Market News

Firm finish for grains and oilseeds

Soybeans were modestly higher on short covering and technical buying. The trade is at least a little optimistic during this round of trade negotiations with China, which run through Thursday. There’s about a month to go until new U.S. tariffs are placed on Chinese goods, probably meeting some form of retaliation from Beijing. The intellectual property allegations against Chinese tech firm Huawei might complicate talks, while China’s economic uncertainties and the spread of African Swine Fever could limit their demand for U.S. beans, with the window for U.S. sales ahead of Brazil’s beans really hit the market narrowing. Still, if there’s more damage to South American soybeans, it would probably open up a bigger window for U.S. beans. Following a less threatening pattern, parts of Brazil could see a return to hot, dry weather sooner than expected. Soybean meal was down and bean oil was up on the adjustment of product spreads.

Corn was modestly higher on short covering and technical buying. Corn is also watching trade talks with China and crop weather in South America, especially the effects of hot, dry weather on Brazil’s second crop, the larger of the two and the source of most of their exports. The trade also has an eye on export competition from Ukraine and Argentina. Weekly export sales numbers will be out starting this Thursday, beginning with the December 20th numbers. That last set of numbers will be a combined report for the weeks of January 10th through February 14th, due out on February 22nd, assuming the government remains open. New supply and demand numbers are scheduled for February 8th, along with the delayed January 11th reports. Ethanol futures were mostly modestly higher. The U.S. Energy Information Administration says weekly ethanol production was down 19,000 barrels on the week at 1.012 million, while stocks were up 479,000 barrels at 23.98 million, a new 15-week high. The Renewable Fuels Association says a lot of that build was on the Gulf, a potential sign of new export demand. The industry continues to wait for more details on year-round E15 use, while monitoring margins.

The wheat complex was modestly higher on short covering and technical buying. Wide swaths of winter wheat growing areas are seeing a cold snap, but winterkill could be limited, with warmer weather in the forecast. In any event, some areas had adequate snow cover, winter wheat tends to be resilient, and adage is that you have to kill that crop “several times”. The trade is also watching the export market, looking for new signs of demand. U.S. wheat prices are competitive, but some of that competitiveness is limited by relatively high freights costs. Exports, supplies, and prices in the Black Sea region will continue to be watched very closely. Given the pace of sales out of Russia and Ukraine, even if formal export controls aren’t announced, an informal limiting of sales could be possible. U.S. Commodity Futures Trading Commission Commitments of Traders reports will resume Friday, starting with data from the week ending December 24th.