Friday June 5, 2020

  • Weather uncertainty remains heading into the weekend the funds continue to buy to cover their short position in case of worsening conditions over the weekend 
  • Large China sale yesterday for soybeans also helping keeping up the momentum, as the American dollar has plunged this week making them cheaper to global buyers 
  • Crude oil prices are testing higher this morning to three month highs 
  • Some money starting to come into the commodities market as faith is re-emerging in energies which could be supportive as funds remain in short positions 
  • Generally short positions are supportive to the market – this is because the funds have over sold their positions and generally they try to get out of these position at some point – meaning they sold so eventually they have to start buying, so when we are sitting at near record short positions like we are today in the corn market, this means that when a weather scare happens the funds have to pay closer attention – they might want to come in and ‘cover’ or ‘buy out’ of their positions a little bit, which generally helps rally the market so that they don’t get caught with a drought coming up, crop conditions suffering and the price moving higher because their is a threat to supply. So this is why, even though there are huge amounts of corn planted in the U.S. and generally its all in pretty good condition, as some talks of dry weather start circulating we are seeing the funds starting to cover their positions a little offering these small rallies over not a huge weather concern.