Weekly commodity wrap-up

$5 corn

On Thursday, for the first time since Aug. 1, December 2023 corn futures were able to rally and close above $5. Five dollar corn isn’t what it used to be with inflated input expenses that farmers have had to deal with this year, but it is a better price then what they’ve had for the past two months.

The trade talk surrounding the move centered on funds holding heavy net short positions and rolling from the December contract to the March as well as some short covering that might have gotten a little heavy handed. The roll was evident in the volume of spread trading that took place and the movement in the spread itself as the carry from December corn to March corn futures narrowed from -$0.15 to -$0.12 in one day alone.

The action of rolling might have been sufficient to rally the market in and of itself, but fundamental traders were searching for reasons behind the move as well. Unconfirmed rumors of China looking to buy some corn out of the Pacific Northwest was what they came up with. If confirmed the corn rally might have legs to keep it walking forward, if not and the rumor mill has tricked the market, the treat might have been $5-plus corn.

Hot bond talk

If you are younger than 40 you’ve probably never heard so much talk of bonds in the financial news as what you have in the past two weeks.

Bond futures once again pushed to new lows across the board on Thursday with the 30-year treasury yield surging above 5% this week for the first time since March 2007. The fever-pitched discussion surrounding bonds would lead one to believe that we are close to a bottom in bond futures if you buy into the theory that, when the news is reporting on something, the trend is close to changing.

If that turns out to be the case the financial sector might not see any radical shifts in investment strategies or structure. But if bond yields continue to climb above 5% it might spur a dramatic increase in bond trade that has current bond holders scrambling to exit if they are leveraged and new bond buyers looking to purchase a theoretically safe investment with acceptable yields.

Have a comment or question? Please reach out to derrick.hermesch@pinion.global.com

Opinions are solely the writer’s. Derrick Hermesch is a commodity futures broker with Pinion. He can be reached at 785-338-9605. This is not a solicitation of any order to buy or sell nor does it provide any recommendations in regard to the market. Information contained herein is believed to be reliable but cannot be guaranteed as to its accuracy or completeness. Past performance is no guarantee of future results or profitability. Futures and options trading involve substantial risk of loss and is not suitable for all investors.