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January 4th - Closing Market Commentary

01/04/2022
January 4th - Closing Market Commentary

Grains closed sharply higher on Tuesday:

Mar Corn + 20 ¼ cents/bu (6.09 ½ )

Mar Soybeans + 34 ¼ cents/bu (13.89 ¾ )

Mar Chi Wheat + 12 cents/bu (7.70)

Cdn $ +0.00240 (78.675 cents)

WTI Crude Oil +1.00/barrel (77.08)

Grains closed very close to their session highs today, as the possibility of shrinking South American crop potential offset yesterday’s concerns over the slower than desired pace of USA export shipments for corn, wheat, and soybeans.  Weather models today suggested building dryness over the next couple of weeks for Argentina and for southern Brazil.  Weather maps are also suggesting little chance for meaningful precipitation for the southern USA Plains over the next 15 days as well, an area that has been ravaged by drought conditions since the fall.

USDA ratings for winter wheat in the southern Plains dropped significantly, with the Kansas wheat crop rated at 33% good/excellent at the end of December, down from 62% in late November and from 51%  on December 12th.  Oklahoma wheat came in at 20% good/excellent, down from 48% in late November

Domestic disappearance in the USA for corn and soybeans remains excellent, as ethanol production and soybean crushing remains extremely profitable.  Government reports suggest that corn used for ethanol in November totalled 468.7 million bushels versus 431.7 million bushels in the same period a year ago.  Corn usage for ethanol is currently running 6.1% ahead of a year ago, versus the USDA forecast of 4% for the year.

On the day today, funds were thought to have been buyers across the board, picking up an estimated 15,000 corn contracts (now long 361,000), 10,000 soybean contracts (now long 106,000), and 8,000 Chicago wheat contracts (now short 22,000).

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