As I talked about last time, weather markets in the grain and oilseed sector usually come with a great deal of hysteria. Like a cattle stampede. Yet despite all the chaos and carnage, most of them don’t last very long, both stampedes and weather markets. I mentioned in the previous piece the observed average length is roughly six weeks, though I haven’t collected the price data to substantiate this claim. Running a quick check I’ve seen weather markets run out of steam as quickly as four weeks and some have lasted eight weeks. The interesting thing about this one, based on the Dec23 corn (ZCZ23) weekly chart, is this is the sixth week of the move. For the record, the weekly chart for Nov23 soybeans (ZSX23) is not as clear on the week count. 

Also mentioned in the previous piece is how weather markets tend to end abruptly, like an old cowboy firing his pistol in the air. In the case of grain and oilseed markets, though, all it takes is a forecast of rain. We saw this late last week, leading to a weekend of weather watching as a rain system moved eastward from the Plains across much of the US Midwest. Was it enough to change soil moisture deficits? No. But that didn’t matter, for noncommercial traders had already bought everything they wanted to, seemingly. 

Last Friday’s CFTC Commitments of Traders report, and again I look at the legacy/futures only numbers[i], showed noncommercial traders had moved from a net-short futures position in corn of 62,267 contracts (as of Tuesday, May 23) to a net-long futures position of 118,773 contracts (as of Tuesday, June 20). This switch of 181,000 contracts pushed July corn to a rally of $1.17, September to a gain of $1.29, and December as much as $1.39 higher. But again, the forecasts changed, and the selling began. As of Wednesday’s close, both the hybrid September (an old-crop and new-crop issue) and more heavily traded new-crop December contracts had dropped 95.75 cents from last week’s highs.