Positive Start to Short Week on Slow Trade

A positive but extremely slow holiday trade unfolded to start Christmas week with corn, beans and wheat all posting modest gains on short-covering and year-end positioning. The available news was more catch-up reports from the USDA and Russia’s continued attacks on Ukraine’s rail and port facilities that could lead to disruptions in the flow of grain out of the Black Sea region. This week’s trading schedule will feature a noon close on Wednesday with markets not re-opening until Friday morning at 8:30 central for a full day to end the week. Without a surprise announcement on Chinese demand or a swift forecast change in South America, the remainder of the week should be uneventful.

News and Notes:

• The SA weather outlook did not change over the weekend, and it remains non-threatening into mid-January. Early harvest in the most northern regions in Brazil will start this week. The latest private crop estimates for Brazil’s corn and bean crops remain above the most recent USDA numbers, with both expecting record or near-record total and per hectare yield records.
• The November bean chart is on Page 2 and shows today’s potential attempt to put in a low. With a lower low, higher high and higher close than the previous day, the DOJI could be signaling exhaustion after the sharp December losses when China’s purchases were a small percentage of expectations. The market is very oversold, but the funds are still holding a large net long, which will limit the available pool of buyers if the rally continues.
• The steady stream of Chinese bean purchases may not be meeting the expectation of 12 MMT by year end, but there are rumors the trade teams are working on a deal for China to return to pre-2023 US bean imports levels of 24-26 MMT annually. This would probably be a symbolic number because China will still buy from the cheapest supplier (Brazil) during SA harvest season and, like this year, when Brazil has a massive crop and can extend their export window.
• Cattle futures, both live and feeders, traded higher today in the wake of Friday’s bullish leaning Cattle on Feed report. Cattle prices have become range-bound just under the 100-DMA, with today’s high marking the highest daily trade since late October. There are two open chart gaps on the April live cattle chart, with one just above today’s close and the other the day after the all-time high in mid-October. The cattle market is fundamentally bullish but remains in the cross-hairs of the Trump administration’s fight to lower food costs, in particular beef prices.
• Wheat moved higher again today on escalating aggression by Russia on Ukraine port infrastructure. While the rally has only added 13-cents is not very impressive, especially since the disastrous $1.60 + losses since mid-February, this rebound feels very hollow. Wheat, even more so than corn and beans, is suffering from records crops in the major production countries and  huge world ending stocks.

Today’s comment will be the only one until this weekend to allow for numerous airport runs and helping my wife get ready for the big day. My family wishes you and your family a blessed and safe Christmas.