Grains closed mostly lower on Wednesday:
Mar Corn – 4 ½ cents/bu (5.85 ¾ )
Jan Soybeans + 3 cents/bu (12.62 ½ )
Mar Chi Wheat – 31 cents/bu (7.56)
Cdn $ +0.00100 (77.90 cents)
WTI Crude Oil +0.68/barrel (71.41)
Grains, particularly wheat, came under some heavy selling pressure midway through the day trading session, as values slumped with corn being down as much as 8 cents/bu, soybeans down as much as 8 ½ cents/bu and Chicago wheat being down as much as 36 cents/bu at one point. Weakness in wheat was tied to rumors of substantially lower Australian grower bids for wheat today, which brought selling into European wheat futures, which spilled over to North American markets. The weakness in wheat could not be ignored by the row crops, despite continued evidence of good domestic demand for corn and soybeans. Ongoing global concerns over the spread of COVID, also brought sellers to the market.
NOPA released it’s October USA soybean crush data today, with usage pegged at 179.462 million bushels of soybeans last month. That was well below the average trade guess of 181.64 million bushels. Soyoil stocks were surprisingly lower @ 1.832 billion pounds, roughly 70 million pounds less than the average trade guess. Renewable diesel demand continues to increase the need for soyoil, and that is the main reason for the lower than expected soyoil month ending stocks.
The Department of Energy released it’s weekly report on petroleum stocks this morning. It showed that crude oil stocks in America declined by 6 ½ million barrels in the last week to 1.0272 billion barrels. While crude oil stocks fell slightly, ethanol stocks grew by 400,000 barrels to 20.9 million – still 2 million barrels less than at the same time last year. On the week, ethanol production averaged a robust 1.087 million barrels per day, some 3,000 barrels less than last week, but 130,000 barrels per day more than during the same week last year.
There were no USDA Flash Export Sales reported this morning.
Tomorrow morning, the USDA will release their Weekly Export Sales Report for the week ended Thursday, December 11th. Trade guesses for sales are similar to last week/last year as indicated below (in thousands of tonnes):
Heavy winds today and tomorrow across much of the USA Southern Plains will create havoc for the winter wheat crop, with dry areas susceptible to “sandblasting” of the crop. Today’s lower market action was overdone, with technical selling allowing the market to free fall. We would look for overnight strength in wheat, based on the today’s selling subsiding and with the expectation that consumptive buyers will return to the market in order to pick up some bargains. Any strength in wheat should provide support to the other grains as well.
After the close of grain trading today, we saw a decent rally in energies, outside commodities, and equities, as the Federal Reserve confirmed expectations that they expect to have 3 interest rate increases in 2022 as they attempt to control inflationary pressures. The late market action is more of a “sell the rumor, buy the fact” type of trade, as some market participants take money off of the table following the Fed’s confirmation of the expected announcement.
On the day, funds were believed to have been sellers of 5,000 corn contracts (now long 324,000), while being buyers of 2,000 soybean contracts (now long 52,000), and sellers of an estimated 20,000 Chicago wheat contracts (short 32,000 overall).