WASDE surprise sends market sharply lower
Head of Commodity Strategy
The report also confirmed a bumper soybean crop which together with Chinese import tariffs are expected to leave a record 845 million bushels in storage by the end of the 2018-19 season. Chicago wheat, meanwhile, was sent lower after the USDA unexpectedly raised Russia’s outlook. This helped lift world ending stocks above what was expected. Cotton also traded lower after production and stocks received a bigger-than-expected boost.
CBOT Soybeans are currently stuck in a tightening range between two trendlines with resistance at $8.50/bu and support at $8.20/bu. In the week to September 4, leveraged funds held a net-short of 63,000 lots which is well below the three-year of a net-long of 45,000 lots. With most of the price-negative news priced in and with US-China trade war showing signs of de-escalating the upside could potentially begin to attract some attention.
CBOT corn has been rangebound since June between $3.4/bu and $3.75/bu. Leveraged funds holds a net-short of 57,000, which is in line with the three-year average.
CBOT Wheat is also caught in a tightening range determined by two trendlines. Support at $4.94/bu which is also the August low while resistance is found at $5.25/bu. The troubled season outside the US helped drive a big jump in the leverage fund long during the past few months. This is currently creating some headwinds while sellers will be looking to trigger long-liquidation on a break below support.
Leveraged funds held an elevated long of 43,000 lots in the week to September 4, close to a six-year high and well above the three-year average of a 70,000-lot net-short.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.