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Grain prices continue to slump lower

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Morning report: Corn, soybeans and wheat all face overnight losses heading into Friday’s session. (Comments are updated by 7:30 a.m. Central Time.)

Overnight trends:

  • Corn: Down 4 to 6 cents
  • Soybeans: Steady
  • Wheat: Down 8 to 28 cents

Grain prices found themselves in the red on Thursday, and overnight action suggests that downward slide will extend into Friday as traders continue to assess ongoing global demand trends and production potential for South America’s 2022/23 crops. Ukraine’s ability to export its crops will also be carefully scrutinized. Corn prices dropped 1% ahead of Friday’s session, with some wheat contracts losing as much as 3%. Soybean losses were mild compared to Thursday’s declines, sliding around 0.15% lower.

Overseas stock markets were lightly mixed but mostly lower. Asian markets showed variable losses that ranged between 0.2% and 1.6%. European markets trended as much as 0.3% higher in Germany and as much as 0.2% in France in midday trading. On Wall St., Dow futures dropped 48 points ahead of the opening bell to 34,381 as investors still await a new round of jobs data out later today that are likely to prove influential on potential future interest rate hikes by the Federal Reserve.

Energy futures tested modest to moderate gains overnight. Crude oil inched 0.1% higher to stay above $81 per barrel. Diesel rose 0.75%, with gasoline narrowly mixed overnight. The U.S. Dollar softened slightly.

The latest 72-hour precipitation map from NOAA showed scattered rains and snow possible for parts of the Midwest and Plains between today and Monday, but large amounts will be relatively rare during this time. Official 6-to-10-day forecasts show above-normal precipitation likely in a band stretching from Texas through the Southeast and Mid-Atlantic regions, while drier-than-normal conditions will be more likely in the Northern Plains between December 7 and December 11. Cooler-than-normal temperatures will be prevalent across the northern half of the country during this time.

On Thursday, commodity funds were net buyers of soymeal (+1,500) contracts but were net sellers of corn (-5,500), soybeans (-19,000), soyoil (-14,500) and CBOT wheat (-4,500).

Corn

Corn prices spilled 1% to 2% lower on Thursday, and overnight trading suggests another round of technical selling may be in store today on general export worries and expectations for bumper crops in South America. Prices faced cuts of around 1% heading into Friday’s session.

Corn basis bids were mostly steady to firm after rising 1 to 10 cents higher at five Midwestern locations on Thursday. An Iowa ethanol plant bucked the overall trend after dropping 5 cents yesterday.

Old and new crop corn sales reached 24.9 million bushels. That was on the lower end of trade estimates, which ranged between 18.7 million and 43.3 million bushels. Cumulative totals for the 2022/23 marketing year are trending below last year’s pace so far, with 227.3 million bushels.

Corn export shipments were also lackluster, with 13.5 million bushels. The top five destinations were Mexico, China, Japan, Canada and Honduras.

With the 2022 U.S. harvest in the books, traders are increasingly looking to South America for price signals in the coming months. Production in Brazil and Argentina, coupled with global demand trends, could push corn prices a dollar higher or cause them to slump a dollar lower, according to Naomi Blohm, senior market adviser with Stewart Peterson. Blohm takes a closer look at the situation in yesterday’s Ag Marketing IQ blog – click here to learn more.

Meantime, November is now behind us, and a look back showed the month wasn’t too kind to corn and wheat prices. “March corn finished down 29.75 cents for the month, while March Chicago wheat and March Kansas City wheat were down $1.0375 and $0.745 respectively,” according to Brian Splitt, technical analyst with AgMarket.net. “Much of the weakness in corn and wheat can be attributed to the extension of the Black Sea grain corridor, although it will need to be revisited again in March as the extension is only for 120 days.” Splitt takes a look ahead to see what factors are worth watching moving forward in today’s Ag Marketing IQ blog – click here to learn more.

The preliminary report from the CBOT showed daily futures volume move to 210,953, with open interest trending 1,404 higher. Options volume was at 52,127 and moderately favors calls (29,809) over puts (22,318). Implied volatility for near-the-money January contracts moved to 18.2%, and expire in another 20 days.

Soybeans

Soybean prices wobbled overnight after incurring significant losses on Thursday. Markets remain focused on South American production potential and U.S. export trends for now. Prices have been fairly stable overall since early November but have been reluctant to break above $14.50 per bushel.

The rest of the soy complex was mixed. Soymeal prices tested modest gains overnight, while soyoil prices continued to slump lower after Ukraine released a significant amount of rival sunflower oil for export earlier this week.

Soybean basis bids were steady to mixed on Thursday, rising 5 to 28 cents higher at three Midwestern locations while dropping 5 to 8 cents lower at three other Midwestern locations yesterday.

Soybean exports totaled 25.0 million bushels last week, spilling to the lower end of trade estimates that ranged between 17.5 million and 40.4 million bushels. Cumulative totals for the 2022/23 marketing year are still moderately below last year’s pace, with 700.5 million bushels.

Soybean export shipments were better, making it to 77.8 million bushels last week. China, the Netherlands, Spain, the United Kingdom and Mexico were the top five destinations.

The U.S. Environmental Protection announced its proposed Renewable Fuels Standard “Set” rule, which outlines biofuel blending requirements through 2025. Reactions were mixed, especially from biodiesel advocates. “The minor increases for biomass-based diesel volumes in 2023, 2024 and 2025 are below the industry’s existing production and ignore the clean fuels industry’s significant investments in new capacity,” per a statement from the Clean Fuels Alliance America. Click here to learn more.

China plans to auction off another 18.4 million bushels of its imported soybean reserves on December 9, according to a new statement from the country’s National Grain Trade Center. China has offered a series of similarly sized auctions throughout 2022 to boost local supplies and quell high prices.

The preliminary report from CBOT showed daily futures volume move to 258,986 with open interest down by 7,001. Options volume was at 51,395 and moderately favors puts (31,888) over calls (19,507). Implied volatility for near-the-money January contracts moved to 17.4% and expires in another 20 days.

Wheat

Wheat prices continued to wane overnight, suffering variable losses as another technical setback appears to be increasingly inevitable on Friday. CBOT contracts are at a three-month low as cheaper Black Sea grain available is undercutting U.S. competitiveness in several key overseas markets.

Wheat exports saw just 6.0 million bushels in combined old and new crop sales last week. That was below all trade guesses, which ranged between 11.0 million and 26.6 million bushels. Cumulative totals for the 2022/23 marketing year are tracking slightly below last year’s pace, with 348.9 million bushels.

Wheat export shipments were somewhat better, with 10.0 million bushels last week. Taiwan, Mexico, South Korea, Spain and Algeria were the top five destinations.

Argentina is struggling through more drought conditions as the 2022/23 production season continues, and the Buenos Aires grains exchange is warning more wheat production cuts could be warranted if overly dry weather continues to play out. Harvest progress is at 23% so far, versus 2021’s pace of 22%. Current production estimates are far below initial estimates of 753.2 million bushels, moving all the way down to 455.6 million bushels.

Ukraine’s total grain exports during the 2022/23 season are down nearly 30% year-over-year, according to the latest data from the country’s agriculture ministry. That includes wheat sales totaling 253.5 million bushels, plus another 381.9 million bushels of corn sales. Ukraine is among the world’s top exporters of both commodities.

French farm office FranceAgriMer reports that 2022/23 soft wheat crop quality continues to be pristine, with 98% rated in good-to-excellent condition through November 28. Plantings are close to being finished for Europe’s No. 1 wheat producer, including 99% of the soft wheat crop and 89% for durum. Mild weather has kept physiological progress six to seven days ahead of the prior five-year average.

The preliminary report from CBOT showed daily SRW volume at 71,484, with open interest trending 4,968 higher. Options volume moved to 15,539 and favors calls (10,851) over puts (4,688) by a more than 2:1 margin. Implied volatility for December near-the-money options is at 28.0% and expires in 20 days.

Volume in HRW wheat moved to 24,606, with open interest trending 868 higher. Options volume is at 968 and moderately favors calls (644) over puts (324).

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