Grains closed higher on Friday:
Mar Corn + 2 cents/bu (5.93 ¼ )
Jan Soybeans + 8 cents/bu (12.85 ¼ )
Mar Chi Wheat + 4 ½ cents/bu (7.75)
Cdn $ -0.00500 (77.655 cents)
WTI Crude Oil -1.52/barrel (70.86)
Grains gave up some of their midday gains, but across the board managed to remain in positive territory through the close of trading on Friday. For the week, March corn futures closed up 3 ¼ cents/bu, January soybean futures closed up 17 ½ cents/bu, while March Chicago wheat futures actually lost 9 ¾ cents/bu on the week. Corn and bean futures are solidly in an uptrend, while wheat futures remain technically weak.
March corn futures posted their highest close since July 1st, as great domestic demand continues to see consumptive buyers supporting the market. Increasing tensions between the Ukraine and Russia are also seen as supportive to corn values as the Ukraine is the 4th largest corn exporter in the world, and importers do worry that any military conflict could negatively impact shipments. Finally, this week saw dry conditions in parts of South America mount in Paraguay, southern Brazil, and eastern Argentina. It is still early for corn development, as much of the South American corn crop remains to be planted, but as areas of dryness expand, speculators become more reluctant to pressure prices lower.
Soybeans saw support this week, as like corn, dryness in pockets of South America have analysts “taking the top” off of the size of soybean crop in the southern hemisphere. However, unlike corn, soybeans are much further along in their life cycle, with most of the Brazilian harvest expected to be complete by the end of January. There is little doubt that high acreage and good early growing conditions will lead to an all time record large Brazilian soybean harvest this year. Regardless of where exactly the southern hemisphere soybean production ends up, the trade will always put additional weather premium into prices when the crop is getting smaller, and conversely, will take weather premium out of the market when the crop is getting larger. Despite the big Brazilian crop, demand does look to be good however. USA soybean crush margins are obscenely high, meaning that North American crushers will continue to be good buyers. Offshore demand remains solid, with the USDA on Friday confirming the following sales of both soybeans and soyoil:
- 132,000 tonnes of soybeans sold to China
- 33,000 tonnes of soybean oil to India
Wheat enjoyed a nice two day rally to end the week following a brutal 2 week slump in prices. Fundamentally, the global supply of milling quality wheat remains snug. Decent Australian and South American wheat production volumes are adding to global stocks, but the overall quality of that production does remain in doubt. Tensions at the Russian/Ukrainian border will continue to support wheat prices, as Russia is the world’s largest wheat exporter with the Ukraine being number three. Look for more analysis to start the week from the USA regarding damage to the US hard red winter wheat crop from the excessive winds across the southern Plains on Wednesday and Thursday. Over 50% of the wheat crop was impacted, with some in the trade forecasting losses of 20-30% in some areas.
On Friday afternoon, the CFTC released it’s weekly report on fund positions in commodities. This weeks data showed that funds were longer corn futures than expected by 6,000 contracts, were not as long soybean futures as expected by 10,000 contracts, and were less short Chicago wheat futures than expected by 2,000 contracts. On the day Friday, funds were believed to have been buyers across the board, picking up an estimated 1,000 corn contracts (now long 337,000), 2,000 soybean contracts (now long 54,000), and 2,000 Chicago wheat contracts (now short an estimated 18,000).