Morning report: Markets set to reopen Tuesday morning after a long Christmas holiday weekend. (Comments are updated by 7:30 a.m. Central Time.)
Because grain markets were closed on Monday, December 26, they enjoyed a silent night heading into Tuesday’s session, where markets will then rush through a shortened four-day week. Here’s a snapshot of where prices were locked in over the weekend. March corn futures are at $6.6625. March Soybean futures are at $14.8450. March Chicago SRW futures are at $7.76, with March Kansas City HRW futures at $8.7475 and March MGEX spring wheat futures at $9.3175.
Overseas stock markets were mixed but mostly higher. Asian markets closed as much as 0.4% down in Hong Kong and as much as 1% higher in China. European markets were mostly moderately higher in midday trading. Wall St. readies itself for the final trading week of 2022, with Dow futures testing 219 gains overnight to 33,596 as traders are still waiting for a so-called “Santa Claus rally” amid ongoing recession fears. (Oftentimes, there is a year-end stock market boost, hence the name.)
Energy futures moved higher overnight. Crude oil was up nearly 1% to $80 per barrel amid China easing Covid restrictions, which is a bullish signal for global demand. Diesel rose 2.25%, while gasoline tested modest gains of around 0.25%. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA shows plenty of rain and snow will be moving its way through the western U.S. between today and Friday, while much of the Midwest and Plains could remain dry during this time. South Dakota and Nebraska should see another round of inclement weather during this time, however. Official 6-to-10-day forecasts show plenty more seasonally wet weather is likely next week, with widespread warmer-than-normal conditions probable for the eastern half of the country between January 1 and January 5.
Last Friday, commodity funds were net buyers of all major grain contracts, including corn (+3,000), soybeans (+5,500), soymeal (+1,500), soyoil (+1,000) and CBOT wheat (+7,000).
NOTE: Because Christmas fell on a Sunday this year and grain markets were closed yesterday in observance of the holiday, regularly scheduled USDA reports will drop one day later than normal. The agency’s export inspection report will be released later this morning, and its export sales report will drop on Friday morning. The same pattern will also occur next week, with New Year’s Day also falling on a Sunday.
Corn
Corn prices only have four more trading days left in 2022. All in all, it has been a wild ride this year, with prices rocketing higher when Russia invaded Ukraine late in February. Prices held at near-historical highs until mid-June before plummeting back below $6 per bushel in July. Prices rebounded to nearly $7 per bushel in the fall but have been struggling to find a lot of positive forward momentum as the year winds down.
Corn basis bids were steady to firm across the central U.S. last Friday after trending 2 to 15 cents higher at four Midwestern locations.
Last December, Brazilian corn exports totaled 133.9 million bushels. And with one week still to go this December, Brazilian corn exports are already at 204.7 million bushels. Anec estimates that total Brazilian corn exports in 2022 will reach a new record of 1.720 billion bushels. Anec attributes the upward trend to a slowdown in Ukrainian exports coupled with the opening of China as a new sales source.
If you still have a significant amount of grain in the bin, Naomi Blohm notes that there is a strong seasonal tendency for March corn futures to rally into July. “Pinning a market price high is nearly impossible, and with so many swirling geo-political activities, constant weather variables, and general supply/demand scenarios unfolding, marketing your grain in 2023 may prove to be tricky,” she says. “I encourage you, however, to not fall into the trap of ‘store and ignore.'” Blohm offers five pieces of advice for properly timing sales in a recent Ag Marketing IQ blog – click here to learn more.
Live events are back! Whether or not you attended the Farm Progress Show and/or Husker Harvest Days this past summer, you should still make plans to attend the 2023 Farm Futures Business Summit, coming up in just a few short weeks. Click here to catch a glimpse of what’s in store and learn how to register.
Speculators cut their net long position of corn by 10,589 contracts to 52,544 in the week through December 20.
The preliminary report from the CBOT showed daily futures volume improve to 178,565, with open interest down 4,739. Options volume firmed to 50,917 and very narrowly favors calls (25,760) over puts (25,157). Implied volatility for near-the-money March contracts held steady at 18.0% and expire in 58 days.
Soybeans
Soybean prices remain in relatively good shape, considering a record-breaking Brazilian crop could be underway. March futures are at $14.8450 heading into Tuesday’s session. In 2022, the highs were captured in early to mid-June, and there were ample opportunities through the year to sell above $15 per bushel.
The rest of the soy complex also held at bullish level for much of the year. Currently, March soymeal contracts are trading at $455.25 per ton, with March soyoil contracts trading at 64.7 cents per pound.
Soybean basis bids held steady across the central U.S. last Friday.
South Korea issued a new international tender to purchase more than 900,000 bushels of GMO-free food-quality soybeans from optional origins that closes on January 4. The grain is split among a series of assignments that would be for delivery between December 2023 and June 2024.
Turkey made provisional purchases of 24,000 metric tons of sunflower oil in a tender that closed on December 23. That oil is for delivery between early January and mid-February – details on origin were not immediately made available.
If you haven’t been to FarmFutures.com since before Christmas, head on over to “7 ag stories you might have missed” to quickly catch up on the industry’s top headlines. Our latest batch of content includes updates on soaring U.S. farmland values, a massive Michigan grain fire, Christmastime reindeer trivia and more. Click here to get started.
Speculators cut their net long soybean position by 8,323 contracts to 86,286 in the week through December 20.
The preliminary report from CBOT showed daily futures volume ease to 167,108 with open interest also down 6,472. Options volume was at 40,578 and is evenly distributed between calls (20,644) and puts (19,934). Implied volatility for near-the-money March contracts held at 16.6%, expiring in another 58 days.
Wheat
Wheat prices endured a rollercoaster ride in 2022, with CBOT prices peaking in mid-May and tumbling after that. Prices steadied through much of the fall but slumped again in November and early December before fighting for some forward momentum to close out the year. Winterkill worries in the U.S. may prove to be a positive price shaker in the near term, and keep watching the latest export signals coming out of Ukraine for additional market clues.
Russian consultancy Sovecon estimates that the country’s wheat exports in December will reach 150.6 million bushels. That would be slightly below November’s tally of 158.0 million bushels but 34% higher year-over-year, if realized. Russia is the world’s No. 1 wheat exporter.
Egypt’s strategic reserves of wheat and vegetable oils are sufficient for between four and five months, according to a cabinet statement on Monday. Egypt is among the world’s top buyer of both commodities.
Speculators cut their net short position of CBOT wheat by 4,090 contracts to 67,107 in the week through December 20.
The preliminary report from CBOT showed daily SRW volume falling to 39,693, with open interest down 3742. Options volume moved to 17,429 and heavily favors calls (12,193) over puts (5,236). Implied volatility for March near-the-money options increased to 30.4% and expires in 58 days.
Volume in HRW wheat fell to 13,210, with open interest trending 1,274 lower. Options volume improved to 1,355 and narrowly favors puts (710) over calls (645).
Here’s your Tweet of the day. It’s all about farmers helping farmers – specifically, about sharing a hack for keeping open fresh water in negative temperatures for your livestock.
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