Declining Crop Conditions Push Grain Futures Higher

August 26, 2020 12:24 AM
RJO grains and soybeans update

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Corn and Soybeans Mid-Week Update

Corn

Corn has been strong to start this week, mainly due to larger than expected declines in crop conditions. Monday’s report showed Corn G/E rating dropping to 64% vs. 67% expected and 69% last week. The sharp drop in open interest during yesterday’s rally is a good indicator that this rally was mainly fueled by short-covering. Some rains are coming by the end of this week, but the question is now, “is it too little too late” for the corn crop? As usual, I expect the gap from Monday nights re-open to be filled eventually, but it will take a lack of demand or much-improved conditions/ratings to see an extended move lower.

Corn Dec ’20 Daily Chart

Source: RJO Futures Pro

Soybeans

Soybeans, like corn, saw a drastic drop in G/E ratings on Monday’s report. The ratings dropped down to 69% from last weeks 72% and vs. expected 70%. For the time being, China’s demand remains strong, the charts seem strong as well as the rains coming this weekend not being enough, or timely enough either. Grains as a whole seem strong right now, and I would expect soybeans to test $9.40-$9.50 before seeing some selling pressure into the harvest.

Soybeans Nov ’20 Daily Chart

Source: RJO Futures Pro

If you are interested in discussing the potential opportunities in grains, contact Tony directly at tcholly@rjofutures.com.

About the Author

Tony Cholly is a senior market strategist at RJO Futures. Tony's primary focus is on technical analysis in the grain, metals, and energy markets.