• Overnight through early Wednesday morning saw a number of markets reverse course, ever so slightly, from Tuesday's selloff. 

• Fundamentally, most of the Grains sector remains bearish indicating overnight activity was a light round of short-covering from Watson. 

• Wednesday's weather forecasts remain favorable for both 2025 US corn and soybean crops, likely limiting buying interest as the day progresses. 

Morning Summary: George^[i], my young friend from Greece, sent me a message early this morning (early afternoon Athens time) pointing out how Grains and Cotton could see a “Turnaround Wednesday” after markets in general stayed true on their previous roads^[ii] Tuesday. A quick running of the traps of the commodity complex and George looks to be correct. The Grains sector is mostly green, with the outlier being soybean oil, the market that just so happened to finish higher yesterday. Energies were mixed at this writing with crude oil (both WTI and Brent) and gasoline higher while distillates and natural gas were lower. Naturally, the latter was showing a sizeable selloff with the spot-month contract down 7.5 cents (2.3%) at this writing. Yes, the Widow Maker was living up to its moniker pre-dawn. Metals were also mixed with August gold down $18 (0.5%) while September silver showed a gain of 4.0 cents (0.1%) and September copper dropped 16.0 cents (2.8%) in a rather natural gas-like move of its own. It will be interesting to see what happens out in the Barn following Tuesday’s strong rally in live and feeder cattle. Boxed beef firmed again yesterday afternoon as we wait to see what develops in the cash cattle market this week. 

Corn: The corn market took a breather from this week’s early freefall overnight through early Wednesday morning. But the respite seems tentative as of this writing. September (ZCU25) posted a trading range of 3.0 cents, all of it unchanged or higher on trade volume of 21,000 contracts and was sitting 1.5 cents higher pre-dawn. Keep in mind September was down 8.0 cents from Tuesday-to-Tuesday, and 22.25 cents from last Thursday’s pre-holiday weekend close through yesterday’s settlement, indicating Watson had been eager to add to its net-short futures position. Given this, a 3.0-cent rally doesn’t feel like much, but we’ll see how the rest of Wednesday plays out. I can make an argument either way: The market sees some light noncommercial short-covering as we get set for the next round of Wrap-around Weather-market Weekend (WWW) Activity or Watson’s selling interest increases due to continued favorable weather forecasts. The bottom line, based on Market Rule #6: Fundamentals win in the end, is there continues to be ample reason for Watson to add to its net-short futures position over time. The National Corn Index came in at $3.8550 Tuesday evening, putting available stocks-to-use at 13.2% as compared to the previous 10-year average end of July figure of 12.7%. 

Soybeans: The soybean market also tried to rally during the overnight session, but as Wednesday’s morning hours start to lengthen the November issue (ZSX25) has found its way back to unchanged. Nov gained as much as 4.5 cents on trade volume of only 14,000 contracts, leaving the door open to an uptick in activity – possibly noncommercial short-covering – by the time we reach intermission in a couple hours. From Tuesday-to-Tuesday, the November issue was down 9.75 cents but lost 31.75 cents from last Thursday’s settlement through yesterday’s closing bell. While some of this pressure came from the commercial side, there was undoubtedly long-liquidation coming from Watson as well. Recall the previous Commitments of Traders report (legacy, futures only) showed the noncommercial net-long futures position to be 41,333 contracts, a decrease of 14,537 contracts from the previous week when the Nov issue also lost 9.75 cents from Tuesday-to-Tuesday. Meanwhile, as mentioned in yesterday’s Afternoon Commentary, both the North American Nov-January and South American March-May futures spreads closed at new low (strong carry) daily closes Tuesday while covering 60% and 41% calculated full commercial carry respectively. The National Soybean Index was calculated near $9.68, holding above last week’s low of $9.66, for now, and putting available stocks-to-use at 16.6%. 

Wheat: The wheat sub-sector was also in the green pre-dawn, but it’s safe to say I’m not convinced the three markets have suddenly turned bullish. As discussed in Tuesday’s Afternoon Commentary, we could be looking at a small vacuum over the markets given commercial traders moved to the sidelines during yesterday’s selloff. If so, a light round of short-covering by Watson Wednesday could spark a rally, a move that would likely bring commercials back into the game on the sell side. Fundamentally, the National HRW Wheat Index was calculated at $4.7050 last night putting available stocks-to-use at 45.4% as compared to the previous 10-year end of July average of 43.2%. HRW National average basis came in at 0.52 cents under September futures, on par with the previous 5-year low weekly close for this week. As for futures spreads, recall the soon to expire July-September settled Tuesday covering 89% calculated full commercial carry while the September-December covered 76%. As of this writing, September HRW (KEU25) was sitting 1.0 cent higher after adding as much as 2.75 cents overnight. The lead SRW issue was up 1.75 cents pre-dawn on trade volume of 5,200 contracts. Here we see September (ZWU25) gained as much as 3.5 cents overnight. 
 

^[i] George’s book is set to be published as an e-book within the next couple days. I am excited for him and will share updates with you as soon as it is released.

^[ii] Speaking of Roads, Barchart’s Grain Merchandising & Technology Roadshow is coming up quickly later this month. I’ll be at the Ames, Iowa and Manhattan, Kansas meetings. You can find more information and register here: (LINK)