Column: Will Thanksgiving week interrupt the bull run in CBOT futures?
24.11.2020 (uk.reuters.com) - FORT COLLINS, Colo. (Reuters) - Many commodity traders take a breather during the U.S. Thanksgiving holidays to spend time with family and kick off the festive season. The holidays are already expected to look a lot different this year for most, a theme that is already true of recent trade in Chicago grain and oilseed markets.
Trends in futures prices can be somewhat erratic during Thanksgiving week, especially when participation is thinner. But the market this year has already been on an unusually bullish run, and participation has mostly been stronger than usual.
On average over the last decade, Thanksgiving week has been slightly more bullish than not across CBOT corn, wheat, soybeans and products. Corn futures rose the least, by just 0.2%, while soybean meal rose by an average of 1.5%. Those also featured the highest and lowest volumes, respectively.
In absolute terms, corn futures moved by an average of 2% during the last 10 Thanksgiving weeks, while soybean meal moved 3.5% and soybean oil 3.2%. Soybeans and wheat were in the middle.
Wheat has recently been the least likely to end Thanksgiving week lower - it has been five years since that happened. Soybeans have ended the last two years lower and corn was higher last year.
Trading volume in the most-active corn, soybean and wheat contracts averaged more than 10% lighter than the full-month mean during the last five Thanksgiving weeks. But volume in the soy products was much closer to normal.
Soybean oil has had by far the highest floor when it comes to the big moves during the holiday week. Over the past 10 years, bean oil futures’ smallest Thanksgiving week move in either direction was 1.5%.
That can be largely explained by the Nov. 30 deadline for the U.S. Environmental Protection Agency (EPA) to set volumes for the next year’s biofuel blending mandates under the Renewable Fuel Standard (RFS). But it appears unlikely that the 2021 figures are coming soon, since the typical mid-year proposal was put on hold months ago.
November 2020 has already been unusually exciting for grain and oilseed markets based on lighter supply and robust demand. Through Monday, most-active soybean futures had risen 13% so far this month, the most for the date. The last time soybeans rose more than that during the whole month of November was in 1987.
Soybean oil futures have gained 14% this month, the most for the period since 1993, and soybean meal’s 4% rise is a four-year best. Corn futures are up 9% this month, the biggest November rise thus far since 2009. Wheat is the most lackluster, having gained 1%.
Through the first 15 trading days of November, volume in most-active soybean futures was 35% higher than the five-year average for the period. Wheat volume was up 11%, but corn was down 7%.
CBOT grain and oilseed markets will close at the normal time on Wednesday and will not re-open Thursday. There will be no overnight trade Thursday into Friday and the markets will open at the usual time on Friday, but they will close at 12:05 pm CST, earlier than normal.
The opinions expressed here are those of the author, a market analyst for Reuters.
Editing by Kenneth Maxwell