Natural gas posted the largest rally to start the week despite warmer than normal temperatures forecast for much of the US.
The corn market has seen renewed buying interest from both commercial and noncommercial traders since last Wednesday's low daily close.
The soybean market is not bullish fundamentally, yet noncommercial short-covering seems to have sparked a short-term uptrend.
Morning Summary: As we start this next to last holiday week of 2024, a look at the early morning Barchart Futures Market Heat Map shows a few markets were scurrying around overnight. The US dollar index added as much as 0.39 and was sitting at 108.00, one tick off its high as of this writing. Cotton is posting a solid rally as well with the March issue gaining as much as 1.49 (cents per pound) overnight and sitting 1.13 (1.7%) higher pre-dawn. March cotton is interesting in that it posted a new contract low of 67.48 last Friday despite continued buying from commercial traders. Soybean oil also recovered slightly from recent pressure with the March issue rallying as much as 0.62 through early Monday morning. What jumps out at me here is most of the support seemed to come from noncommercial traders despite this group reportedly holding a net-long futures position of 33,350 contracts as of last Tuesday. But the star of the overnight show was our old friend natural gas (NGF25), aka the Widow Maker, with a gain of as much as 19.6 cents (5.2%). What makes the move more interesting, as if the market needed help, was the extended forecast of continued above normal temperatures across the US.
Corn: The corn market was in the green to start the week. March (ZCH25) posted a trading range of only 2.5 cents, from down 0.75 cent to up 1.75 cents on trade volume of 16,000 contracts. No, it wasn’t a busy overnight session for King Corn, at least not as of this writing, but green, nonetheless. A look back at last week and the common theme was renewed buying interest from both sides of the market – commercial and noncommercial. Last Friday’s CFTC Commitments of Traders report (legacy, futures only) showed noncommercial traders had decreased their net-long futures position by 2,575 contracts as of Tuesday, December 17, not a huge surprise after adding 87,195 contracts the previous week. Still, after posting a low daily close of $4.3725 last Wednesday, the March contract has rallied to a high of $4.48 to start this week indicating funds have returned as buyers. On the commercial side, 2024-2025 spreads covered less calculated full commercial carry than the previous week last Friday, all comfortably in bullish territory of less than 33%. The National Corn Index came in at $4.1975, putting national average basis at 26.5 cents under March futures as compared to the previous 5-year low weekly close for last week of 30.5 cents under March.
Soybeans: The soybean market was also higher pre-dawn, also on lighter trade volume. Here we see the March issue (ZSH25) rallied as much as 4.75 cents on trade volume of 15,500 contracts and was sitting 2.0 cents higher to start the day. If we want to use our imagination we could say there was some commercial support early in the overnight session, hinting at possible light interest from Eastern Hemisphere buyers coming out of the weekend. We could also make the argument soybeans did nothing more than follow the rest of the oilseed sub-sector higher with canola posting the stronger overnight gain of $8.20 (1.3%). I mentioned how bean oil was one of the lead markets, with even soybean meal posting a stronger gain (0.5%) than soybeans. All that having been said, the soybean market was able to roll into a short-term uptrend on its daily charts late last week. This after Watson reportedly increased its net-short futures position by 23,113 contracts, putting it at 109,329 contracts as of Tuesday, December 17. The National Soybean Index was calculated near $9.23 last Friday as compared to the previous weekly settlement of $9.3775 telling us available supplies gained on demand. The end of November saw the NSI priced near $9.3750.
Wheat: The wheat sub-sector was in the green to start the week with the spotlight still on Minneapolis (HRS). Here we see the March issue (MWH25) rallied as much as 7.0 cents through early Monday morning and was sitting 6.5 cent higher while registering nearly 800 contracts changing hands. When it comes to trade volume, keep in mind that’s a decent overnight number for spring wheat. The HRS national average basis market remains the more bullish of the three in the sub-sector, calculated last Friday at 20.75 cents under March Minneapolis futures as compared to the previous week’s 22.5 cents under and the previous 5-year average weekly close of 27.0 cents under March. The latest weekly export sales and shipments update showed total sales (total shipments plus unshipped sales) of US HRS running 13% ahead of the same week last year. This makes sense given the National HRS Wheat Index was priced at the end of November near $5.59 as compared to November 2023 at $6.90. March Kansas City (HRW) was up 5.0 cents at this writing after gaining as much as 6.5 cents overnight on a paltry trade volume figure of 1,700 contracts. March Chicago (SRW) was also 5.0 cents higher to start the day.
