Grains closed mostly higher on Tuesday:
Mar Corn + 5 ¼ cents/bu (5.90 ¼ )
Jan Soybeans + 15 ½ cents/bu (12.59 ½ )
Mar Chi Wheat – 1 ¾ cents/bu (7.87)
Cdn $ -0.00335 (77.835 cents)
WTI Crude Oil -0.69/barrel (70.60)
Tuesday was a quiet day for grain news, but the market did manage to rebound nicely from Monday losses in beans and corn, despite the fact that there were no new USDA Flash Export Sales today. Technical buying provided the first strength for row crop prices, as overnight values had dipped below the 100 day moving averages, but buying early in the day trading session allowed prices to surge well over those moving averages today. As well, midday weather maps from Commodity Weather Group ran significantly drier for South America production zones, with reductions in projected rainfall seen across the board in the 6 to 10 day forecast windows. Traders will be looking for verification of the drier forecast in tonight and tomorrow’s forecasts.
Tomorrow, NOPA will release it’s November soybean crush report for the USA. The average trade guess is 181.6 million bushels, which would represent the 5th biggest monthly soybean crush ever, but slightly behind the 184.0 million bushels crushed in October. The trade will be paying particular attention NOPA’s reporting of soyoil and soymeal stocks, as much of today’s strength in soybeans came from a massive rally in meal futures (up $14.80 US/short ton) coupled with a sell off in soyoil futures. The unwinding of the “long soyoil/short soymeal” spread started a couple of trading sessions ago, and is likely overdue, as we have seen a return to increasing demand for soymeal since the beginning of November.
Corn prices benefitted from the increase in soymeal prices today. Corn is also being supported by lighter than “normal” producer selling, as growers are holding onto their stored corn, not wanting to miss a rally like we saw in the winter of 2021, by selling too early. As indicated earlier, the size of the 2022 corn rally will be dictated by ongoing Chinese buying interest, and by the size of the 2021/22 South American corn crop. Today, we saw some analysts lower their bias for the size of the Brazilian corn crop.
Wheat values continue to look for direction. Northern hemisphere production issues and good global demand have supported values for the past few months, but increasing forecasts for southern hemisphere wheat production have allowed the wheat market to soften. Likely more fireworks ahead, but technically, the Chicago wheat futures chart is weak. Ongoing dryness in the southern USA Plains will continue to underpin wheat values, but we will need to see some new business in order to revisit our recent highs in wheat prices anytime soon.
On the day Tuesday, funds were believed to have bought 6,000 corn futures (now long 329,0000), bought 12,000 soybean futures (now long 50,000), while selling 2,000 Chicago wheat futures (now short 12,000).