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Middle Tennessee | 'Cause Sometimes There's Nothing Like a Little Market Noise
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Crude oil and the wheat markets were in high contrast today, as the oil built a full 25% appreciation over the low hit Monday morning, while the hard-red wheat market managed the worst valuation of any wheat contract in a half decade.
The wheat market offered a great selling opportunity mid-week as funds short-covered for a dozen sessions or so, and then put in a quietly miserable close to the week. Ironically, the worst thing that can happen to wheat prices lately is a tender out of the world’s largest importer, Egypt. Prices dive every time in attempt to get the bid. It’s a pathetic state of affairs, when every few weeks the world’s sundry wheat exporters are pit in a frenzied competition to devalue, for the sake of the business of a small country in civil war, and whose neighbors are all in civil war, and whose’ neighbors’ neighbors are too. This week was remarkable in that Putin himself got in the game, declaring intention to corner the Egyptian wheat market.
http://www.agrimoney.com/news/egypt-snaps-up-russian-wheat-at-a-bar...
At today’s prices, it hardly seems an endeavor worthy of one of the world’s most powerful man, but maybe his wheat positions with Guvnor require it (google Putin Long Wheat? for details). If the Fed announces no move on interest rates Sunday night, the Euro could weaken. Coming at a time when France’s export terminals are brimming and rejecting goods, it wouldn’t help US wheat prices.
WTI crude oil powered through the resistance level established by the spring low. The Brent contract however is still a couple dollars below that low on the continuous chart. If Brent and WTI spread continue unchanged, it suggests resistance for the WTI up at $48, a long way from Monday morning’s low of $37. If crude took soybeans down early in the week, Friday’s trade left the question whether it will be able to take it back up. Soybeans benefitted from significant short-covering Thursday, but soybeans were down on the week, while crude, incredibly, was up. It seems just as oil finds support, and the USDA begins announcing new crop orders, all the talk is about macro conditions encouraging even more South American soybean acres (talk about market efficiency). Basis weakness seems to be spreading from the far-Western corn belt to the processing plants in Central Illinois, which might be expected seasonally.
For corn, Thursday and Friday sessions were quiet on price action, but Thursday showed a massive 30k decrease in open interest, the largest yet in a string of decreases. For tonight’s CFTC report, I project Managed Money will have reduced wheat longs 20k, and reduced 10k in short contracts. For corn, 10k decrease in longs and 10k less in shorts. For soybeans, 20k decrease in longs, with shorts steady. Action since the report suggests long reduction continuing subsequent to Tuesday. I’ll check this analysis with tonight’s CFTC data and update with the Sunday Nightly.
Edited by LongKC 8/28/2015 14:44
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LKCW Nightly: 8-28
