Funds Sell CBOT Corn, Soy and Wheat as Supply Fears Wane

Commodity

Summary:

Speculators have ramped up their comfort with global corn supplies this month, though U.S. crop uncertainties continue lingering as the Corn Belt will be gripped by hot and dry weather this week, possibly impacting yield.

In the week ended Aug. 15, money managers increased their net short in CBOT corn futures and options to 72,580 contracts from 26,656 a week earlier and a net long of 16,741 two weeks earlier. That marked funds' most bearish corn view in three months.

Funds Sell CBOT Corn, Soy and Wheat as Supply Fears Wane_1

An increase in gross corn shorts was the dominant theme for a third consecutive week, though funds also cut longs in the latest two weeks. Most-active CBOT corn futures had dropped 4.7% in the week ended Aug. 15.

Most-active soybeans were unchanged in that week, though money managers trimmed their net long in CBOT soybean futures and options to 50,719 contracts from 64,081 a week earlier.

That marked funds' least bullish soybean stance in two months and for a third consecutive week, was primarily the result of exiting longs. Investors have also added a small number of gross soybean shorts in the last three weeks. Funds Sell CBOT Corn, Soy and Wheat as Supply Fears Wane_2

Funds Sell CBOT Corn, Soy and Wheat as Supply Fears Wane_2

Open interest in CBOT corn and soybean futures and options has not fluctuated much in the last couple of months. But open interest in CBOT wheat futures and options has surged 29% over the last seven weeks, directionally seasonal but more than double the recent average rate during the period.

CBOT December wheat futures tumbled 8.5% in the week ended Aug. 15, and money managers increased their net short in CBOT wheat futures and options to an eight-week high of 65,590 contracts versus 55,395 a week earlier.

Speculators have not held a bullish view in CBOT wheat since June 2022, and the recent bump in bearishness comes despite higher tensions in the Black Sea over the last month. However, Ukraine's 2023 grain harvest is seen topping previous expectations.

Money managers' bullish takes on the soy products are both more elevated than normal for this time of year, though they reduced their net long in CBOT soybean meal futures and options to 56,860 through Aug. 15 from 69,143 a week earlier. That was on a 3.4% drop in most-active futures.

CBOT soybean oil futures rose 3.4% during that period, though money managers added just 145 contracts to their net long, which reached 46,668 futures and options contracts. Oil futures rose another 3.6% over the last three sessions while meal added 2.2%.

Corn and soybean futures were also up between Wednesday and Friday, both rising 3.7% as an extreme heat wave is setting up for U.S. crops this week. Crop Watch farmers suggested last week that the upcoming heat and dryness will hurt grain fill for corn.

Most-active corn futures on Wednesday had hit their lowest levels since Dec. 31, 2020, though soybeans on Friday traded to their highest levels since July 31. Wheat bounced 2.4% over the last three sessions as renewed concerns about the Black Sea offered strength on Friday.

Source: Reuters

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Comments

Add to Favorites

Chandan Gupta

Forex

The recent GBP/USD trading has been tough and the conditions fluctuated wildly, meaning that speculators should maintain their risk management and should pursue cautious positions if there is a bet.

While this week's economic data will be relatively light, traders will get feedback from multiple global central banks, including the Bank of England, when the Jackson Hole meetings take place in London. America this weekend.

The chatter of anxiety is likely to intensify in the coming days from financial institutions as they seek clarity, and the heads of global central banks are delivering inflation rhetoric. and growth.

Behavioral sentiment should be cautious this week as investors take a wait-and-see approach while trying to gauge their outlook. GBP/USD may still be oversold, but a sustained rally is still difficult to predict.

Technical Analysis

Speculative price range for GBP/USD is 1.26610 to 1.27920

Last week's GBP/USD trade tested a fairly wide range, but a range is predicted mainly based on the fragile sentiment that exists in the global markets and Forex. Going forward, 1.27000 will once again come into focus and bullish traders will want to hold this level. A reversal test earlier in the week could trigger further GBP/USD buying to test the resistances reached last week, i.e. 1.27600 seems a possible target.

Day traders should be careful in using leverage and should not be too ambitious if they are looking for big moves. Monday and Tuesday will offer a glimpse into short-term sentiment after a week of rather nervous results. GBP/USD's upside potential sounds enticing and could prove interesting, but Forex has proven to be the best speculative over the past month and traders should be cautious and able to target Fast rate spending as reversals may continue to thrive in the currency pair this week. GBPUSD: Forecast for the Week of August 21 - August 26 _1

GBPUSD: Forecast for the Week of August 21 - August 26 _1

Trading Recommendations

Trading Direction: NO TRADE

Risk Warnings and Disclaimers

Comments

Add to Favorites

Owen Li

Energy

Economic

The likelihood of industrial action at three Australian liquefied natural gas facilities is increasing, but the question for the market is what is the potential impact on the supply of the super-chilled fuel.

Unions at Woodside Energy Group's North West Shelf offshore gas platforms announced plans on Aug. 20 to strike as early as Sept. 2, the latest escalation in a long-running dispute over pay and conditions.

The Offshore Alliance, which consists of two key unions, will also finalise a strike vote at the Chevron-operated Wheatstone and Gorgon LNG ventures by Aug. 24.

It's likely that workers at the Chevron plants will join their Woodside colleagues in authorising industrial action, which could then be launched with a seven-day notice period.

The three LNG plants are located in Western Australia state and combined produce about 10% of the world's supply of the fuel, used in Asia and Europe to generate electricity as well as for industrial purposes.

The worst-case scenario is that industrial action is prolonged and forces a total shutdown of the three plants.

But this is also the least likely outcome as it doesn't suit the aims of any of the parties, namely workers, the LNG producers and the overseas buyers.

Sources at the two LNG companies, speaking on condition of anonymity, believe some form of industrial action is likely in coming weeks, as this is how such disputes have played out in the past.

In effect, the unions and the companies are engaging in a balancing act, with the labour representatives wanting to inflict enough pain on the companies that it becomes more cost-effective to meet their demands.

At the same time, they don't want to cause too much financial loss, or disrupt too many cargoes, as this has longer-term implications for investment, and therefore future jobs, as well as impinging the reputation of Australia as a reliable LNG supplier and partner.

For their part, the companies don't want to be seen to be caving too easily to union demands, but ultimately don't want to have to declare force majeure on LNG shipments.

The most likely outcome for the time being remains limited industrial action, ongoing negotiations and an eventual settlement that sees the unions get some of what they want, most likely in exchange for some longer-term guarantees.

However, the above scenario rests on all parties eventually adopting a mature approach to the dispute, and there are obviously risks that calmer heads don't win the day.

It's these risks that are helping increase the spot price of LNG, with cargoes for delivery to North Asia rising last week to the highest in five months.

The spot price was assessed at $14.00 per million British thermal units (mmBtu), the most since the week to March 3, and also up 55.5% from the low so far this year of $9.00, reached in early June.

There is also some fundamental support for LNG prices, with signs that demand in Asia, the top-importing region, is starting to accelerate ahead of the northern winter.

Asia Imports Rising

Asia's imports for August are expected to lift to 22.86 million metric tons, according to data compiled by commodity analysts Kpler.

This would be up from 21.61 million metric tons in July and would be the strongest month since January's 23.37 million.

The increase in demand is being largely driven by Japan and South Korea, which rank top and third among LNG importers, as they seek to fill storages ahead of the winter demand peak.

Japan is on track to imports 5.56 million metric tons of LNG in August, up from 5.09 million in July and the most since February, while South Korea's arrivals are pegged at 3.64 million in August, the highest since March.

While Asia's LNG demand is picking up, Europe's is continuing to slip, with August imports estimated by Kpler at 8.20 million metric tons, down from 8.78 million in July and the weakest since November 2021.

Europe's natural gas storages are at high levels for this time of year and the continent has also had success in structurally lowering gas demand in the wake of curtailed pipeline supplies from Russia following Moscow's invasion of Ukraine in February last year.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Comments

Add to Favorites

Warren Takunda

Forex

The US Dollar Index (DXY) has once again taken center stage with a significant turn of events. The DXY's daily chart reveals a critical juncture in its trajectory: it has returned to the upper boundary of a descending trendline. This trendline isn't just an arbitrary line on the chart; it's a technically significant feature as it aligns perfectly with a robust area of resistance.

This convergence of resistance factors has established a formidable barrier for the DXY, resulting in a recent price rejection. This scenario has triggered a keen interest among traders and analysts alike, prompting questions about the future direction of the US Dollar Index. Why the US Dollar Index Could Tumble to New Lows_1

Why the US Dollar Index Could Tumble to New Lows_1

Adding another layer of complexity to this analysis is the presence of a steadfast horizontal structure at 103.499. This level has played a pivotal role in the past, acting as both a critical support and resistance zone. It's akin to a psychological battleground where bulls and bears clash for dominance.

With the DXY currently hovering around this level, it underscores the intensity of this battle. The big question on traders' minds is whether this level will act as a springboard for a bullish rally or succumb to the weight of selling pressure.

Now, what does this confluence of factors suggest for traders and investors? The answer lies in the interplay of these critical elements.

The recent rejection at the upper descending trendline, coupled with the historical significance of the 103.499 level, hints at a potential downside for the US Dollar Index. In this context, it's plausible to consider a target around the 101.900 level.

However, it's crucial to remember that financial markets are inherently unpredictable, and circumstances can change swiftly. Therefore, traders and investors must exercise caution, continuously monitor the situation, and employ prudent risk management strategies.

In the weeks ahead, the journey of the US Dollar Index will remain in the spotlight, as it reflects not only the fortunes of a single currency but also the intricate interplay of global economic forces. This situation underscores the importance of staying informed and adaptable in an ever-evolving financial landscape.

Risk Warnings and Disclaimers

Comments

Add to Favorites

Samantha Luan

Economic

Stocks

Asian markets stumbled on Monday after China delivered a smaller cut to lending rates than markets had counted on, continuing Beijing's run of disappointing stimulus steps.

China's central bank trimmed its one-year lending rate by 10 basis points and left its five-year rate unmoved, a surprise to analysts who had expected cuts of 15 basis points to both.

Disappointment at the meagre move saw Chinese blue chips ease 0.3%, while the Australian dollar took a dip as a liquid proxy for China risk.

Investors have been hoping for a repeat of the massive fiscal spending that has juiced the economy in the past, but Beijing seems reluctant to add to its borrowing tasks.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3% to a fresh low for the year, adding to a 3.9% dive last week.

Japan's Nikkei was still up 0.3%, though that follows a 3.2% drop last week.

EUROSTOXX 50 futures and FTSE futures were near flat. S&P 500 futures were 0.1% firmer, while Nasdaq futures added 0.2%. Earnings from AI-darling Nvidia on Wednesday will be a major test of valuations.

Analysts are concerned the market has got too long, especially of tech, leaving it vulnerable to a deeper pullback.

BofA's latest survey of fund managers found sentiment was the least bearish since February 2022, while cash levels were at nearly a two-year low, and 3 out of 4 surveyed expect a soft landing or no landing for the global economy.

Analysts at Goldman Sachs, meanwhile, argue there is still scope for investors to add to equity positions.

"The re-opening of the buy-back blackout window will provide a boost to equity demand in coming weeks although a flurry of expected equity issuance this fall may provide a partial offset," they wrote in a note.

Parsing Powell

Stock valuations have been pressured in part by a sharp rise in bond yields, with the U.S. 10-year hitting 10-month highs last week at 4.328%.

Early Monday, yields were up again at 4.28% and a break above 4.338% would take them to levels not seen since 2007.

Markets assume Federal Reserve Chair Jerome Powell will note the jump in yields at the Jackson Hole conference this week, and the recent run of strong economic data. The Atlanta Fed's GDP Now tracker is running at a heady 5.8% for this quarter.

"It's an opportunity for Powell to give an updated assessment on economic conditions, which now appear stronger than anticipated and reinforce the case for additional rate hikes," said Barclays analyst Marc Giannoni.

"Even so, we would be surprised if he provided specific guidance, with key August prints for employment, CPI and retail sales all to come before the September meeting."

A majority of polled analysts think the Fed is done hiking, while futures imply around a 31% chance of one more increase by December.

The rise in yields has helped the dollar notch five weeks of gains and a nine-month top on the Japanese yen at 146.56. On Monday, it was trading at 145.30 with the market wary of risk of Japanese intervention.

The euro was also firm at 157.96 yen, but under pressure from the dollar at $1.0871 after losing 0.7% last week.

The ascent of the dollar and yields was weighing on gold at $1,887 an ounce, having touched a five-month low last week.

Oil prices edged higher on Monday, having snapped a seven-week winning streak as concerns about Chinese demand offset tight supplies.

Brent was up 38 cents at $85.18 a barrel, while U.S. crude bounced 45 cents to $81.70 per barrel.

Prices for liquefied natural gas (LNG) were underpinned by the risk of a strike at Australian offshore facilities that could affect around 10% of global supply.

Source: Yahoo

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Comments

Add to Favorites

FastBull Featured

Daily News

[Quick Facts]

1. U.K. job market cools in July.

2. The U.S. rig count continues to fall and hasn't bottomed out.

3. U.K. retail sales decline more than expected.

4. Russian Foreign Minister: There are no prospects for Ukraine talks between Russia and the West.

[News Details]

U.K. job market cools in July

A survey released on Monday showed that Britain's labor market is losing some of its inflationary heat with vacancies and advertised starting salaries falling in July for the first time this year. The number of job seekers per vacancy edged up in July, but overall conditions in the labor market remain tight.

While it is normal for vacancies to fall over the summer months as firms typically slow down their hiring during this period, the preliminary data on July employment will demonstrate to UK policymakers that inflation should indeed be on a downward trajectory.

The U.S. rig count continues to fall and hasn't bottomed out

The overall U.S. rig count is down 12 rigs during the week ended Aug. 18, suggesting that oil and gas producers are keeping drilling activity in check despite a recovery in oil and gas prices. So far this year, the rig count has declined by 17% to 642 rigs. The model shows that 700 rigs will be in service by the end of 2023, implying that the trend will stabilize by the end of the third quarter and begin to recover in the fourth quarter.

U.K. retail sales decline more than expected

U.K. retail sales fell more than expected in July after a spell of cool and rainy weather kept people out of shops. Data released last Friday showed that U.K. retail sales fell 1.2% in July from June after seasonal adjustment, beating economists' expectations of a 0.5% decline. The figures mark the first time in four months that sales have fallen short of expectations and could indicate that consumers are starting to buckle under the pressure of soaring prices and interest rates. Breaking it down, U.K. clothing sales also fell last month, which the Office for National Statistics attributed to the wet weather that swept across the country, leading to a drop in traffic to stores. Food sales were also weaker, which customers said was due to higher prices.

Russian Foreign Minister: There are no prospects for Ukraine talks between Russia and the West

In an interview with The International Affairs journal, Russian Foreign Minister Sergey Lavrov said that he sees no prospects for Ukraine talks between Russia and the West at the time. Meanwhile, Western sponsors keep pushing the Kyiv regime to raise the stakes. In our view, the West's hypocritical calls for negotiations are a tactical ruse to buy time once again, to give the exhausted Ukrainian army a chance to take a rest, and to replenish them with weapons and ammunition, said Sergey Lavrov. But this is the way of war, not a peaceful solution.

[Focus of the Day]

None

Risk Warnings and Disclaimers

Comments

Add to Favorites

Thomas

Central Bank

Economic

The People's Bank of China is expected to cut interest rates on Monday, but it may have to throw caution to the wind and 'go big' if it is to soothe the nervousness and concern around China currently sweeping through financial markets.

The Chinese central bank's policy decision is one of three in Asia for investors to take in this week, with the Bank of Korea and Bank Indonesia both expected to keep interest rates on hold on Thursday.

The PBOC's decision and wider developments around China's markets and economy will dominate investors' thinking this week along with the U.S. Federal Reserve's annual Jackson Hole Symposium, where Fed Chair Jerome Powell will speak on Friday.

Investors will also be tuned into the summit of the BRICS group of major emerging economies - Brazil, Russia, India, China and South Africa - in South Africa this week, where Chinese President Xi Jinping will attend.

But whatever Xi says will likely be more political in nature. The assurances investors want from Chinese officials probably center more on monetary and fiscal policy.

Economists at Goldman Sachs and Barclays are among the many who expect the PBOC to lower its one-year loan prime rate by 15 basis points to 3.40%, which would be a new low. China to Cut Rates, But Will It 'Go Big'?_1

China to Cut Rates, But Will It 'Go Big'?_1

China to Cut Rates, But Will It 'Go Big'?_2

Despite Chinese policymakers' conservative nature, the skew is surely for a bigger move on Monday, and further cuts and wider easing in the months ahead. The risk here would be to the currency, which is already extremely weak and vulnerable.

Economists are slashing their Chinese GDP growth forecasts and many doubt Beijing will meet its 2023 goal of 5.0%. Deflation, slumping trade activity and an imploding property sector are the familiar and increasingly serious risks.

Not only is the real estate crisis a threat to growth in its own right - the sector is a huge part of the economy - but the scale of indebtedness raises questions over the strength and stability of the $3 trillion shadow banking system.

Beijing is taking steps to bolster confidence, but so far these measures seem no more than tinkering around the edges. Chinese blue-chip stocks are down 6% in the last two weeks, and financial conditions are the tightest since early December, according to Goldman.

China's problems coincide with a deteriorating global backdrop. The dollar is surging, U.S. Treasury yields are breaking to new multi-year highs, and stock markets around the world are finally getting vertigo.

Much of that is perhaps being exaggerated by the seasonally thin market conditions of August. Either way, investors will be looking to Beijing and Jackson Hole this week for some degree of assurance and guidance.

Here are key developments that could provide more direction to markets on Monday:

- China interest rate decision

- Thailand GDP (Q2)

- Hong Kong inflation (July)