Corn and Wheat Bounce, Soy Retreats, and Cotton Flat as Traders Look Ahead to WASDE

Author: Doug Christie

Fundamental: Corn and wheat posted gains of 3.5% and 10%, respectively, for the five-day trading period ending December 5. Corn saw some positive demand news, with an uptick in weekly export sales from the US. Wheat benefited from the reporting of US export sales to China at the same time as Egypt and India signaled renewed buying interest in international markets.  

Soy traded off 3% in the face of better rainfall forecasts in Brazil. Cotton had a very quiet week, trading in a 2-cent range.

All the ag markets will get a key fundamental input with Friday’s WASDE release. This is an interesting reporting period – while the North American harvest is essentially complete, it is not too late for the USDA to make revisions to current crop-year production estimates. At the same time, the market will be looking to this report for emerging estimates of South American production as well as global demand updates.

Technical: The tech outlook took some interesting turns with the recent price moves. Soy moving averages crossed to a bearish signal as of Monday’s close, and the liquidation of managed money longs seems to be adding momentum to the down move. 

Corn shows the prospect of making a bullish moving-average cross on a continuation of the recent rally, with a large managed-money short being potential fuel for a further rally.

Wheat’s recovery has also posted a bullish moving-average cross while showing a net managed-money short as of November 28. The prospect of WASDE on Friday may slow some of the technical action, but conditions are there for some strong moves.   

Cotton is the exception to the above, with range-bound technical and a flat managed-money position. 

Macro: Crude markets traded off $3 per barrel despite OPEC+ announcing production cuts, and USD recovered what it had lost in the previous week. Neither of these developments is doing much to bolster demand sentiment for ags. 

May see quiet sessions for the balance of the week, with potential for stronger breakouts post-WASDE.

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.