Grain Comments: 12-21-2023

Good morning.

Another quiet overnight trading session at the CBOT. Traders have set the cruise control into the long holiday weekend. So far, news of Brazilian rain amounts has not showed up, but greater totals are expected to arrive in the coming 24 hours. Otherwise, not many groundbreaking developments overnight. Corn futures are trading around a penny higher, with another small 1 1/2 cent range; soybean futures are down 1-2 cents with about a 7-cent range; and the Chi wheat market is 4-5 cents higher and near its highs. Products were mostly lower, with bean meal down around $0.50/ton and bean oil down about 50 points. Outside markets mixed, the stock market is recovering a portion of yesterday’s losses, while crude oil futures trade 30-40 cents lower. The US$ index is down around 35 points.

Debate rages as to the potential size of the Brazilian soybean crop. Estimates for Mato Grosso specifically range anywhere from 5-10% yield reduction to 20-25%.

Trade has been reluctant to add premium in the soybean market until more is known about coming rainfall. More important than the size of Brazil’s final crop is the amount of additional export business the US picks up because of it. This is the million-dollar debate.

SF/SH continues to firm, now having added nearly 12 cents from last week’s lows and trading around -7 cents this morning.

Today’s weekly export sales report is expected to show 800,000 to 1.5 mmt’s of corn, 1.5-2.5 mmt’s of soybeans, and 200,000-600,000 mt’s of wheat. The upper end of the soybean guess would be the second-best sales week in the last year. Corn and wheat business expected to be average.

World freight rates are seen rising further, as shipping companies continue to avoid the Red Sea due to attacks from Iran-backed Houthi militants.

Water levels in the Panama Canal have also caused logistical issues for shipping companies, although late last week the Canal announced shipping slots would increase to 24 in its Panamax and Neopanamax locks.

The US stock market yesterday closed lower for the first time this week, after setting new highs in the previous days. Futures had become overbought with RSI in March Dow Jones futures registering near 85-86.

The US 30-year mortgage rate dropped to 6.83% last week, the lowest reading since June. Rates below 7% had not been since the end of July, and recently were over 8% in October. This is yet another sign the war on inflation is being won.

Have a great day!