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Grain Comments: 12-28-2023

Good morning.

Another low volume, quiet night of trade so far. CBOT markets again have small ranges and not a lot of excitement. The last couple days of trading look to bring 2023 to a grinding halt, as traders have flipped their books to 2024. Corn futures are unchanged to down a tick, soybean futures are unchanged to down a penny, and the Chicago wheat market is 3-4 cents higher. Products mixed, soybean meal is off 20-30 cents and soybean oil is up 5-10 points. Outside markets are also relatively quiet: crude oil futures are down around $1/bbl, the Dow Jones index is down 50 points, and the US$ index is 14 points lower.

What news there was overnight was again macro in nature. Ag-specific news, aside from the Brazilian weather forecast, has been null.

Today’s weekly ethanol production report is expected to show production down from last week at 1.062 mil bpd. Stocks are seen at 22.923 mil bbl vs 22.906 mil last week.

Thousands of people already displaced by the war in Gaza were again on the move Thursday. People from the North who had moved into the central part of the Strip, again had to move farther south as Israel continued its bombardment of the Gaza Strip.

The US’s guardian task force in the Red Sea has been slow to be accepted; of the 20 countries that had agreed to participate, only 12 have offered any kind of public comment.

Nations are fearful of retaliation against them by Hamas and have tried to keep their distance from the conflict due to this reason.

Private estimates continue to be all over the board for Brazil’s soybean crop. SimConsult, a Brazilian agribusiness firm, lowered its estimate of the 2024 crop to 130 mmt’s. This would be the new low water mark. In all honesty, we probably don’t know enough at this point to discredit estimates on either end; a logical argument could be made for 150-160, just the same as it could be made for 140-150 in my opinion right now. We need to see more weather develop over the next 50-60 days.

Corn futures remain range bound, with March between 4.70 and 4.85. New crop Dec 24 futures are between 5.05 and 5.20 and also have been range bound. Producer is waiting for another push on South American crop decline, and end user is waiting for confirmation that the worst-case scenario has been avoided.

Soybean futures also spent most of last month range bound, trading between 13.00 and 13.30 for the most part. China seemed to think values close to $13 were good enough for them, and most feel they’ve finished their next tranche of reserve buying. Confirmation of South America’s crop size is needed to provide price direction into Spring.

Wheat futures likely have the strongest fundamental story based on global balance sheets; however, Chicago price determination recently has been almost exclusively a result of managed money activity. That being said, as of the first of December, fund managers have trimmed their short Chicago position by roughly 30-40%.

Weather forecasts overnight remain the same, with some 3-5 additional inches of rain predicted for Norther areas of Brazil in the 11–15-day period. Upwards of 10+” is needed by February to replenish soil moisture deficits.

Have a great day!

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