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Grain Comments: 12-26-2023

Good morning.

Last week of trade for 2023. Hope everyone had a Merry Christmas. Grain markets are called mixed to lower to start the week, with the trade beginning at 8:30am central this morning. Weekend rains in Brazil were widely scattered in nature, but beneficial, nonetheless. Reports of trace showers to an inch were common, with locally heavier amounts reported. More normal rainfall is still needed going forward. Outside markets are quiet/higher in thin volume overnight; crude oil futures are 40-50 cents higher, the stock market is up marginally, and the US$ index is about 7 points higher.

Pictures/stories beginning to circulate showing some pretty rough scenarios in parts of Northern Brazil. Yield losses estimated upwards of 70-80% are being talked about. Social media will likely show the worst of the worst and will paint a bleaker picture than maybe what is realistic. Time will tell what damage has been done.

While losses of this nature will/do certainly exist, there are also areas that have caught some rain through the season and will have an average, if not above average crop.

Due to this scenario, final crop size will be widely debated into the later days of February. More needs to be known on Brazilian weather/crop potential before Chicago futures make a big move one way or the other.

Friday’s COT report showed traders in the week ending December 19th were sellers of nearly 30,000 corn contracts, sellers of more than 20,000 soybean contracts, and buyers of almost 5,000 contracts of wheat.

Managed money short position in wheat is smallest it’s been since August. That being said, MM combined net short across all US grain/oilseed futures and options contracts was the largest since June of 2020.

In soybean meal, funds sold nearly 61,000 contracts of meal futures and options over the last 3 weeks, the most for any 3-week period since records began in 2006.

Key to CBOT ag markets this week and into Spring will be south American crop sizes and whether Brazil can return to a more normal rainfall pattern. Crops in Argentina and the South will make up for some losses in the North.

Technically, corn futures need to hold last week’s lows, which in the March contract were the contract lows. Soybean futures also sit on support and need to hold 12.92 this week.

Ukraine overnight struck a Russian landing warship off the coast of Crimea with cruise missiles, as reports had begun to circulate that Russia was attempting to seize more Ukrainian territory along the Black Sea coast.

Shipping company Hapag-Lloyd announced early this morning they would make an announcement Wednesday regarding their plan to resume sailing through the Red Sea. Maersk announced over the weekend it would return to the area following US led efforts to prevent attacks.

The US Military yesterday carried out precision airstrikes on targets in Iraq, following a one-way drone attack on a US base that left one US service member in critical condition, and two others wounded.

The US military also announced over the weekend a drone launched from Iran struck a chemical tanker in the Indian Ocean early Saturday. Iran has denied the accusations.

Geopolitical tensions look to remain high into 2024, with wars on multiple fronts keeping the global political landscape edgy at best.

Have a great day!

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