Author: Doug Christie
Fundamental: Major ag markets worked lower, entering the US Thanksgiving holiday period with a softer feel. Wheat led the way down, with a 17 cent decline in SRW futures. Corn was off 8 cents while beans moved down 12. Cotton continued its decline, with a 134-point dip for the December contract.
US harvest activity is virtually complete, so the supply focus is squarely on South America - most notably for Brazilian bean and corn production potential. Rains there have been scattered and sporadic. That pattern has been enough to keep a weather risk premium in both markets without being severe enough to support a significant rally. Markets will be closed on Thursday, with lighter volumes expected for the bookend days around the holiday.
Technical: Mild signals remain in tech indicators. Corn, wheat and cotton moving averages remain on the modest bear side, while soy flashes a bull signal. The COT report as of November 14 reflects the post-WASDE moves. Most notable is the continued build in managed money longs in beans and the continued liquidation of managed money longs in cotton. The spec money position in cotton has now flipped to a net short.
Macro: Crude oil and USD both moved slightly lower over the reference period, but not to the extent of being a major market driver.
The Biden-Xi meeting did not produce any substansive news on agriculture, but the general tone would seem to allay some fears of escalation of trade tensions between the nations for the time being.
Argentina’s election of Javier Milei as president marks a turn to right on the political spectrum and had generally been viewed as favorable for the country’s ag sector, though specifics on taxation, subsidy and currency issues have yet to emerge.
Thanks to all the players in global agriculture who work to feed and clothe our world!
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.
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