Wake Up Call February 6th

Soybeans

We kicked off with a discussion on soybeans, which hit new three-year lows yesterday. The market saw a significant open interest increase, suggesting that funds were actively selling, driving prices down. However, following this aggressive selling, we observed bargain buyers stepping in, which helped soybeans recover from those lows. This pattern of behavior is not new; we've seen similar trends in other commodities as well.

Corn

Corn experienced a comparable situation last week, with heavy fund selling pushing it to three-year lows before it bounced back due to small speculative buying. These buyers are betting on an uptick in demand, which could come from exports or other uses like crushing for soybeans. Indeed, the demand for corn improved, as evidenced by the weekly export numbers rising to 1.35 million tons and a notable purchase by Mexico.

Funds' Positioning

We also discussed the positioning of funds in the market. While they are nearing an aggressively short position in corn, which may slow down soon, there's still room for them to maneuver in the soybean market. We advised listeners to keep an eye on this over the next week or so.

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