This Week in Ag (August 30)

Ags stay on trend as financial markets find some footing

Fundamental

Nominally stronger markets on the week despite a rough day yesterday for corn and soy. Over the last 5 trading day period soy was the most active, posting a 46-cent gain while corn moved up 13 cents, Cotton up 233 points and wheat down 27 cents. Crop condition scores were basically unchanged and are becoming less relevant as crops near maturity. Concerns on final yields are certainly valid, but some cool down in temps and scattered moisture appear have moderated some of the bullishness. Demand signals are exerting more force on the market – weekly exports reports showed net cancellations in old crop sales for corn while beans showed old crop sales ahead of 4-week average. Cotton sales were slow at 39,000 bales.

Technical

Technical indicators continue to look best for soy as it works back towards $14.00 level, accompanied by a rise in open interest and an increase in managed money longs. The bean chart remains on a moving-average buy signal but relative strength indicators are tipping to an overbought market. Corn shows a lower to sideways pattern while wheat continues its downtrend. Corn and wheat saw an increase in managed money short positions for the week with neutral momentum indicators. Cotton looks to be making a third attempt to get through 88 cent level but without much conviction as open interest continues to decline.

Macro

Financial markets are firmer following Fed Chairman’s Jackson Hole comments. That tone does not seem to have sparked a major ‘risk-on’ move in ags as concerns for overseas destination markets (China) remain in place. Slivers of progress on Black Sea grain movements have been reported but with no substantive movements in what is a seasonally slack period for that region. India announced a ban on sugar exports for the current season, and while not directly related to the markets tracked here, its indicative of the of mood of many market followers – defensive about impact of rising prices.

Trading strategy is based on the author's views and analysis as of the date of first publication. From time to time the author's views may change due to new information or evolving market conditions. Any major updates to the author's views will be published separately in the author's weekly commentary or a new deep dive.

This content is for educational purposes only and is NOT financial advice. Before acting on any information you must consult with your financial advisor.