Grains are mostly lower at midday:

Mar Corn – 6 cents/bu (6.03 ½ )

Mar Soybeans + 1 cent/bu (13.90 ¾ )

Mar Chi Wheat – 8 ¼ cents/bu (7.61 ¾ )

Cdn $ unchanged (78.69 cents)

WTI Crude Oil +1.40/barrel (78.39)

Cereal grains have been under pressure for the entire day session, while soybean futures have actually showed some decent strength, at one point trading up to new highs for the move.  March soybeans traded up as much as 9 cents/bu today.  The USDA confirmed a Flash Export sale of soybeans to an unknown destination for 132,000 tonnes – but the sale is for the 2022/23 marketing year.

Support for beans continues to come from concerns over dryness in southern Brazil and in Argentina.  Hot and dry conditions will persist for the next 10 days, before rains are forecast to return.  For much of southern Brazil, rains 2 weeks from now will be too late, as December was the critical month for soybeans.  Rains in two weeks in Argentina would still be beneficial.  One Brazilian analyst in Rio Grande do Sul wrote today that in December many soybean plants actually died, and fields that were replanted have yet to receive any rains at all.  He pegged production losses at 4 million tonnes in RGDS, and 5 million tonnes in the province of Parana, indicating that the StoneX production numbers of 134 million tonnes overall is very accurate, IF Brazil gets rains to stabilize production levels. 

The Energy Information Administration confirmed in it’s weekly report on petroleum stocks that USA ethanol production last week was 1.048 million barrels per day.  This is a solid production number, but does represent a drop of 11,000 barrels per day.  A little more concerning is the fact that ethanol stocks rose by 700,000 barrels to 21.4 million barrels.  The jump in ethanol stocks is a little more understandable when one considers that gasoline stocks last week rose by 10.1 million barrels to 232.8 million barrels overall.

We should expect to see a high degree of volatility in grain futures going forward.  Afterall, we are in a weather market.  Ultimately, until any forecast  rains verify, our bias for grains remains friendly.