TFM Daily Market Summary 12-30-2021


FRIDAY, DECEMBER 31: The CME has regular trading hours. Total Farm Marketing offices will close at 2:00 CT; there will be no Top Farmer Intelligence report.

MARKET SUMMARY 12-30-2021 

Tracking the spreads in grain markets can give a good indication of the money flow. The old crop/new crop soybean spread has extended its gains recently as the front-end soybean contracts pushed quickly higher. The Jul/Nov spread has rallied nearly 80 cents since December 14, and a dry weather forecast in South America and the possibility of limited production saw money move strongly into the old crop soybean futures prices. The run up may have gotten overextended, and this week, these bull spreads have been starting to unwind. Improved moisture forecasts, demand concerns, and profit-taking have quickly moved money out of these spreads. As we move into 2022, the weather in South America will likely stay the main headline, and these spreads could very quickly regain strength in more dramatic losses in production than South America realized.

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CORN HIGHLIGHTS: Corn futures were under pressure throughout the session finishing with losses of 7-1/4 in Dec to 10-3/4 lower in Jul. Nearby Mar closed 9-1/4 weaker to end the session at 5.96. Sell stops were likely triggered into the close, as Mar moved back under 6.00. After Tuesday’s bearish key reversal, traders may have been inclined to exit on weakness. Near-term weather forecasts for parts of Brazil and Argentina show some relief from the dry, with the general outlook for the next one to two weeks warmer and drier.

Weekly export sales at 49 mb were supportive, yet not overwhelming. It will be interesting to see if, on the January Supply and Demand report, the USDA will lower exports and at the same time increase ethanol demand. End users are likely hand-to-mouth and unless they see a real urgency out of the Southern Hemisphere, they will likely stay in that purchasing mode. This is likely the same for U.S. livestock producers, that is, buying as needed. The implication is that unless the Southern Hemisphere weather threatens the crop, the market will likely have a downside. Ethanol has a finite amount of grind it can add to projections with most believing this is 100 to 150 mb.


SOYBEAN HIGHLIGHTS: Soybean futures were under heavy selling pressure as forecasters increased near-term rain changes over the next seven days in northern Argentina and southern Brazil. End-of-year squaring of books along with a technical sell signal in overbought territory according to the stochastic indicators likely contributed to losses. Jan closed 28-3/4 lower at 13.27-3/4, trigging a cash sale. Mar soybeans lost 30-1/4 cents to close at 13.38-1/2 and Nov lost 14-1/4 to end the session at 12.65-3/4.

Export sales did not help today’s cause either. Today’s figure was 19.3 million bushels. While not terrible, it was less than half of the four-week average and a marketing-year low, not a bullish momentum builder. Yet, we don’t want to read too much into one day. However, it looks like the market took some weather premium today. Future weather predictions will suggest to traders this is a buy opportunity or a reason to shed long contracts. Soymeal and oil were also weaker with meal shedding 4.00 or more and oil over 80 points lower. Year-to-date export sales at 1.520 bb are 74% of the 2.050 bb forecasted. This is a great start, however, the concern is a shift to mostly South American origination by importing countries.


WHEAT HIGHLIGHTS: Wheat futures succumbed to another day of selling pressure. Profit-taking at year-end, along with spillover pressure from the other grains caused wheat to slip today. Mar Chi lost 8 cents, closing at 7.79-3/4 and Jul down 11-1/4 at 7.74-1/4. Mar KC lost 11-3/4 cents, closing at 8.12-3/4, and Jul down 12 at 8.07-1/4.

The USDA reported today an increase of only 7.3 mb of wheat export sales. Shipments are running behind schedule to meet the USDA’s goal, and it is possible they will decrease wheat exports on the January 12 WASDE report. As of today’s close, Mar KC wheat has plunged close to 60 cents from the high on Monday. The U.S. Dollar Index still hovering around the 96 mark was no help and added to pressure seen today. Russia’s wheat export tax, currently at $94.90 per metric ton is set to increase to $98.70/mt on January 12 as stated by the Russian ag minister. Paris milling wheat futures have traded in a relatively narrow range the past two sessions after plummeting on Tuesday. One might argue that the Mar contract is beginning to form a pennant chart formation that points to the downside. Looking at U.S. futures, some technical indicators also show downward price momentum. Despite the negative close today, all three classes of wheat remain above the 100-day moving average which may act as support. Also supporting the U.S. market is the fact that the forecast for the southern Plains remains dry for the next two weeks. Looking to the northern Plains, the forecast calls for increased precipitation during that time frame.


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John Heinberg

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