LKCW Nightly: 'Cause Sometimes There's Nothing Like a Little Market Noise

(Hopefully first in a nightly series guys...)

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The generally bearish positioning in the grains  since the Aug. 12 report switched modes early in the week.  Over the last couple of weeks,  bean-grain spreading took the form of long liquidation in soy and short covering in corn and wheat.  The result had been large reductions in open interest for all those commodities as soybeans lost relative value to the grains.  Tuesday and Wednesday the short-covering became long liquidation as open interest in corn and wheat declined further with two consecutive sellers’ bars on the 8:30 open.  Then Wednesday, for the first time this week, and only the second in two, short sellers had their way in the soybean market with an open interest increase and a contract-low close.   That all signaled more pressure to come across the complex, with persistent concerns about oversupply (the IGC released a bearish report today on global grain inventories,
http://www.agrimoney.com/news/world-grain-stocks-to-hit-29-year-hig...
, but Lanworth released a US corn yield projection below the August WASDE number). 

But those designs looked derailed by an explosive 11% jump in crude oil.  The backdrop was anxiety relief in the macro conditions, with the Commerce Department reporting a strong GDP growth figure.  Soybeans rallied (along with the Brazilian real). Yesterday it looked like bean bears would get their shot this week at Monday’s $8.55 panic low, but now, not so much.  Wheat faded (along with the Euro), with the perversely-structured KC-Chicago spread gaining on follow-through strength, and the KC market pennies from contract lows.

If crude oil can make a couple of closes above $42 which is (or was?) resistance as the low from last March, that will be one less deterrent for soybean buyers.  Today’s crude oil strength came in typical fashion with spreading against natural gas, which is now posed for a downside breakout from the trading range throughout the summer.