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Soft Price Action Heading into the Holiday Break

Author: Doug Christie

Fundamental: Limited fundamental news, and the approaching holidays brought a quiet tone to markets.  

All the tracked markets moved modestly lower in the five-day reference period. Corn finished 8 cents lower, while soybeans lost 11 cents. Wheat prices dipped by 3 cents.  Cotton values declined by 159 points.

Weather in South America followed recent form – some rain activity to maintain crops but with more needed and expected in coming weeks. 

Technical: Managed money traders appear to be bringing in positions as the calendar year winds down.

Corn net short was trimmed by 9,593 contracts, while the net soy long declined by 5,784 contracts. Wheat saw the largest net change, a reduction of nearly 26,693 contracts in the net short position. Cotton was the exception to this pattern with a 6,770 increase in managed money exposure, creating a small net fund long.  

Moving-average signals remain uncompelling after five days of prices trading in a narrow band while momentum indicators are in balance in all four markets.

Macro: Outside markets have been more exciting than ags, with financial markets continuing to show strength following Fed comments suggest the rate hike era is coming to an end in 2024.  

Crude petroleum put in a strong 5 days with a $5.26 gain in West Texas futures while the USD index declined 1.85%.  Each of these developments are, in theory, supportive of commodity prices but have yet to see any spillover into ag commodity sentiments. 

While there are plenty of trading days remaining for 2023 the recent pattern seems to be one of reduced activity.

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.