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Grain Comments: 12-04-2023

Good morning.

Corn and beans are lower this morning on prospects of better rain chances for central and northern Brazil. Wheat markets are higher. Meal is lower while bean oil is flat.

Central Brazil saw some scattered rains over the weekend. Rain changes will continue across central Brazil early this week. The latter part of the week looks dry again. The weather models continue to suggest more significant pattern changes towards the middle of the month. If realized, this would bring more monsoon-type rains to those dry areas. Cooler temps are forecasted for Brazil over the next week, averaging slightly above normal into early December. Argentine weather continues to look good, which has helped pressure soybean meal futures.

Wheat is finding some support on a new Algeria tender and shipping delays in Russia due to weather. Corn is stuck once again between higher wheat and lower soybeans. A large fund net short should offer support to corn and wheat at some point. The corn seasonal argues for a bounce during the month of December.

Soybeans gapped lower last night, leaving a gap area between $13.23 1/2 and $13.22 1/2. Nearby soybeans are trading to their lowest level since November 1st. The next support is $13.00, which held for 6 straight sessions back in late October. March corn is trading an inside day so far this morning. March Chicago wheat was able to exceed Friday’s high and is trading at its highest level since Nov. 9th.

The USDA supply/demand report will be out on Friday. There is no U.S. production update in this report. The focus will be on export forecasts and South American production updates. Conab is out with Brazil production forecasts on Thursday morning.

The commitment of traders’ report on Friday showed the net position of futures and options for the corn managed money at a short of 206,478 contracts. This is the largest net short position since June of 2020 and the largest ever for this time of year. The net short of futures and options for Chicago wheat managed money was listed as 119,986 contracts, the biggest short since May and was nearly tied for the biggest net shorts of the time of year with 2016 and 2017.

Crude and equity futures are lower this morning. The dollar is higher. The payrolls report for November is out on Friday. Futures markets are now anticipating a 60% chance of a rate cut as early as March. This is up from 20% just one week ago. Bitcoin is trading above $40,000 for the first time since May of 2022.

Have a great day!

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