Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: United States
MarketMultipleExposure011717 scyther5/ThinkstockPhoto

Markets fail to hold ground for the week

Uncertainty surrounding crude oil, coronavirus, and China trade continue to dominate headlines.

Many markets failed to hold their ground for the week ending 3/31 as nearby corn lost 6 ½ cents, meal lost $10.7 a short ton and Chicago wheat lost 7 cents. The beans end up gaining 3/4 of a cent while Kansas City wheat managed to gain 2¼ cents. Uncertainty surrounding crude oil, coronavirus, and China trade continue to dominate headlines.

Crude oil fell to its lowest level in nearly 20 years on COVID-19-related demand destruction and continued fallout from the Saudi-Russia oil price war before bouncing back late in the week on hopes of a deal to reduce production could be announced next week. 

Corn hit hard

Corn has been hit extremely hard as the oversupply of crude combined with demand destruction for fuel has put the ethanol industry in a bad spot economically and that has spilled over into producers’ balance sheets as approximately a third of the U.S. corn crop is used to produce ethanol. 

Glimmers of hope

We are seeing some glimmers of hope on the demand side of the table as managed money reduced shorts and added to longs across many commodities. In the corn market, the commitment of traders report showed that both Managed Money and Commercials were buyers in the last reporting period. Managed money purchased net 12,300 contracts, decreasing their net short to 99,925. Commercials continued their pattern of buying, purchasing 20,055 contracts and bringing their net short to 143,993. Managed money were net purchasers of soybeans and meal, purchasing 27,621 contracts and 9,396 contracts, respectively. Managed money was a net buyer in both Chicago and Kansas City, buying 16,613 and 8,215 contracts. Managed money is now long 36,756 SRW contracts and 2,292 HRW contracts.

In fact, when we look across the ten major ag markets, funds bought 75,000 contracts shifting their net position to long for the first time in nine weeks. What this shows us is that we are at levels of value and if we can hold levels we should see more buying step up to the plate.

Taking a 30,000-foot view on the commodity complex the Goldman Sacks Commodity index is trading at levels that we have provided support in other times of commodity weakness.

040620mccormick gi monthly.png

A monthly chart of the Goldman Sachs Commodity index (GSCI).

Reach Jim at  jmccormick@AgMarket.Net @jpmccormick3
The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. AgMarket.Net is the Farm Division of John Stewart and Associates (JSA) based out of St Joe, MO and all futures and options trades are cleared through ADMIS in Chicago IL. This material has been prepared by an agent of JSA or a third party and is, or is in the nature of, a solicitation. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading infromation and advice is based on information taken from 3rd party sources that are believed to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. The services provided by JSA may not be available in all jurisdictions. It is possible that the country in which you are a resident prohibits us from opening and maintaining an account for you. 
The opinions of the author are not necessarily those of Farm Futures or Farm Progress. 
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.