REJECTION: Is the Corn/Soybean Rally Over??

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Futures and options trading involves risk of loss and is not suitable for everyone.

Here's the latest on the markets and key developments:

🌾 Corn and Soybean Futures:

Price Rejection: Corn and soybean futures pulled back from recent highs on Friday. The Dec24 corn contract reached $4.16 per bushel but closed near $4.06. The Nov24 soybean contract hit $10.31 per bushel before closing around $10.05. This rally followed reduced farmer selling and concerns over drought in Brazil, along with stronger export sales reported by USDA.

🌾 Fund Trader Positions:

Short Position Reduction: Fund traders have reduced their net short positions. For the week ending September 3, funds were net buyers of 61k corn contracts and 21k soybean contracts. This has cut down nearly half of the record net short position in corn. They also bought 11k SRW wheat contracts. See Fund Tracker charts below.

🌧️ Mississippi River Conditions:

Water Levels: Despite the Potential Tropical Storm Six expected to bring heavy rains to the Gulf Coast and southeastern US, water levels on the Mississippi River are likely to continue declining. The system may bring 3-5 inches of rain to southern areas, but central and northern river valley areas may remain dry. See maps below.

🌽 US Export Commitments:

Strong Corn Sales: New crop US corn export commitments were strong last week at 1.8mmt (72 million bushels), up 22% from the previous week, with Mexico being the largest buyer. Soybean sales were 1.7mmt (61 million bushels), down 37% from the previous week, with China as the largest buyer. Wheat sales were lower than expected at 340,000mt (12 million bushels). See charts below.

🌱 Brazilian Soybean Production:

Increase Despite Drought: Brazil's soybean production is projected to rise to 168mmt this season, a 14% increase from last year, despite ongoing drought conditions. Forecasts suggest that rainfall may start in October. The USDA projects Brazilian soybean production at 169mmt. Prices for soybeans recently fell to a nearly four-year low, but have since been buoyed by US crop concerns.

🚁 Chinese Agriculture Drones:

Security Concerns: US lawmakers are raising concerns about DJI agricultural drones potentially posing a security threat. They argue that these drones could be used for attacks, although DJI denies military ties. The US imposed export restrictions on DJI in 2020, but the company still dominates the US drone market.

💰 Trump’s Tariff Proposal:

100% Tariff Plan: Donald Trump proposed a 100% tariff on countries that move away from the US dollar. This plan follows discussions last year among China, India, Brazil, Russia, and South Africa about de-dollarization. Despite a decline in the dollar's dominance, it still made up 59% of global official foreign exchange reserves in Q1 this year, with the euro at 20%. The Biden administration is also expected to make a decision soon on increasing tariffs on Chinese EVs, batteries, semiconductors, and solar cells.

Stay tuned for more updates and adjustments in these key areas! 🌾📉🌧️