Wake Up Call January 30th

Good morning, everyone! In today's episode, we discuss the current trends in the grain market, particularly corn and beans. Since the January crop report, we have been seeing a downward drift in grain prices, and this trend continues today. We note that open interest has increased in both corn and beans, with corn seeing a 10,000 increase and beans a 17,000 increase. While some of this could be new hedging, we believe that most of it is additional fund selling.

The funds are already 82% short in corn, which is close to a record level. However, it's important to note that the funds have only reached 100% short once since 2007. So, even though there is still some room for them to sell corn, we are already in a very aggressive fund short position. In beans, the funds were short 54% as of last week, so there is more room for them to sell beans compared to corn.

We also discuss the trade reaction to South American weather map updates. Typically, at the end of January, the trade tends to shift its focus away from weather updates. We have observed this shift since last week, with less of a trade reaction to changes in the weather maps. Even a drier Brazil and Argentina weather map did not lead to an immediate market reaction. This change in market behavior should be kept in mind.

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