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Grain Comments: 12-18-2023

Good morning.

The last full trading week of the year started lower at the CBOT, as grain markets are unable to follow through on Friday’s higher trade, at least in the overnight session. Weekend weather in South America was as advertised, with the key for this week being whether needed Brazilian rainfall shows up by Thursday/Friday. Corn futures are trading 1-2 cents lower, soybean futures 2-3 cents lower, and the Chi wheat market down 6-7 cents. Products mixed, meal 10-20 cents lower and bean oil up 0.20 to 0.30 cents. Outside markets also start the week quietly, with crude oil futures up around 50 cents/barrel, the Dow Jones index up 60-70 points, and the US$ index 5 points lower.

Overnight markets have started out with small ranges and light volume this week, as whatever traders haven’t started Christmas break yet anxiously await the next 5 days of South American weather.

Forecasting models are at odds, with the latest run of the European model still advertising some 2-3″ of moisture, while the GFS model has any amount over 1.5″ far more scattered in nature. Late week price action will be determined almost exclusively by gauge readings, especially in soybeans.

Otherwise, fresh fundamental news is notably absent over the weekend. Next key report from the US government will be the quarterly grain stocks report due out January 12th, along with the January WASDE report.

Friday’s COT report showed traders for the week were sellers of 27,000 contracts of wheat (-69,000), sellers of 9,000 contracts of corn (-151,000), and sellers of 5,800 contracts of soybeans (+31,000).

In world news, US Defense Secretary Lloyd Austin is in Israel today, calling on leaders of the IDF to consider a more targeted approach to its high intensity war in Gaza.

Russia’s Ag Minister, Dmitry Patrushev, over the weekend stated that Russia has “no interest” in extending the Black Sea grain deal, as tensions in the region remain heightened.

Hostilities are also increasing in the Red Sea, as Houthi rebels in the region step up their attacks on sea-going vessels. Two of the world’s biggest freight firms, including MSC, announced over the weekend that they would be avoiding the Suez Canal due to the increased attacks.

In US weather, some of the driest areas of the Southern Plains received good rainfall over the weekend, with an additional 1-3″ slated to fall Thursday-Saturday this week.

Have a great day!

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