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Ag Markets Enter 2024 With a Defensive Tone

Author: Doug Christie

Fundamental: Prices worked lower in the post-Christmas trading period, with grains seeing declines of 3.5% – 4.5%, while cotton remained essentially unchanged. Most of the price damage was done in the initial trading session of 2024, with all of the tracked commodities posting losses. It’s a quiet period for fundamental news with exports sales being in a holiday lull. On the weather front, Brazil and Argentina continue to see some rain activity which is eroding some of the risk premiums built into the market.

Technical: The trend of reduced managed money positions persisted, with figures as of December 26 showing reductions in net exposures in corn, soy and wheat. Cotton's managed money positions continue to bounce either side of even with specs holding a modest short in the latest report. Moving average indicators show a slight bearish trend in corn and soy and slight bullish trend in wheat, with gaps narrowing in all three of these markets. Relative strength indicators for corn and soy are tilting towards oversold, while wheat stays neutral. In cotton, short-term moving averages are very flat while the market continues to trade very closely to the 50-day moving average. Overall weak technical signals in the markets at the moment.

Macro: The calendar year has started with a ‘risk-off- vibe, indicated most strongly by the crude oil market trading down to $70 per barrel and the USD index showing some strength. Ags seems to have been a follower of this sentiment in early calendar year trading.

Happy New Year and happy trading to all in 2024!