Author: Doug Christie
Fundamental: Soy was the biggest mover in the first full 5-day review period of 2024 with prices declining by 25 cents. Recent moisture and a favorable forecast in Brazil seem to be systematically taking the weather risk premium out of bean prices. Corn and wheat were 3-4 cents lower over the same period while cotton managed to post a 79-point rise. On the demand front, US exports sales reports are still straddling the holiday period and tend to be discounted as an indicator of true demand pace. The announcement of upcoming destination market wheat tenders has provided some fundamental support, but hasn’t been a market mover.
Technical: A couple developments of note on the technical front. In soy, net managed money positions have flipped to the short side as of Jan 2 reporting and the recent weakness in prices suggests a continuation of that movement by spec traders. In that regard, soy may just be catching up with corn where managed money further extended their 2023 shorts into 2024. Looking at charts, the most meaningful news to report is cotton posting a 10/25 day bullish cross and closing Tuesday just above the 50-day moving average – the first time it has done that since mid-Oct. Corn and soy both remain on moving average bear signals though a heavily oversold relative strength indicator should provide some short-term support. Wheat moving averages and RSI are neutral.
Macro: There has been some moderation to the “risk-off’ sentiment with a slight recovery in crude oil values and a strong opening of the week for US stock indices. The USD is modestly stronger.
No strong signals emerging yet - either internally or externally - for major ag markets. Quiet start, but rest assured there will be plenty of trading opportunities in the weeks to come!