Beans gapped down roughly 14 points? While it’s nice to be on the right side of a move like that, thank goodness….corn gapped lower too.
Seems like a severe move to be weather related at this stage. Tariffs enacted?
Not sure either, Jim.
The open was still within the lower part of the previous days range so not a daily gap lower but it was double digits lower than the close, less than 6 hours earlier.
I checked the Argentina radars..........not much rain.
The forecast didn't change that much either, so it must have been news related on something like you suggested.
1. This was the last 18z GEFS out just before the open.
2. Below that, the previous 12z GEFS that came out when the market was trading. If anything, there was a tad LESS rain on the last one but they are both leaning MUCH MORE bearish than earlier this week for Argentina, at least.
3. 6z GEFS from 12 hours earlier
4. 0z GEFS from 18 hours earlier.
I thought market weakness overnight Wednesday was tied to bearish maps 3 and 4, which first added the rains but we bounced back strong later in the day session with that same forecast. If this is weather, then overnight traders are focused on the increased rains coming to Argentina and day session traders were shrugging it off. on Thursday.
More likely something else but sometimes, the market doesn't behave perfectly like you expect it to on weather, as if there's a formula of rains, where the letters represent the importance of certain regions based on production and dryness: A+2B+3C+4D = T(total rains for South America during the growing season) and you expect that when T goes up, its bearish and when T goes down, its bullish.
Just the opposite can happen, depending on a host of other factors.
1. USDA-demand/supply fundamentals. We had a bullish shocker in the January report which has turned the underlying psychology from BEARISH to BULLISH and from ignoring a month+ of severe weather adversity in Argentina to suddenly, trading on it more than anything else.
2. Technical. Key levels. Trends and indicators.
3. Seasonals. Approaching and during harvest is a huge bearish force for instance. Traders, just knowing this will WANT TO BE short during those periods and want to be long during periods with positive seasons.........the law of the markets self fulfilling prophesies.
4. News about tariffs or other surprises that are very unpredictable, unlike the other stuff above.
5. Positions of the funds. If they are overloaded to one side, it creates an imbalance and fuel for them to cover when the market is hit with news that suggests they are wrong, while at the same time, they love to follow trends and can feed a trend to help sustain it for very long periods.
6. We are always looking for THE reason for daily moves, especially big ones like the much lower open tonight. News reporters and brokers are paid to tell us THE reason because thats their job. They usually have decent sources, and certainly more than the average trader. However, I've seen them completely wrong on occasion on the weather. Everybody is wrong sometimes(that includes me for sure). Everybody is wrong about where the price is going a great deal, especially pertaining to how the weather turned out. I'm talking about being wrong about why the price just acted the way that it did. THE PAST. What happens is that they/we find an explanation that makes good sense and will more often than not, give that one the most weighting because its the first one that got stamped into our brains.
7. If you're a weather trader, this is the most dangerous mistake you can make. For instance, if rains had increased a bunch on this last GEFS(they didn't) I would be convinced that this huge open lower was from that. This would cause me to assume that taking away some of those rains or adding more should have a similar impact. It might have an impact but if the real reason was something different, then I'm missing whats of most importance to the market.
No big rains happening this evening in Argentina., which is extremely dry right now This something that can cause huge price changes when the market it closed. Not this time:
Look how dry its been in Argentina!!!!!
30 days below compared to average:
https://www.cpc.ncep.noaa.gov/products/Global_Monsoons/gl_obs.shtm
https://www.cpc.ncep.noaa.gov/products/Precip_Monitoring/Figures/global/n.30day.figb.gif
90 days compared to average
https://www.cpc.ncep.noaa.gov/products/Precip_Monitoring/Figures/global/n.90day.figb.gif
The crop in Argentina has lost a tremendous amount of yield with 100% certainty and this has helped drive prices higher, especially since the USDA finally told us the truth about last years crop......in January, 3 months after most of it was harvested!
USDA January 10, 2025/grains
23 responses |
Started by metmike - Jan. 10, 2025, 11:38 a.m.
https://www.marketforum.com/forum/topic/109451/
+++++++++++
Latest thread:
Soybeans/grains/coffee 1/15/2
18 responses |
Started by Jim_M - Jan. 15, 2025, 9:12 a.m.
To your point about the dryness, a big jump up wouldn’t have surprised me. I guess we wait and find out eventually.
they re saying it had nothing to do with weather. Argentina lowered export taxes on beans
Thanks, mcfarm. That makes complete sense for the reason that we had a much lower open on Thursday evening!
The weather has not changed much. Biggest rains in some time to hit Argentina next week. It will be interesting to see how the market reacts to those rain events. Probably volatile based on the radar lighting up over key production areas OR NOT compared to expectations.
1. Last radar
2. 16 day rains
3. Brazil crop calendar
4. Argentina calendar
https://www.accuweather.com/en/ar/rosario/11222/weather-forecast/11222
https://ipad.fas.usda.gov/countrysummary/default.aspx?id=BR
https://ipad.fas.usda.gov/rssiws/al/crop_production_maps/Brazil/Municipality/Brazil_Soybean.png
https://ipad.fas.usda.gov/countrysummary/default.aspx?id=AR
Last 6z run of the GEFS. Not much different than what the market had on Friday. More bearish than not for Argentina!
February is getting late in the growing season for some areas in South America, so I'm not sure anything but extreme weather can dominate price determination:
3pm update:
Last 12z run:
The early evening 18z GEFS added a tad more rain to Argentina's already bearish forecast for total rains going out 384 hours.
