U.S. dollar putting pressure on grains

Published on: 13:01PM Oct 24, 2018

Corn (December)

 

Yesterday’s Close:  December corn futures finished yesterday’s session up ¾ of a cent, trading in a range of 4 ½.  Funds were estimated buyers of 4,000 contracts on the day. 

 

Fundamentals:  Corn futures tried to work higher yesterday with little to no new news.  Much of yesterday’s trade was technical in nature.  The U.S. dollar is surging to 2 ½ month highs this morning which will be a near term headwind for commodities.  The weekly EIA ethanol report will be released today at 9:30 and export sales will be out tomorrow morning, these are the 2 “major” news events scheduled this week.  With the lack of significant news expected, our attention will lean heavily on technicals this week.

 

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Soybeans (November)

 

Yesterday’s Close:  November soybeans finished yesterday’s session down 1 ½ cents, trading in a range of 11 ¾ cents.  Funds were estimated buyers of 1,000 contracts on the day.

 

Fundamentals: China’s stock market was under pressure again yesterday which led to volatility in the global markets which spilled over into commodities and put pressure on beans in the early morning trade.  The U.S. dollar is surging to 2 ½ month highs this morning which will be a near term headwind for grain prices.   Option Expiration is something we have been writing about since last week, this will likely be a key factor in price action.  We have mentioned 860 being the strike of interest for us as it has a lot of the put open interest, this could help keep a floor into the market through the rest of the week.  To give you an example of what we look at in the options market you can look at yesterday’s trade to 851, 860 puts which were in the money by 9 cents were only trading fractionally over 10 cents, indicating little fear of a complete breakdown before Friday’s close. 

 

TechnicalsClick this link to get our full commentary delivered to your email.

 

Wheat (December)

 

Yesterday’s Close:  December wheat futures finished yesterday’s session up ¼ of a cent, trading in a range of 6 cents.  Funds were estimated buyers of 2,000 contracts on the day. 

 

Fundamentals:  Wheat futures have been under pressure in the overnight and early morning session as the U.S. dollar surges to multi-month highs.  If the dollar continues to take out technical resistance levels it will be a meaningful headwind for grains, wheat more so than the others.  Export sales will be out tomorrow morning, this has the ability to influence price action in the back half of the week as well.  Option expiration is Friday, there’s not a strike that jumps out at us but if we had to lean on one, 510 would be the target for Friday’s close. 

 

Technicals:  Click this link to get our full commentary delivered to your email.

 

 

 

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