Closing Markets: Corn: -2.50.
Beans: -14.25. Wheat: -4.50.
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Cisco – Tuesday, 12/16
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Good evening!
Market Recap-
Happy Friday. Grain and soy markets at the CBOT saw lower closes to end the week on Friday, paced to the downside by soybeans which came under pressure despite the announcement of another chunk of daily sales flashes to China this morning. While rumors that a sell-off in the Brazilian real on political news there throughout the day was responsible for the selling in Chicago, we would also add that there was likely some measure of buy the rumor, sell the fact trading, as these sales were looked for all week and then the market was sold when they finally did show up. Add in further negative developments on the charts, and you've got a pretty good three-part mix for an end-of-week sell-off.
Corn Summary-
Corn futures capped off what was a quiet week this week with an equally quiet day on Friday, as there was little new today different from the previous four days this week that would give traders anything to get excited about. There seems to be a growing amount of the trade that apparently thinks a further decline in USDA corn yields is a given going forward, but we would remind that this cut won't occur, if it is going to, until the final production update in January. And even then, we assume that any cut in yields is going to be met with an equal cut in either FSI or some other demand category, which would leave ending stocks near unchanged compared to current levels. In our opinion, it is this and whether or not exports continue at the pace they're on that drives price direction into January.
Soybean Summary-
Soybeans saw selling on Friday both from a technical standpoint and a fundamental standpoint, as the neckline on the much discussed head and shoulders pattern was broken and as traders continue to seemingly be more disappointed than not on the China sales that show up. As mentioned above, cash sources throughout the day mentioned that they think China is roughly half way to the 12 MMT purchase pledge that was made earlier in November, which if true, would seem to have them on pace to meet this objective by the end of February. Even so, and as we've talked about numerous times since this deal was announced, 12 MMTs of bean purchases, while better than nothing, is a far cry from normal levels. Where total exports shake out by August next year continues to be one of the biggest questions for soy traders, and will likely be debated for months.
Wheat Summary-
Will keep wheat comments short today, as the market closed quietly lower on generally the same news headlines that were seen the rest of the week this week. Aside from fund positioning, which traders presume is still on the short side, market inputs of note include global production and the Russian/Ukraine situation, and as one has been bullish and one bearish, these have led to mostly choppy/rangebound trade.
Outside News Headlines-
Crude oil futures up $0.40+/bbl.
Weather Updates-
This afternoon's weather runs are much like the overnight versions, and continue to feature a more scattered bit of low pressure providing precip to the northern Midwest and Great Lakes area tonight and into tomorrow. A more defined system works through the western part of the region through the day on Saturday and then across the central and eastern Midwest through Sunday. Accumulation-wise, totals this afternoon are still seen like those shown this morning, with a band in the west expecting 2-4" while the bulk of the area sees a lesser half inch to an inch.
Extended forecasts this afternoon now up to the weekend before Christmas are continuing to see little sign of any sort of pattern shift occurring, and if anything, have trended even drier across the northern third of the US in the period. There is good model agreement between all three of the EU, the GFS and the CPC outlooks, which is keeping us confident in the solution.
Similar on the temperature side, there is still zero sign in the models that the current cold northeast and warm southwest pattern changes anytime soon, as cold air from the arctic continues to be able to link up with low pressure around the Hudson Bay and encompass most all of the northern half of North America. We've pounded the drum for days, but a pattern shift requires the Pacific high pressure ridge currently present to move, and there just are no signs that this occurs at any point in the next two weeks.
Main weather event to watch for over the weekend in South America will be a storm system starting in southwestern Argentina and working north and east into southern Brazil by the middle part of next week. Through the end of the week next week, the model sees rainfall totals ranging anywhere from an inch to upwards of 6+", with the heaviest totals expected in southwest and south-central Brazil.
We've talked about it all week, but it continues to be important this coming precip verify due to a couple days of expected warmer weather through the weekend. The GFS this afternoon shows highs reaching above 40 degrees C over the weekend and into the first part of next week, which will exacerbate crop stress in places where moisture has been lacking.
Enjoy it!
Bailey Runyen
Grain Originator | Topflight Grain Coop.
101 N. Main St. | Cisco, IL 61830
Phone :: 217-669-2141
Email :: brunyen@tfgrain.com
