Sep Wheat - Steady to 1 Higher
Dec Corn - Steady to 2 Higher
Nov Beans - Steady
The open interest in all contracts of soybeans increased by 7468 contracts on Friday's report of volume and open interest from the Chicago Mercantile Group.
Friday was also a double digit up day for all the bean contracts going out to the July 2024 contract on the soybean board.
All other factors and data aside, when the bean market gives you a good up day in an up trend and open interest also increases a good amount (greater than 5000) on that day, this increase in OI is generally new fund buying and therefore adds to the up momentum.
In general, when a market has confirmed a trend as beans have, it will tend to remain in motion until a greater outside force stops or reverses it. Depending on the time of year, that force could be weather, a market capitulation, or a supply/demand balance.
Think of the supply/demand ratio like a spring. When the supply/demand is equal or balanced, the spring is at rest and you have a market that either completed a move, or it's trading sideways. Stretched out, and there's some or a lot of pressure for a market to trend one way or another.
Currently, the weekly soybean chart says that beans are very overbalanced on the supply/demand ratio - it is indicating that there is not enough supply, or to much demand or a combination of both.
Over time, we will learn more details about this ratio - USDA reports, export/usage, and harvesting results, etc. November Soybeans gapped up on last night's open, indicating strong demand.
The gap remained open all day, and is probably a continuation/measuring gap. If there are no more gaps during the rally, this gap measures to 1483 - view this data as a node or small correction area, not an end all-be all target high price.
The 1399 target was eclipsed by a dime. This was the target created by the initial bottom formation in beans.
Here is today's 2 hour November Bean chart. I believe today's trading session produced the small 3 and 4 in our Elliot wave count. We'll see how tonight's trade behaves.
I can't take credit for this, but a farmer on agtalk pointed out an island bottom/reversal in November Soybeans. It fits a loose definition. You will understand if you read the article.
This formation has 2 gaps - beans were in a down trend from 7/27 to 8/8, gapped down then marked a V bottom. Last night beans gapped Up, leaving a large island below. This pattern doesn't change the soybean analysis except perhaps for emphasizing soybeans strength.
Here is a good definition of an island reversal from investopedia.
Here is a link to the agtalk statement by a longtime farmer: https://talk.newagtalk.com/forums/thread-view.asp?tid=1127017&mid=10379393#M10379393
Here is the soybean continuation chart - the pattern is highlighted with a white oval shape.
Another example of the many ways a chart can be characterized.
December Corn also gapped open, but it was not as strong as the one in beans. Corn did close on the high today, indicating some upside risk. I will need to see tonight's trade to confirm that this gap is a breakaway in December Corn.
The gap is an intraday gap, meaning that there is space in between Friday's close and today's low. These are normally as valid as pure gaps. Again, we will have to see how the corn trade responds tonight.
Check out the 2 hour December Corn chart. The 2nd red line from the bottom is Friday's close so that you can see the small gap.
The September Wheat chart is like a dead fish. I do believe that the wheat trade is chewing through supply, but the fund buyers are showing no urgency, yet. If you remember, the 590 to 575 level is strong monthly chart support going back to 2009.
There are 111,767 patient fund longs and 146,558 fund shorts per the legacy COT report from last Friday. https://www.cftc.gov/dea/futures/deacbtsf.htm
Today's wheat trading marked a lower low by 2.25 pennies, but closed up above Friday's low by 1 cent on some buying.
The wheat continuation chart will roll to the December contract in the next couple of days. When this occurs, it will produce a gap up near the top of the recent trading range.
December closed at 617 and September closed at 588.50, or about 29 cents. Often times when there is a lot of carry like this, the continuation chart roll will start a move (higher) in this case. Here's the daily continuation wheat chart.