Market volatility remains high, generally across the board regardless of sector, for late November.
Overnight through early Monday morning saw renewed pressure on gold while the US dollar index firmed slightly.
The Grains sector was higher after trading both sides of unchanged overnight through the pre-dawn hours.
If overnight through early Monday morning was any indication, the coming week looks to be another wild one. The fun part is, it makes no difference what sector investors might be most interested in, they are all expected to see continued elevated late November volatility. The US dollar index ($DXY) was up 0.16 at this writing, not overly dramatic, and near its overnight high after finishing 0.30 lower last week. December gold (GCZ25) was down $30 pre-dawn after posting an overnight trading range of $56.50, from up $13.40 to down $43.10. For last Friday’s Kitco News poll on gold’s direction this week, the best I could come up with was, “It is impossible to tell what is real, and even more difficult to guess what will happen next. Given this, my answer has to be a definitive ‘I have no idea’.” Meanwhile, December silver (SIZ25) is sitting near unchanged after posting an overnight range of 99.5 cents. What will happen out in the Barn this week given all three major markets continue to show bullish fundamentals? From a technical point of view, both feeder cattle and lean hogs turned bullish last week, but that and a crisp $5 bill will get you a cup of coffee from your local barista.
The corn market traded either side of unchanged overnight through Monday’s early morning hours, on still light trade volume. December has lost its status of most open interest, but I’ll begin with the nearby issue anyway. Dec25 is showing a 3.5-cent trading range, 1.75 cents on either side of unchanged and was sitting 1.25 cents higher while registering 23,000 contracts changing hands. Is this big volume or moderate at best? It’s difficult to tell these days. My Blink reaction is to say low volume, but again, we are in a time of year when not much usually happens overnight. The March issue was showing trade volume of 15,000 contracts as of this writing. Fundamentally, corn hasn’t changed much with futures spreads finishing last week covering neutral-to-bullish levels of calculated full commercial carry. However, week to week changes show commercial interests were providing support. The National Corn Index ($CNCI) was calculated near $3.9325 last Friday, up 4.25 cents for the week but still more than $1 below its previous 5-year end of November average figure of $4.98. This tells us supplies are still large in relation to immediate demand. National average basis remains weak, coming in at 37.0 cents under December futures Friday evening.
The soybean market had a little something for bulls and bears overnight through early Monday morning. The week got under way with January showing follow-through pressure from last Friday’s silly selloff, dropping as much as 10.25 cents. However, the contract then turned on a dime, literally, rallying to a gain of as much as 10.25 cents and sitting on its session high at this writing. Does this mean the world’s largest buyer used the USDA-driven drop to again cover some secondary cash supplies? It is a possibility. Or was that same buyer simply playing the futures market according to the latest “deal”? Also a possibility. I have no idea when, or if, daily export sales will be announced again or how long the truce between US political parties keep the doors of government open. The bigger question is, given all decisions and actions are decided by one person with one social media account these days, does it even matter? Fundamentally, the National Soybean Index ($CNSI) came in last Friday near $10.4975, up about 8.5 cents for the week but still nearly $1.50 below the previous 5-year end of November average figure of $11.94. National average basis remains weak, coming in at 74.75 cents under the January futures contract Friday evening.
The wheat sub-sector was also in the green to start the week after winter contracts traded both sides of unchanged overnight through pre-dawn Monday morning. Trade volume was light across the board, highlighted by the HRS market showing fewer than 150 contracts changing hands, total for the first four issue (Dec, March, May, and July). Yes, that is quiet, even by spring wheat overnight standards. The HRW market was only a bit more active with December registering 1,200 contracts and March 2,500 contracts traded overnight. For the record, both issues are up about 3.5 cents to start the day. New-crop July is up 2.75 cents at this writing after closing Friday at $5.5650, up 1.75 cents for the week. The National HRW Index ($CRWI) was calculated at $4.4775 Friday evening, roughly $2 below the previous 5-year average end of November figure of $6.4950. Would anyone like to venture a guess as to what that tells us about fundamentals of the largest class of wheat grown in the US, based on the Law of Supply and Demand? I think we know. March SRW was up 5.25 cents at this writing on overnight trade volume of 6,500 contracts while new-crop July is up 4.75 cents and registering 700 contracts changing hands.
On the date of publication, Darin Newsom did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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