970s style stagflation as a possibility. The expectation is that as growth slows when the effect of stimulus on economic activity wanes, we’ll be left with the result of all the monetary expansion, which is higher prices as more money competes for scarce assets.

Final Thoughts

Obviously, we could see a rapid mean reversion in coffee prices as we saw earlier this year with lumber. Also, keep in mind that as appetites for the commodity have grown globally, so has the efficiency of production and distribution. But when you compare the current coffee price peak with the ones that came before, it seems as though we’re comparing prior crises that are now in the history books (stagflation and the GFC) with one that has yet to fully play out. As to how far this rally still has to go, it depends on whether current inflationary pressures are enough to make this recent hit to the global supply the perfect storm.

by Giles Coghlan, Chief Currency Analyst, HYCM

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World Food Prices Fall in June for First Time in a Year – FAO

The Rome-based FAO also said in a statement that worldwide cereal harvests would come in at nearly 2.817 billion tonnes in 2021, slightly down on its previous estimate, but still on course to hit an annual record.

The Food and Agriculture Organization’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 124.6 points last month versus a revised 127.8 in May.

The May figure was previously given as 127.1.

On a year-on-year basis, prices were up 33.9% in June.

FAO’s vegetable oil price index plunged 9.8% in June, partly on the back of a fall in palm oil prices, which were hit by expectations of output gains in leading producers and a lack of fresh import demand. Soy and sunflower oil quotations also dropped.

The cereal price index dropped 2.6% in June month-on-month, but was still up 33.8% year-on-year. Maize prices fell 5.0%, partly because of higher-than-expected yields in Argentina and improved crop conditions in the United States.

International rice prices also fell in June, touching 15-month lows, as high freight costs and container shortages continued to limit export sales, FAO said.

Dairy prices dipped 1.0% on a monthly basis, with all components of the index easing. Butter recorded the largest drop, hit by a rapid decline in global import demand and a slight increase in inventories, especially in Europe.

The sugar index posted a 0.9% month-on-month gain, reaching its highest level since March 2017. FAO said uncertainties over the impact of unfavourable weather conditions on crop yields in Brazil, the world’s largest sugar exporter, pushed prices up.

The meat index rose 2.1% from May, with quotations for all meat types rising as increases in imports by some East Asian countries compensated for a slowdown in China’s meat purchases.

FAO said the slight fall in its estimate for world cereal production this year was principally triggered by a sharp cut to the Brazilian maize production forecast as prolonged periods of dry weather weighed on yield expectations.

Global wheat production prospects also retreated this month, as dry weather in the Near East hurt yield prospects there. By contrast, the forecast for global rice output in 2021 edged up.

The forecast for world cereal utilization in 2021/22 was cut by 15 million tonnes from the previous month to 2.810 billion tonnes, still 1.5% higher than in 2020/21.

World cereal stocks by the close of seasons in 2021/22 are now expected to rise above their opening levels for the first time since 2017/18. “Higher maize stocks foreseen in China account for the bulk of this month’s upward revision to world cereal inventories,” FAO said.

For a look at all of today’s economic events, check out our economic calendar.

(Editing by Crispian Balmer)

 

Subdued Fund Buying Despite Strong Commodity Gains

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, June 1. A week that saw S&P 500 trade mostly sideways near its record high while the technology sector lost steam. Treasury yields rose ahead of jobs data with the market pondering for how long the Fed can continue adding support amid rising inflation. The dollar held steady while the commodity sector recovered strongly from the May correction.

Commodities

The commodity sector saw buyers return following the May correction with the Bloomberg Commodity index rising 3%. All sectors apart from precious metals and livestock recorded strong gains led by crude oil, copper, corn and coffee. In response to these developments hedge funds and large money managers increased bullish bets across 24 major commodity futures by 3% to 2,358k lots.

Given the strength of the recovery a relatively small increase that was led by crude oil (25k), gas oil (17k), natural gas (+11.7k), corn (21.9k) and sugar (12.5). Other contracts such as copper (-6.3k) and both wheat contracts (-5.7k) were sold despite recording strong price gains. Potentially a sign that investors despite being dictated by the price action to be long are feeling somewhat uncomfortable with prices at multi-year highs and breakeven yields (inflation) that has been drifting lower during the past three weeks.

Energy

Most of last week’s commodity buying was concentrated in the energy sector, most noticeable crude oil and gas oil. OPEC’s bullish demand outlook for the second half combined with the OPEC+ groups ability to control the price, helped drive Brent above $70 while WTI reached levels last seen in 2018. In response to these developments hedge funds increased their combined crude oil net long by 25.2k lots to 649.5k, a three week high but still some 88k below the recent peak in February.

While the overall increase in both WTI and Brent was primarily driven by fresh buying, the bulk of the buying occurred in WTI. This in response to tightening US market amid increased demand for fuel and low stocks at a time where production is expected to show a much slower growth trajectory than the one we witnessed during previous cycles of rising prices.

Agriculture

Despite recovering strongly from the late May correction, only small changes were seen in soybeans and wheat. Corn received most of the attention with the 11% price spike driving a 21.8k lots increase, mostly due to short covering with potential buyers showing a degree of hesitancy as we move into the US growing season. In soft commodities, buying benefitted sugar, cocoa and coffee, and just like corn the net buying in coffee was primarily due to the short covering with buyers hesitating chasing the 7% rally seen during the week.

Metals

Gold buying ran out of steam with long accumulation slowing to just 2.9k lots, a far cry from the 61.3k lots that was net bought the previous three weeks. Having surged higher by 240 dollar since early April on a combination of technical buying and short-covering from large trend following funds, the lack of fresh buying last week could indicate that this initial demand has now been met. Also worth noting the reporting week up until last Tuesday did not take into account the US economic data related price swings that hit the market towards the end of last week. At 129k lots, the gold long remains well below the most recent 284k lots peak from March last year.

Elsewhere in the metal space, silver longs were reduced for a second week while copper selling extended to a fourth week. During this time the net long has slumped by 58% to just 27.6k, the lowest bet on rising copper prices since last June when the rally had only just started to gather momentum.

Latest: Gold trades softer in early trading following an end of week rollercoaster ride where prices first slumped on emerging profit-taking, only to bounce back on Friday following what looked like “Goldilocks” US payroll date. Gold’s so far shallow correction following the strong rally since early April potentially highlighting the risk that all is not done yet on that front. The first key downside support level that will determine the underlying strength of the market is the 200-day moving average at $1842. Focus on the dollar and whether yields can maintain their Friday drop, President Biden’s spending plan and the market reaction to the G7 tax proposal.

Forex

In forex, the flows in the week to June 1 were mixed while the overall sentiment was still skewed towards additional dollar selling. The net short against ten IMM futures and the Dollar Index reached a 12-week high at $17.7 billion after speculators net sold $900 million. Despite trading softer on the week, speculators continued to buy euros (5.3k lots) with buying also seen in JPY (3k), CAD (3.9k) and CHF (1.5k), while selling reduced the sterling long by 6.5k lots.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Speculators Keep Piling Into Agriculture Commodities

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across commodities, forex, bonds and stock indices up until last Tuesday, April 27. A week where U.S. index futures resumed their ascent, the dollar continued lower while US Treasury yields ticked higher, while staying within their established ranges. Commodities surged higher led by very strong gains in grains and soft commodities.

Commodities

Money managers increased bullish commodities bets with the total net long across 24 major commodity futures rising by 4% to 2.5 million lots, representing a nominal value of $137 billion. This in response to a 3.6% rise in the Bloomberg Commodity index to a fresh ten year high. The bulk of the increase was concentrated in grains and soft commodities which rallied by 8.6% and 7.3% respectively. The biggest individual position increases was seen in sugar, coffee, wheat, gas, oil and copper.

Energy

The combined net long in crude oil reached a six-week high at 677k, with the increase being led by WTI while speculators kept an almost unchanged position in Brent, primarily due to an increased amount of naked short selling. The biggest change was seen in gas oil where the net long came close to a one-year high.

Latest: Crude oil futures trade lower for a second day with the uneven demand recovery creating a somewhat challenging outlook. In India, April gasoline demand fell to the lowest level since August and increased curbs on mobility may trigger further declines into May. This at a time when higher fuel consumption is being recorded in the U.S., China and the U.K. and OPEC+ during the next three months begins to add barrels back into the market. The outlook is further being clouded by uncertainty about U.S. production growth and Iran nuclear negotiations where a deal could trigger rising production. For now, Brent crude oil trades within an ascending channel, currently between $64 and $69.

Metals

A relatively quiet week in precious metals with gold’s failure to build on the recent break above $1765 attracting fresh short selling resulting in the bulk of the 6k reduction in the net long being driven by new short positions. Silver length increased by 8% and platinum by 25% on tailwinds from surging industrial metals. The 6.3% rally in HG copper helped attract new longs with the net rising by 23% to 55.5k lots, still well below the December peak at 91.5k lots and the 2017 record at 125k lots.

Latest: Gold (XAUUSD) and silver (XAGUSD) continue to frustrate bulls and bears alike given their inability to break current ranges. Both trading higher today after surviving another downside attempt on Friday when the dollar suddenly jumped. US Treasury yields continue to trade range bound with rising breakeven (inflation expectations) being offset by lower real yields. Speculators cut length in COMEX futures last week while ETF holdings remain stuck near a one-year low. Current range in gold being $1755 to $1800.

Agriculture

Most of the speculative buying last week was concentrated in the agriculture sector (ex. livestock) with most grains and softs contracts seeing strong gains. Most noticeable being the strong gains in corn, wheat, sugar and coffee with dry weather in South America and the U.S. plains hurting the production prospects. The combined long in corn, soybeans and wheat reached a fresh record and with the latter well below previous peak positions, further length could be added over the coming weeks. In softs, the coffee long almost doubled while the sugar long jumped by 15% to 258k lots, the third highest exposure on record.

Latest: The Bloomberg Grains Spot index, already at an 8 year high continues higher today led by corn (CORNJUL21) and (WHEATJUL21). In corn, the spread between the July (old crop) and December (new crop) contracts has widened to 115 cents per bushel, and it highlights the current stress in the spot market as a powerful La Nina disrupts harvests in Brazil with dry weather cutting the production outlook by 8% to 104m tons. Adding to the current unease has been record Chinese imports while US planting progress and weather developments will be watched for clues as to the direction of the new crop contracts, such as December. Weekly U.S. planting progress data due later at 20:00 GMT

Forex

Broad speculative dollar selling lifted the net short against ten IMM currency futures and the Dollar Index by 30% to $10.3 billion, a six week high. The dollar was sold against all the major currencies with the bulk of the change being led by short-covering in Japanese yen where 11k lots ($1,3 bn equivalent) was bought.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other.

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other.

Forex: A broad breakdown between commercial and non-commercial (speculators).

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged.
  • This makes them most reactive to changes in fundamental or technical price developments.
  • It provides views about major trends but also helps to decipher when a reversal is looming.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

COT: Iran Tensions Lift Gold and Oil Longs

Saxo Bank publishes two weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Read the COT Report

Strong and broad-based speculative buying ahead of yearend turned more selective during the first week of the year. The combined net-long across 24 major commodity futures was left unchanged close to an 18-month high. While buying of crude oil, gold, platinum and soybeans continued speculators sold most other contracts. Most noticeable natural gas which hit a record short as the price hit a record seasonal low. HG Copper was knocked back to neutral as the US-China deal rally ran out of steam.

Crude oil was left vulnerable to profit-taking following the US-Iran pump and subsequent dump when the focus turned to de-escalation. The combined net-long in Brent (+15k) and WTI (+5k) reached 714k lots, a 15-month high, following the US killing of a top Iranian general. The near 50% increase in net-longs following the December 6 OPEC+ decision to lower production left many recently established longs under water as the price dropped 11% from its Wednesday peak.

Hedge funds increasing bullish gold (+9k) bets to the highest since September got handsomely rewarded when the metal briefly spiked above $1600/oz last Wednesday. The subsequent $70 correction briefly challenged the bullish sentiment before the risk of another geopolitical flareup and a weaker than expected US job report ensured a weekly close above $1555/oz, the September high.

Platinum reached a fresh record long at 49k lots despite being rejected at $1000/oz, the September high, a failure which subsequent left it exposed to profit taking. Copper was knocked back to neutral as the US-China deal rally ran out of steam. The metal has traded in an uptrend since October with tight supply and lack of supply growth providing the underlying support.

In softs both sugar and coffee was sold with the latter retracing 50% of the October to December price surge as exchange-monitored warehouse supplies jumped.

What is the Commitments of Traders report?

The Commitments of Traders (COT) report is issued by the US Commodity Futures Trading Commission (CFTC) every Friday at 15:30 EST with data from the week ending the previous Tuesday. The report breaks down the open interest across major futures markets from bonds, stock index, currencies and commodities. The ICE Futures Europe Exchange issues a similar report, also on Fridays, covering Brent crude oil and gas oil.

In commodities, the open interest is broken into the following categories: Producer/Merchant/Processor/User; Swap Dealers; Managed Money and other.

In financials the categories are Dealer/Intermediary; Asset Manager/Institutional; Managed Money and other.

Our focus is primarily on the behaviour of Managed Money traders such as commodity trading advisors (CTA), commodity pool operators (CPO), and unregistered funds.

They are likely to have tight stops and no underlying exposure that is being hedged. This makes them most reactive to changes in fundamental or technical price developments. It provides views about major trends but also helps to decipher when a reversal is looming.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Weekly Forecast: Cutton, Sugar, Rice and Orange Juice Futures

Cotton Futures

Cotton futures in the March contract settled last Friday in New York at 66.69 while currently trading at 64.00 down about 270 points for the week as prices have now hit a 5 week low.

I have been recommending a bearish position from around the 65.00 level and if you took that trade continue to place the stop loss at 67.13, however the chart structure will improve in next weeks trade therefor the monetary risk will be lowered.

Cotton prices are trading under their 20-day but still slightly above its 100 day moving average which also stands at major support around the 63.00 level as I think that area will be touched in next week’s trade.

One of the main problems for cotton is the fact that we can’t come up with a trade agreement with China as they are the number one importer of U.S cotton in the world and until that situation is cemented look for lower prices ahead. At the current time my only other soft commodity recommendation is a bullish sugar trade as I do think cotton prices have topped out in the short-term so continue to play this to the downside while placing the proper stop loss making sure that you risk only 2% of your account balance on any given trade.

Sugar Futures

Sugar futures in the March contract settled last Friday in New York at 12.73 a pound while currently trading at 12.74 basically unchanged for the trading week continuing it’s extremely low volatility.

I have been recommending 2 bullish positions with an average price of 12.67 and if you took that trade continue to place the stop loss under the 10-day low which now stands at 12.46 & in Monday’s trade that will be raised to 12.51 as the chart structure is outstanding at the current time due to the fact that prices have been stuck in the mud.

Sugar is still trading slightly above its 20 and 100 day moving average as the trend remains higher as we need some fresh news to dictate short-term price action as the Brazilian Real has hit a 4 year low against the U.S dollar as that has a negative influence on prices. The next major level of resistance stands at the 13.00 area as I will be looking at adding more contracts at that level due to the fact that the stop-loss is so tight therefor the risk/reward is in your favor so stay long.

Orange Juice Futures

Orange juice futures in the January contract settled last Friday at 100.50 while currently trading at 99.00 down about 150 points for the week as prices are still stuck in a tight 4 week consolidation.

I will be recommending a bullish position if prices break the 101.65 level while then placing the stop loss under the contract low which was hit on October 30th at 96.10 as the risk would be around $850 per contract plus slippage and commission.

We are starting to enter the very volatile winter season for orange juice prices as a possible frost could hit the State of Florida sending prices sharply higher as that situation has occurred in the past as I do think we are in a bottoming-out pattern as the downside is limited.

Volatility at the current time remains low as I don’t think that situation is going to last much longer as the weather conditions at the current time remain ideal, but it is a long growing season so look to play this to the upside.

TREND: MIXED

CHART STRUCTURE: EXCELLENT

VOLATILITY: LOW

Rice Futures

Rice futures in the January contract settled last Friday in Chicago at 11.89 while currently trading at 12.23 up about $0.34 for the trading week as prices are right near a 5 week high. I had been recommending a bearish position from around the 11.82 level getting stopped out around 12.10 earlier in the week while at the present time I’m sitting on the sidelines waiting for another trend to develop.

Rice prices are now trading above their 20 and 100 day moving average as the trend has turned higher, however the chart structure is terrible therefor the risk/reward is not in your favor as prices rallied straight up over the last week. The volatility has finally come back to life in this historically volatile commodity as my only grain recommendation is a bearish soybean trade which continues to grind lower on a daily basis.

S&P 500 Futures

The S&P 500 in the December contract settled last Friday in Chicago at 3118 while currently trading at 3111 down about 7 points for the trading week breaking a 4 week winning streak.

I have been recommending a bullish position from around the 3006 level and if you took that trade the stop loss has now been raised to 3074 as the chart structure will also improve in next week’s trade therefor the monetary risk will be reduced.

For the bullish momentum to continue prices have to break the November 19th high of 3132 in my opinion as earnings season has been very solid coupled with the fact that we are entering the holiday markets which generally push prices higher.

Expectations for an outstanding Christmas season is predicted as the U.S economy is by far the strongest in the world with historically low unemployment and an excellent stock market helping fuel the economy so stay long as I still think the 3200 level is realistic come year end.

The S&P 500 is trading far above its 20 & 100 day moving average as this is the strongest trend to the upside out of all commodity sectors as we continually grind higher on a weekly basis despite this recent setback.

TREND: HIGHER

CHART STRUCTURE: IMPROVING

VOLATILITY: LOW

The Article was written by Michael Seery (CTA—COMMODITY TRADING ADVISOR)

Grains to Close Week, Month With Losses, All About Trade War

Grains are trading mixed on Friday but with a negative note on August as investors are still waiting for trade war developments. As for now, conciliatory words between US and China are giving some hopes.

“The most important thing is to create the necessary conditions for continuing negotiations, said Gao Feng, a spokesman for China’s Commerce Ministry. However, he said that China has an arsenal of measures for retaliation. However, they don’t want to use it.

Despite the conciliatory tone, the market is reluctant to believe in everything China and the United States said, as it seems they want to have a prolonged trade war. Farmers, then, are suffering the consequences.

Soybean ready to close August with gains

ZS1 Futures of Soybean 1-hout chart August 30
ZS1 Futures of Soybean 1-hout chart August 30

Soybeans are trading positive for the third day in a row as investors welcomed conciliatory feeling between the two parts involved in the trade war. On Friday, futures of soybeans jumped to trade as high as 8.78 per bushel, but the level resisted and it sent the unit back to previous levels.

Profit-taking ahead of the end of the week and month is keeping the grain out of higher prices. Currently, soybean is trading 0.60% positive on the day at 8.73.

On the technical analysis front, odds are for a bullish extension in the short and middle terms as studies on both, the 1-hour and daily charts, are pointing to the upside.

On the week, soybean is closing the first positive period in the last three weeks. The oilseed is posting a 2.10% weekly gain, recovering almost all losses experienced in the previous two weeks.

In the monthly chart, soybean is closing August with a 0.63% gain as the unit was on time to reverse losses in the first half of the month, but the benefit is not that big. August would be the third month of gains in the last four. The monthly chart also suggests that the grain is moving in a long term range between 8.44 and 9.30.

Corn down amid profit-taking

ZC1 Futures of Corn 1-hour chart August 30
ZC1 Futures of Corn 1-hour chart August 30

Corn is trading down for the second day as investors are closing positions ahead of the end of the month. Early in the day, the contract attempted to break above the 3.74 level, but it wasn’t successful.

Currently, corn is trading 0.40% negative at 3.69. The unit is now testing the 3.69 area, which is the support that is containing the downside. Below there, the next frontier would be 3.66.

On the week, corn is giving signals of life as the unit is performing its first period of gains after the sell of experienced in the last three weeks. Thought the move is on a consolidation phase rather than a recovery.

The month is also an ugly picture for corn as it is closing its third negative period. The unit has now entered on full steam into the long term range traded between July 2014 and May 2019 between 3.40 and 4.00.

Wheat breaks below 4.62 and trades at lows since May

ZW1 Futures of Wheat 1-hour chart August 30
ZW1 Futures of Wheat 1-hour chart August 30

Futures of wheat are trading negative on Friday with the unit breaking below the 4.62 area and extending drops to 4.59, its lowest level since May 16.

Previously in the day, wheat traded around 4.66, but a break below the 4.64 triggered stop losses that fueled declines to 4.62, where another batch of stop losses was activated. Then, the unit found support just below the 4.60 area.

Currently, the unit is trading at 4.60, 2.50% negative on the day.

On the week, the unit is falling 3.50%, extending losses after the previous week small recovery.

On the month, wheat is falling for the second period, with August performing 5.28% down in the period. Overall, wheat is inside a downtrend with the 4.20 area as the most likely destiny.

Grains roundup for August 30

Coffee is down in the day, week, and month as futures of coffee weren’t able to break above the 98.00 area. The contract is now traded at 95.25, 2.15% down. On the week, coffee is 0.11% down after attempting a recovery that was capped at 98.50. In the bigger picture, coffee is closing August with a 3.25% decline, extending the already sell-off of 10.30% of value performed in July. Technical analysis suggests more declines in all frame times.

ZC1 Futures of Coffee 1-day chart August 30
ZC1 Futures of Coffee 1-day chart August 30

Sugar is having the same story of coffee with declines in the day, week, and month. The trend in the sugar futures is even more visible to the downside with prices at 11-month lows around 11.10. The unit is closing its fifth negative week in a row, and its second month with red numbers in a row. August is 8.20% negative for sugar.

SB1 Futures of Sugar 1-day chart August 30
SB1 Futures of Sugar 1-day chart August 30

Happy weekend and stay safe!

Grains Positive Amid Hot Weather Conditions, Ahead of Fed

Agricultural futures are trading positive on Monday as investors are digesting dry weather conditions in the United States that would stress even more the crops.

Also, all the action in the investment market is focused on the Federal Reserve two-day meeting that will start tomorrow Tuesday and will announce a possible interest rate cut on Wednesday.

Soybeans bounce from 8.780

Prices of Soybean daily chart July 29
Prices of Soybean daily chart July 29

Soybean is trading positive on the first day of the week as investors are digesting dry weather conditions in the U.S. midwest. Also, the 200-day moving average is serving as support at 8.780.

Currently, soybean is trading 0.65% positive on Monday as the grain is moving at 8.850. However, technical conditions suggest that the upside will be short-lived and the 8.900 will be strong resistance.

To the downside, soybean has immediate support at the mentioned 200-day moving average 8.780. Below there, the oilseed will face the 50-day moving average at 8.720, then July 9 lows at 8.660 and June 10 minimums at 8.410.

Corn up after bouncing at 4.075

Prices of Corn daily chart July 29
Prices of Corn daily chart July 29

Corn is opening the week with gains as the unit found support at the 4.075 area earlier in the day and it started a recovery to trade as high as 4.145.

However, the 50-hour moving average is containing the upside, and currently, Corn is trading 0.60% positive on the day at 4.120.

Technical studies suggest more room for the upside, but the critical support at 4.06 is holding the unit. In the case the pair breaks below that level, it will have freeway to 3.900 and 3.750.

To the upside, 4.120-40 is the area to clear up if bulls want to start thinking in a possible long-lasting recovery. Watch 4.200, 4.300, and 4.500 as resistance areas.

Wheat jumps to tet 5.035

Prices of Wheat daily chart July 29
Prices of Wheat daily chart July 29

Wheat is recovering from Friday’s losses, and it is now testing July 25 highs at 5.035, where the pair is facing a robust middle-term resistance.

Technical conditions suggest more room for the upside with a break above the mentioned 5.035 level would open the door for more gains until 5.100. Above there, the unit will go all the way up to test the 5.300 area.

To the downside, check the 4.900 area for support. Below, the 200-day moving average would be a defensive line just ahead of July 23 lows at 4.800.

Sugar tests the 0.1200 area

Prices of Sugar daily chart July 29
Prices of Sugar daily chart July 29

Sugar is resuming its uptrend on Monday as the unit is retaking levels above 0.1200 for the second time in the last three trading sessions. Sugar is currently trading at 0.1195, 0.83% positive on the day.

In the case sugar breaks above the 0.1200 area, it will face next resistances at the 200-day moving average at 0.1230 and then, 0.1240 and the 0.1260 critical level.

Grains Mixed After GDP, Inspection Reports

Agricultural futures are trading mixed on Friday as investors are digesting the U.S. GDP and inspection reports from the USDA.

U.S. Bureau of Economic Analysis reported a better than expected GDP in the second quarter of 2019; however, it also showed a slowdown from previous data.

On the other hand, the United States Department of Agriculture reported plunging week-to-week inspections. U.S. spring wheat crop was rated 76% good or excellent, unchanged from the previous week.

Besides, corn and soybeans sales for exports declined in the last week. Corn sales for 2018-2019 marketing year fell 39% to 121,200 metric tones. Soybeans also posted declines as cancelations loomed the deals.

Soybeans recover ground on Friday but remain negative in the week

Prices of Soybean daily chart July 26
Prices of Soybean daily chart July 26

Soybean is trading positive on Friday after the unit found support at the 200-day moving average at 8.780 and it traded back to 8.850.

Currently, the unit is posting 0.75% daily gains as it is trading at 8.851. Technical factors say that the movement seems to be short-lived, and due to profit-taking on Friday and the execution of contracts.

However, the grain looks bearish in the middle term with the mentioned 8.780 as immediate support. Below there, 8.700 and 8.660 are the levels to watch.

To the upside, soybean needs a close above 8.900 with the unit facing then the 9.000 area as the net selling zone.

On the week, prices of soybeans are moving negative for the second week in a row with the unit posting 1.65% losses in the period. The unit is extending its rejection of the 9.150 area.

Wheat declines for the first time in three days

Wheat is trading down on Friday for the first time since its bounce from 4.800 on July 23. The move comes after the grain got a rejection at the 5.040 on Thursday, level where the 20-day moving average was at that moment.

On Friday, Wheat is extending declines with the unit posting 0.93% daily losses as it is currently trading at 4.915.

Technical conditions are showing some revival in the grain, but the studies are still weak. Supports are at 4.885 and 4.800. Resistances are at 5.040, 5.100, and 5.220.

On the week, wheat is extending losses for the second straight week with the unit posting 1.40% losses in the period.

Corn down for the third day

Prices of corn are extending losses for the third day in a row with the unit now trading at +3-week lows near to 4.100. The grain is now heading to test July’s minimums at 4.060.

On the week, corn is extending its rejection from the 4.530 for the second period as the unit is 3.20% down on the last five trading days.

Wheat Jumps as IGC Cuts Crops Forecast for 2019-20

Wheat is trading positive on Thursday as the IGC cut crops forecast for the 2019-2020 season. Corn is trading slightly up, while soybeans are declining. Sugar is negative amid improved weather in India.

Fewer crops expected for 2019-2010 campaign

The International Grains Council is now expecting a weaker production of grains in the 2019-2020 seasons following hard planting conditions and weather around the world.

According to the IGC, wheat crop production for the next marketing year will be of 763 million tonnes, 6 million tonnes lower than previously expected.

World corn production was cut by 3 million tonnes to 1.092 million tonnes. However, United States production was unchanged at 333.5 million tonnes.

Soybean global production is now expected to be 348 million tonnes, slightly below the previous forecast of 349 million.

Wheat jumps above 5.000

Prices of Wheat daily chart July 25
Prices of Wheat daily chart July 25

Wheat is trading positive for the second straight day on Thursday as investors are digesting news about cutting production forecasts for the next marketing year.

After performing a Doji daily candle on Tuesday, and a bullish confirmation day on Wednesday, wheat is extending gains on Thursday with the unit testing the 20-day moving average at 5.040.

Currently, wheat is trading at 5.010, 1.10% positive on the day. Technical conditions suggest a short term positive outlook for the grain. Next resistance is at the mentioned 5.040. Above there, 5.100 and 5.200 are the northern frontiers.

To the downside, 4.800 supports the upside, so a break below that level would open the door for a decline to 4.700.

Corn trades sideways

Prices of Corn July 25 daily chart
Prices of Corn July 25 daily chart

Corn is trading flat on Thursday as the unit remains trapped by a small range between 4.150 and 4.200. It seems the grain is performing a consolidation pattern after the declining performed from 4.500 since July 15.

Technical conditions suggest that prices of corn are weak and traders can expect more declines. Next supports are at 4.130, 4.060, and 4.000.

To the upside, the 20-day moving average at 4.255 is containing the unit. Above there, 4.500 and 4.600 are the levels to watch.

Soybeans fail at 8.900

Prices of soybeans are moving down on Thursday as the unit failed to keep levels above 8.900 earlier on the day.

Currently, soybeans are trading at 8815, 0.50% negative on the day. To the downside, the unit is facing supports at the 200-day moving average at 8.780, 8.700 and July 9 lows at 8.660.

Grains Positive Amid Weak Crop Conditions

Agricultural futures such as soybeans, corn or wheat are trading positive on Wednesday amid weak crop conditions in the U.S. The White House hopes China will resume grains purchases, but Chinese crushers are not in a rush.

Sugar is also positive amid news from India and Brazil that are putting the price under pressure.

What is moving grains

Declining crop conditions in the United States and uncertainty about how crops will evolve in the next week are adding doubts about soybeans, corn, and wheat supply for the 2019-20 year.

The concerns are pushing prices up, while the forecast for better weather conditions contains the upside. Investors are now waiting for the new acreage count and grains report that the USDA will publish the first week of August.

On the other hand, the United States and China will resume negotiations for the trade war next week. The White House is hoping that the talks will bring China purchases alive again. However, people familiar with the matter said that Chinese crushers are in no rush to buy from the U.S.

Meanwhile, Washington announced that the U.S. government would pay a minimum of $15 per acre to farmers that have been hurt by the trade war between China and the United States and which was impulsed by President Donald Trump.

Agriculture Secretary Sonny Perdue said that the Department of Agriculture would “have information for you [farmers] before the week ends.”

Soybeans positive after bouncing back at 200-day M.A.

Prices of soybeans July 24 daily chart
Prices of soybeans July 24 daily chart

Soybean is trading positive on Wednesday as investors are digesting news in the U.S. and China.

After two days of declines from 9.000, beans found support at the 200-day moving average at 8.777 on Tuesday. The unit opened Wednesday with gains, and it extended the bounce to test the 8.890 area.

Currently, Soybeans is trading 0.75% positive on the day at 8.885. Technical indicators are mixed with a no clear way to take. To the upside, beans will face resistance at 9.000, and then, the critical 9.150.

To the downside, the previously mentioned 200-day moving average at 8.777 is the short term support. Below there, July 9 lows at 8.660 and June 10 minimums at 8.410 are buying zones.

Corn bounced back 4.130, but it seems to be short-lived

Price Corn is trading positive on Wednesday after bouncing at 4.130 on Tuesday. Currently, the grain is trading at 4.210, 0.80% positive on the day. Previously, it tested the 4.250 intraday high.

Wheat positive after a Doji daily candle

Prices of wheat are moving higher on Wednesday as investors are extending bounce from Tuesday’s lows at 4.800. Currently, it is trading 1.40% positive at 4.903.

Wheat looks like developing a positive u-turn after a Doji candle on Tuesday and an extension on Wednesday. However, technical indicators are weak.

Sugar extends rally for the second day

After logging 8 trading session with losses, sugar is now recovering levels for the second straight day with the unit extending gains from Tuesday minimum at 0.1120 to test the 20 and 50 days moving average confluence around 0.1200. Sugar is currently trading 1.02% positive at 0.1188.

Soybeans, Corn, and Wheat Trades Down Amid Progress Report

Grains are trading down on Thursday as investors are digesting recent progress in crop reports.

Traders are now focused on the second survey of planted acres that the U.S. Department of Agriculture will release on August 12. They are expecting significant advances.

Soybeans extend decline for the fourth day

Soybeans daily chart July 18
Soybeans daily chart July 18

Soybean is trading down for the fourth straight day as investors are digesting reports on crop progress. Beans are now testing the 8.700 area.

Currently, Soybean is moving at 8.728, 0.50% down on Thursday. In the last four days, the oilseed has fallen around 4.4% from July 15 highs at 9.125 to today’s fresh bottom at 8.710.

Technical conditions suggest more room for the downside with the 8.660 area as the next support. Below, check the 50-day moving average at 8.615 and the 8.400 as buying zones.

To the upside, the unit needs a close above the 8.800 area to give bulls reasons to believe in a long run. The 20-day moving average will be the next resistance and above there, 9.150.

Corn breaks below 4.200

Corn daily price July 18
Price of Corn daily price July 18

Corn is falling hard on Thursday as investors are digesting better than expected reports on crop progress. It is the third negative day in the last four.

Prices of corn fell on Thursday from 4.300 to break below the 4.200 area and trade at lows since July 3 at 4.170. Currently, it is trading at 4.190, 2.35% negative on the day.

Technically, the pair looks bearish with the 50-day moving average at 4.110 and the July 1 and 2 lows at 4.060 as the next supports.

Wheat falls below 4.940

Price of wheat daily chart July 18
Price of wheat daily chart July 18

After falling for four consecutive days, wheat has finally broken below the July 10 low of 4.930, and it is now trading as low as 4.905, a fresh minimum since June 10.

The grain is now developing what it looks like a lower low on the daily chart — signaling a downtrend in the chart pattern.

With the pair trading 1.56% down on the day at 4.921, next support is at the 200-day moving average at 4.365. Below there, 4.760 and 4.730 are the levels to watch as buying zones.

Grains report for July 18, 2019

Sugar is falling hard for the sixth day in a row as investors are digesting improved weather in Brazil and India. Technical conditions suggest more losses in the short and middle term.

Coffee futures closed Wednesday with gains, but the unit remained below the 109.00 after finding support at the 105.50 area. The unit moved up and down with violence on Monday and Tuesday. However, on Wednesday, it returned to the range between 105.50 and 108.00.

Grains Trade Down Amid Crop Conditions Improvement, Retail Sales Push Dollar Up

Agricultural prices are trading lower on Tuesday as investors are digesting the USDA’s weekly Crop Progress Report released on Monday.

Improvement in the crop situation and quality conditions have pushed prices down; while retail sales data is pushing dollar up, adding pressure to exports prices in the US.

Soybeans down for the second day

Soybeans daily chart July 16
Soybeans daily chart July 16

Soybean is extending losses for the second straight day as investors are digesting reports on crop condition improvements and better than expected weather in the US midwest.

Also, a better than expected retail sales data in the United States are pushing grain prices under pressure. A higher dollar will make US products more expensive.

According to the USDA’s weekly Crop Progress Report released Monday, soybeans crop is rated 54% good or excellent, a rise of 1 percentile point from last week. 95% of the soybean crop has emerged, lower than the 99% average in the previous five years, but an advance at all.

On Tuesday, the price of soybean is falling 1.3% on the day as it is trading around 8.845. The bean is extending losses from the 9.125 area, level the unit tested on Monday, but it failed to sustain gains.

Soybeans are now heading to test the 200-day moving average as next support. Below there, 8.670, July 9 low, and the 50-day moving average at 8.600 are the levels to watch.

Corn extends 4.500 rejection for the second day

Corn daily chart July 16
Corn daily chart July 16

Price of corn is falling on Tuesday as emerging, and crop quality has improved. Also, retail sales and better weather are pushing rates down.

USDA’s weekly Crop Progress Report showed that overall conditions of corn crop was rated 58% good to excellent in the US. Up from 57% last week. However, just 17% of the crop was in the silk stage, well behind 42% on average in the last five years.

Corn is currently trading at 4.250, 2.30% down on the day. The unit is extending losses from Monday’s highs around 4.530, and it is focused now in the test of the 4.200 area. Below there, the 4.080 level will be the target.

Agricultural prices report for July 16, 2019

Wheat is trading in recovery mode after falling to 4.965 earlier in the day but bouncing back at that level to move at current prices around 5.030. WheatUSD is 0.08% negative in the day.

US winter wheat harvest is at 57% complete, well behind of the 71% average in the last five years. Spring wheat crop is rated 76% good or excellent, below last week 78% rating.

Sugar is extending losses for the fourth straight day as improved weather in Brazil and India are pushing prices down. Sugar is now trading at 0.1175, 0.55% down on the day. Next support for sugar will be at 0.1135 and 0.1115.

Futures of coffee jumped on Monday as the contract rallied 3.2% at the beginning of the week with the grain closing the day at 109.95. Technical conditions suggest more gains in the next days.

Soybeans Jump to Test the 9.000 Level; Ready to Close a Strong Week

Soybean is extending gains for the fifth straight day as investors are still digesting the WASDE report and news from China that its soybeans imports have decline considerable in the last year.

China is importing fewer soybeans in 2019 according to customs data due to Sino-US trade war and deadly African swine fever.

China’s imports of soybean fell 11.5% between May and June to 6.51 million tonnes, down 25% from June 2018, and 15% less YTD compared with the same period of 2018.

In this framework, investors are betting for a reestablishment of the demand, and prices are still trading up. On Friday, soybeans rallied to test the 9.000 area, and it is now posting 0.64% gains at 8.980.

On the week, soybean is performing a strong period with 3.30% gains in the last five days with the unit recovering all previous week losses. The grain seems supported by the 20 and 50 days moving averages at 8.680 and 8.715 respectively.

Grains report for Friday, July 12, 2019

Wheat is consolidating levels on Friday after the rally performed on Thursday. The unit is ready to close the week with gains after recovering from early losses in the week.

On Friday, wheat jumped to trade at 5.206, its highest level since July 1, but the unit found resistance at the 20-day moving average around 5.195, which is now containing the pair.

Currently, wheat is trading 0.21% positive on the day at 5.170. Investors are closing positions on profit-taking mode after Thursday rally.

On the week, the grain is performing 1.20% gains after recovering from 50-week moving average at 4.930 earlier in the week. A positive close would be the first one in the last four weeks.

Corn positive for the second day

Price of corn has accelerated on Friday as the unit is extending gains from Wednesday and Thursday bottoms at 4.060 to trade as high as 4.460 on Friday. Currently, the unit is moving 1.80% positive at 4.450.

On the week, the unit is closing its second period with substantial gains as the unit is rallying 3.06% in the last five days.

Sugar is trading flat on Friday as the unit is consolidating losses performed on Thursday. On the day, sugar is 0.07% at 0.1215. On the week, sugar is closing almost unchanged as the unit is trading just above the 0.1200 level, as it has been doing in the last three periods.

Coffee remains inside the range it has been trading since the beginning of the week between 105.30 and 108.00. On the week, however, Coffee is falling 1.10% as the unit is extending previous week rejection of the 116.00 area.

Soybean positive amid China demand; Corn down on improved weather

Agricultural grains are trading mixed on Wednesday as investors are digesting news from different part of the world.

On the one hand, China is reporting sustained strong demand; on the other, improved weather in the US midwest but not that good in Brazil.

According to Andrei Evbuoma, commodities research analyst and a Meteorologist for NOAA, said in a recent article published on SeekingAlpha that “grain prices should trade mixed in the near term but quickly could become bullish if hot weather persists longer term.”

Soybeans up for the third day

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Prices of Soybeans are trading positive for the third straight day on Wednesday as investors are digesting weather news and high demand in China. The price for a soybean bushel is now at 8.820, 0.40% positive on the day, but it jumped to 8.860 earlier in the session to trade at the highest level since July 2.

Technical studies for soybeans are suggesting a continuation for the recovery in the grain. Next resistance is located at mentioned 8.860; then, the psychologic 9.000 level and the 9.150.

Soybean’s investors are now focused on the World Agricultural Supply and Demand Estimates report, the WASDE, which will be released on Thursday this week. Market is expecting a decline in soybeans stockpiles to 812 million bushels for the 2019-2020 marketing year, well below June’s reading of 1.072 Billion.

Corn down to test 4.200

corn daily chart July 10
corn daily chart July 10

Prices of corn are trading down on Wednesday as investors are digesting improved weather in the United States.

Tobin Gorey, director agricultural strategy at Commonwealth Bank of Australia said to Reuters that “weather forecasters expect a somewhat better turn in US Midwest crop conditions. That at least means that corn crops are unlikely to suffer any further setbacks.”

Therefore, corn fell to 1-week lows at 4.200 but it bounced back from that level to trade at current levels around 4.240, posting a 0.10% daily decline. In the big picture, corn is extending decrease from the 4.400 rejection the price suffered on July 8, and that meant to be the final of the recovery from 1-month lows at 4.060.

Technical factors suggest more dovish continuation in the short term. Check 4.200 as immediate support, then, 4.060 and the 4.000 area.

Grains report for July 10, 2019

Wheat extended decline to its lowest level in a month as it fell to 4.930 earlier in the session; however, the unit managed to recover some ground, and it is trading now at 4.980, 0.15% positive on the day.

Sugar remains trading in the range it has been trapped since the beginning of July, but on Wednesday it is posting gains as the unit is trading 1.10% positive at 0.1225. Frontiers are at 0.1240, 0.1260, and 0.1270 to the upside; while 0.1200 is the level that is containing bears for now.

Coffee closed Tuesday with a rebound from 105.35 to trade above the 108.00 area. A minimal recovering after losing 8.8% of value between 115.65 on July 5 and 105.30 on July 8. The odds continue signaling more drops in the short term.

Soybeans Recover Ground; Coffee Falls Big; Corn Signals for a Decline

Grains are trading mix on Tuesday as investors are digesting better than expected crop report from the USDA and bad weather in Brazil.

Soybeans recover ground after bouncing at 8.660

Soybean prices are moving higher on Tuesday as the unit found support 8.660 earlier in the session and it bounced back to trade at current levels around 8.750. On the day, the oilseed is performing 0.38% positive.

Previously on the day, the bushel of soybean declined following a good enough crop report from the United States Department of Agriculture. The USDA rated soybeans 53% good or excellent, down from 54% the previous week. 90% of US beans have emerged, below expectations but only 10% blooming.

Corn fails at 4.400 amid USDA report

Corn is trading down on Tuesday as investors are welcoming crop report from the USDA. On Monday, the unit performed a daily Doji candle that signaled reversal; now, Tuesday candle is confirming the downside as its body is going below yesterday’s low.

Earlier in the day, the grain dropped to 4.219 before bouncing back to current levels at 4.262, 1.30% negative on the day.

According to the USDA, 57% of corn crop was rated good or excellent, up from 56% last week. 98% of corn has emerged in the US.

Agricultural investments report for July 9, 2019

Sugar is losing on Tuesday all the gains conquered on Monday as the unit fell over 1% to test the 0.1200 area. Currently, sugar is trading at 0.1213, 0.70% negative on the day.

Sugar prices are under pressure amid news from Brazil where frosts are affecting several agricultural areas in the country.

Coffee closed Monday with significant losses as investors are extending its profit taking from the 116.00 area. However, news that a frost front in Brazil affecting key coffee areas could push prices up again.

According to Reuters, “Brazil is in the middle of coffee harvesting, and any impact would be felt only in next year’s crop. Traders were expecting a record crop in 2020, when the country returns to the on-year in the biennial arabica cycle. But it is unclear now whether production could surpass the 2018 record near 62 million 60-kg (132 lb) bags.”

Prices of coffee fell to 105.20 on Monday, its lowest level since June 25. It is now trading at 106.85.

Wheat is trading down for the second day as investors are digesting latest USDA report. On Tuesday, wheat fell to its lowest level since June 10 at 4.939, where it found support. Now, wheat is trading at 4.990, 1.36% positive on the day.

Soybeans up But Limited as China Demand Remains Robust

Agricultural futures are trading mixed on Monday as investors are digesting news around the world. Wet weather in the United States and a hot wave in Europe are in the headlines.

Besides, reports from China that the demand for soybean remains robust despite the swine fever outbreak is signaling that farmers are switching to manufactured feed for their herds from food waste as it was for centuries.

Soybean fights to maintain levels above 8.700

Soybean rices daily chart July 8
Soybean rices daily chart July 8

Prices of Soybean are extending its middle term decline from 9.150 although it opened the week with gains on Monday. Earlier in the day, the oilseed recovered ground from 8.685 to trade as high as 8.780; however, the unit was able to sustain gains, and it is back to 8.715, still 0.26% positive in the session.

Investors on soybeans are digesting news that demand in China remains robust despite continued swine fever outbreak, but also, that Chinese scientist developed a gene-edited soybean that can grow in warmer climates.

On the other hand, the forecast for dry weather is adding pressure to soybean prices as a warmer than expected climate pattern could put newly planted crops in risk.

Analysts at Allendale affirms that Agriculture “traders will be cautiously watching weather maps, the weekly crop progress report and the results of the USDA July WASDE (World Agricultural Supply and Demand Estimates) report as it will be released later this week.”

Back to prices, Technical conditions suggest more room for the downside but small hope for a turn is on the cards. The unit is now testing the 8.690 area; in the case it breaks that level, soybean prices will face next support at 8.600 and 8.500.

To the upside, the grain should first recover the 8.800 area before thinking on potential upside.

Corn positive for the fourth straight session

Corn is extending its rally for the fourth consecutive session despite reports from the United States Department of Agriculture that say the export sales of corn dropped week-to-week in the last seven days to June 27.

Sales of corn were 41% down to 175,600 metric tons from the previous week, but interestingly 42% up from the prior four-week average.

In this framework, corn is now trading 0.80% positive on Monday as prices are testing the 4.400 area. Corn has almost recovered all losses suffered on June 28 and July 1 amid profit-taking.

Prices are returning to the range between 4.400 and 4.500 performed from June 14 to June 28. If the unit breaks above the mentioned 4.400 level, it will face the next resistance at 4.500.

Grain prices report for July 8, 2019

Wheat is trading flat on Monday after performing two positive sessions that took the unit from July 3 lows at 4.955 to trade as high as 5.135 today.

Currently, Wheat is moving at 5.108, 0.04% negative. Investors are digesting the news of a new crop arrival in Russia that are pushing prices down and severe weather in Russia and the United States.

Sugar remains trading in the range between 0.1200 and 0.1240 it has been moving in July. On Monday, sugar prices are trading 1.3% positive t 0.1227.