Corn, Soybeans May Rise as Low Prices Likely to Attract Bargain Hunters
Corn and soybean futures may rise on speculation that low prices will attract bargain hunters.
Both
overseas buyers and investors seeking a bargain purchase likely will,
at the very least, consider U.S. corn and soybean supplies because
prices are historically low.
Soybeans
yesterday reached a fresh six-year intraday low while corn neared, but
did not touch, contract lows set last week after the USDA upped its
forecast for production and yield.
Corn futures for December delivery gained 1 ½ cents to $3.61 ½ a bushel overnight on the Chicago Board of Trade.
Soybean
futures for January delivery rose 1 ½ cents to $8.61 a bushel on the
CBOT. December soymeal futures declined 30 cents to $288.50 a short ton.
December soyoil rose 0.11 cent to 27.40 cents a pound.
Wheat
futures may fall as favorable weather improves prospects for parts of
the U.S. and other exporting countries, which could add to global
supplies.
December wheat
futures in Chicago fell 2 ½ cents to $4.91 ½ a bushel on the CBOT.
Kansas City wheat for delivery the same month declined 1 ¼ cents to
$4.66 ¼ a bushel.
**
Fund Managers Cut Ag Bets, Which May Be Good For Prices
Hedge
fund managers in the week that ended November 10 turned sour on
agricultural commodities after the U.S. Department of Agriculture raised
its outlook for corn and soybean production last week, according to
data from the Commodity Futures Trading Commission. (http://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm)
Positions
on corn went from a plus-19,860 futures contracts to a net-short of
53,164 contracts, meaning the number of money managers who are betting
on a price decline increased considerably from the prior week. Soybean
investors on November 10 were net-short 48,930 contracts and wheat
traders were net-short by 22,914 contracts.
Needless to say, large investors don’t seem to have much faith in the ags.
But
that actually may be a good thing. When positions are extremely short,
like they are now, investors begin to see two things: a bargain and
oversold conditions.
The low
prices we’ve seen recently could draw overseas buyers who need to fill
immediate needs. It also may give sellers pause to think prices are
oversold, and that now may be a good time to buy. As we’ve seen in the
past, fund managers get spooked easily and given any bullish news
whatsoever, the shorts could potentially begin buying back contracts and
bumping prices.
Now, we just need some bullish news.
**
Crazy Day of Weather With Floods, Blizzards
It’s going to be a bit of a crazy day of weather across the U.S.
A
wide swath of land from east Texas to central Illinois is still at risk
of flooding, while a blizzard is hitting part of the High Plains,
according to the National Weather Service (weather.gov).
Flash
flood advisories are in effect for several states including parts of
Illinois, Missouri, all of Arkansas, Louisiana, and Mississippi. A
strong storm could dump several inches of rain in a short time, causing
flooding. That, of course, is bad for farmers in those states who have
any crops left to harvest.
A
blizzard warning has made its way into western Nebraska and Kansas,
which could benefit winter wheat that’s recently emerged. Ahead of that
is a winter weather advisory creeping east into central counties in both
states.