Grains closed higher on Friday:
Mar Corn + 3 cents/bu (6.06 ¾ )
Mar Soybeans + 23 cents/bu (14.10 ¼ )
Mar Chi Wheat + 12 ½ cents/bu (7.58 ½ )
Cdn $ +0.00600 (79.14 cents)
WTI Crude Oil -0.59/barrel (78.87)
Grains shook off early weakness to storm higher in afternoon trading. Initial selling came from ideas of slumping demand for USA grains, but a weaker USA dollar supported commodities as the greenback fell due to a disappointing USA December jobs report say employment rise by only 199,000 jobs last month versus the expectation for 400,000 new jobs. But the biggest reason for gains in corn and soybeans was the fact that South American weather forecasts trended drier as the day went on. Argentina is not expected to see rains for the next week and a half, and will see temperatures soar to 40 degrees Celsius this week. Similarly, southern Brazil and Paraguay saw their moisture forecasts lighten on Friday, with temperatures warm but not as extreme as Argentina’s. Also helping grains on Friday was the re-emergence of index fund buying, as fund managers rebalance their portfolios for 2022.
On Wednesday, January 12th, the USDA will release their massive January reports which will include global and USA Supply and Demand forecast. January’s numbers will contain the final revisions for 2021 USA production levels, as well as adjusted winter wheat planted acres. Also included will be the December 1st Quarterly Stocks Report. The January reports are well known for often containing some major market moving surprises. Domestic demand in the USA for corn and soybeans is currently outpacing current USDA projections, but export shipping is lagging the pace needed to meet forecasts. How the government balances demand is anyone’s guess. As far as final yield projections go, the charts below reflect what kind of changes have been made by the USDA in the last 20 years. Big changes are possible, and even a one bushel per acre adjustment to yield is significant.
Average trade guess for the January USDA reports are listed below. Average trade projections are anticipating very little change to USA grain ending stocks, while most analysts expect to see a slight reduction to world ending stocks of corn and soybeans:
There were no major surprises in the weekly CFTC on fund positions in commodities that was released on Friday afternoon. Funds were less long corn than expected by 5,000 contracts, were less long soybeans than expected by 6,000 contracts, and were shorter Chicago wheat than expected by 1,000 contracts. On the day Friday, funds were believed to have been buyers of 5,000 corn contracts (now long 358,000), buyers of 10,000 soybean contracts (now long 110,000), and buyers of 6,000 Chicago wheat contracts (now short 31,000).