• As is standard given CFTC's Commitments of Traders reports run from Tuesday to Tuesday, Wednesday is the first positioning day of the week for Watson. 

• The overnight session was largely uneventful, at least compared to what has been happening, as algorithms wait for the next statement/action, real or not, from the US administration. 

• Grains were in the green to start another day, with the spotlight on continued short-covering by Watson in the Wheat sub-sector. 

Morning Summary: We’ve reached another Wednesday, the first day of the new positioning week for Watson. What does this mean? As I’m getting accustomed to saying again, similar to between 2016 and 2020, I don’t know. It all depends on what today’s attempts at market manipulation – I mean executive orders – turn out to be. I’ve seen stories, from reliable sources, of who profited from the recent game of tariffs – both announced and delayed – and the ripple effects seen on crypto currencies, of all things. But as I’ve said so many times over the past two weeks, it simply doesn’t matter anymore. As for markets, the US dollar index ($DXY) was weaker through early Wednesday morning with buyers still showing interest in precious metals. April gold (GCJ25) rallied as much as $22.30 (0.8%) and March silver (SIH25) 13.8 cents (0.4%) overnight. Meanwhile, the Energies sector was in the red across the board pre-dawn. I’ll give you four guesses as to which market led the way, and the first three don’t count. That’s right, our old friend natural gas (NGH25) lost as much as 9.0 cents (2.8%) and was still sitting 5.4 cents (1.7%) lower at this writing. As for Softs, most markets were in the green while cocoa continued to slide lower. 

Corn: The corn market continued to rally overnight with March gaining as much as 4.0 cents on trade volume of 29,000 contracts. March crept closer to the big round number of $5.00, posting a high of $4.9850. This was its highest mark since $5.0450 the week of May 27, 2024. Similar to the other corn contracts, from a technical point of view March looks to be building a rare diamond formation on its weekly chart (see Wednesday’s Chart of the Day). The analytical – nay philosophical – question is if such a chart pattern matters if Watson doesn’t pay attention to such things^[i]. Or is it as simple as Newton’s First Law of Motion applied to markets, meaning corn will continue to trend up until it doesn’t. Have market fundamentals changed dramatically? The National Corn Index (national average cash price) ($CNCI) was calculated Tuesday evening near $4.6175 putting national average basis at 32.75 cents under March futures, as compared to last Friday’s figure of 32.25 cents under and the previous 10-year low weekly close for this week of 41.75 cents under March (2017). Tuesday’s close also saw the March-May futures spread covering 47% calculated full commercial carry while the May-July covered 9%. Last Friday’s settlement had these same spreads covering 51% and 17% respectively. 

Soybeans: The soybean market was also glowing green, mostly, pre-dawn Wednesday. Here we see March rallied as much as 4.75 cents overnight while May added 4.5 cents and July 4.0 cents. Though trade volume likely skewed spread results, an interpretation of overnight gains would tell us there was possibly some buying interest from the Eastern Hemisphere. As I discussed in Tuesday’s Afternoon Commentary, this week’s spread activity has been hinting at possible issues with Brazil’s early soybean crop. Recall the May-July spread closed yesterday at a carry of 12.75 cents and covered 45% calculated full commercial carry as compared to last Friday’s settlement of 14.75 cents carry and 53%. As for national average basis, the National Soybean Index ($CNSI) came in at $10.11 Tuesday evening, 64.0 cents under March futures as compared to last Friday’s 64.5 cents under and the previous 5-year low weekly close for this week of 53.75 cents under March. The bottom line is basis has firmed DESPITE March gaining 33.0 cents through Tuesday’s close. This tells us immediate-term available stocks have tightened in relation to demand. For the record, Tuesday’s National Soybean Index calculation of $10.11 was the highest since $10.1450 on August 5, 2024. I find that development interesting. 

Wheat: The wheat sub-sector was in the green to start the day as well. While overnight trade volume wasn’t heavy, it also wasn’t bad considering the activity seen so far this week. To me, the key factor for the three markets continues to be noncommercial short-covering with March Chicago (SRW) gaining 31.75 cents, March Kansas City (HRW) 33.75 cents, and March HRS^[ii] 24 cents from Tuesday-to-Tuesday. This tells us we should be expecting sizeable reductions to Watson’s net-short futures positions in the next CFTC Commitments of Traders report (legacy, futures only) set for release Friday afternoon. Could Watson have switched to a net-long in at least one of the three markets? It isn’t out of the question. Recall from last week’s update the net-short positions were 91,110 contracts in Chicago, 24,150 contracts in Kansas City, and 18,780 contracts in Miami (I won’t get used to this any time soon). Fundamentally wheat remains neutral-to-bearish, generally across the board. The National SRW Wheat Index ($CSWI) was priced at $5.22 Tuesday evening putting national average basis at 55.0 cents under March Chicago futures as compared to last Friday’s 55.5 cents under and the previous 5-year low weekly close for this week of 56.25 cents under March. The March-May futures spread closed Tuesday covering 52% calculated full commercial carry. 

^[i] I’ll be visiting with Barchart’s Senior Market Strategist and Certified Market Technician John Rowland on this subject in Friday’s Market on Close program. Stay tuned for details. 

^[ii] My friend Tony St. James reminded me on RFD-TV Tuesday morning that it is no longer the Minneapolis Grain Exchange, but rather Miami. I have trouble saying “Miami Wheat”.