Soy and Wheat Downtrends Continue, While Corn and Cotton Consolidate.

Author: Doug Christie

Fundamental

The major fundamental input was the release of the grain stocks report last Friday, creating a bearish tone with soy, wheat and corn all closing down sharply in the immediate wake of the report.

While the reported figures were only slightly lower than year-ago numbers, the market had expected sharper declines and reacted accordingly.

Harvest in the US is steadily getting underway. Corn and soy are both reported at 23% complete, with cotton at 18% – all in line with five-year average progress.

The WASDE report to be released next week should set the stage for further price action. Will likely need to see a bullish surprise to get markets excited.

Technical

The downside breakouts last Friday cast a defensive tone for techs.

Grain moving averages are all sell signals. The soy market is verging on oversold following a steady downtrend, so that has some potential to support the market. Cotton moving averages are flat as that market continues to be range bound.

COT figures, which pre-dated the grain stocks report, showed an increase in corn managed money shorts, a decrease in soy longs and unchanged positions in wheat and cotton.

Macro

The dollar continues to move higher versus world currencies, which adds to demand concerns for US export – the major preoccupation for markets currently. The risk-off tone in capital markets is not helping matters.

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.