Wheat, Corn and Soybeans Prices Come Off Lows After WASDE
Wheat, Corn and Soybeans Prices Come Off Lows After WASDE
Shorts Squeezed in Agricultural Commodities as Fundamentals Strengthen
- Agricultural commodities extend recent gains off multi-year lows.
- Friday’s March WASDE report trims bearish market bets.
- Wheat, corn and soybean markets in focus.
WASDE report may help agricultural commodities put in a bottom
It’s been a while since a WASDE (World Agricultural Supply and Demand Estimates) update in November, but agricultural markets have suffered some severe losses. Since then, grain markets have been smashed in 2024 due to increased supply over the past year, but signs that the bottom has been put in are flashing, and traders are taking notice.
Corn, wheat, and soybeans are all coming off multi-year low levels as the fundamental backdrop shifts from very bearish to just a little bearish. Will the shifting, albeit still bearish fundamentals, allow these agricultural commodities to put in more gains?
Wheat recovers off lows following WASDE
If you were trading wheat futures (/ZW) on Monday morning, you saw a market breaking into its lowest levels since August 2020, but prices started to rally into the afternoon, and wheat prices are up 1.81% on the week as of March 12, its best weekly performance on a percentage basis since December 2023.
Chicago SRW wheat futures and Kansas City futures, when combined, show the largest short position among speculators since mid-2019, according to the Commitments of Traders report (COT) from the Commodities Futures Trading Commission (CFTC).
The elevated short position leaves prices exposed to a potential short rally and highlights the fact that shorts may not have much more patience to stay in the trade.
Another development to consider is changes in the latest WASDE report from the United States Department of Agriculture (USDA). Global ending stocks were lowered by 0.6 million tons to 258.8 million tons, per the WASDE, which was released on Friday.
At the same time, global consumption was upped to 799 million tons.
**All subsequent references to supply and demand estimates are attributable to the March WASDE report**
Data sourced from USDA’s March 2024 WASDE report
Corn follows a similar pattern
Corn is following a similar pattern to wheat, with prices coming off a bottom in February when prices briefly broke below the 400’0 level. Now prices are up nearly 3% this month, putting it on track to break a 3-month losing streak. That bottom is also coming off the lowest level since November 2020.
Does the WASDE data support a fundamental case for the bottom being in? The U.S. outlook was unchanged in the report, but globally, coarse grain production for 2023/24 was forecasted at 2.8 million tons to the downside at 1,507.4 million tons. Ending stocks were also trimmed, with declines in production coming from South Africa, Ukraine, Mexico, and Russia.
Given the extreme price levels, this might support some further upside in the short term.
Similar to wheat, corn trader positioning is also at extreme levels. While shorts reduced their exposure slightly last week, short speculators have the largest position since April 2019, putting a short-covering rally on the cards.
Soybeans the best bet for March?
Soybean futures (/ZSH4) are up nearly 5% this month in the best performance so far on a monthly percentage basis since February 2022. The commodity is coming off the lowest levels since November 2020 and looks poised to offer the best chances for a trend reversal out of the three commodities discussed in this article.
Globally, oilseed production was trimmed by 0.7 million tons to 658.7 million tons, and the 2023/24 soybean supply estimates were for lower beginning and ending stocks and lower production.
Global ending stocks for soybeans were cut by 1.8 million tons to 114.3 million tons, with higher Chinese stocks partially offsetting lower Brazilian stocks.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.
Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.