Rose on Grain – CME Grains Finish Week Mixed as Year’s End Nears

December 20, 2021 12:29 pm
Published by

Louis W. Rose IV

Corn:

CME Mar corn futures gained 3¼ cents last week to finish at 593¼.  We did not recommend trading any bias last week for corn, wheat, or soybeans. 

The corn market finished slightly higher, despite maintenance of strengthening US currency and on continued strength US export sales and, most likely, tensions between Russia and Ukraine.

Domestically, harvest of the 2021 crop is, effectively, in the books, with trader attentions now turning to 2022 acreage, domestic offtake, and dry conditions across the southern Great Plains.  Current cotton prices keep it competitive with corn for southern acreage.

Net export sales and shipments were higher Vs the previous sales period at approximately 77K and 43M bu, respectively.  Sales were again head of the pace required to meet the USDA’s latest projection while shipments were again well off the pace requirement.  The US is 61% committed and 18% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season; shipments are off their expected pace.

Internationally, there is general optimism regarding production prospects for the new crop across South America, with many projecting new crop production well ahead of USDA’s expectation.  Russia’s saber rattling along its border with Ukraine should serve to keep extra premium in the market.

CFTC Commitments of Traders data for the week Dec 14 (futures only) showed that the trade increased its net short position Vs the previous assay period to approximately 3.28B bu while large specs increased their net long to around 1.68B bu.

For an in-depth analysis of CFTC data see our weekly COT analysis and commentary.

For this week, the weekly technical analysis for and money flow into the Mar contract remain bullish, with the market remaining overbought.  Export data, foreign crop reports, and geopolitical concerns seem likely to be major market moving factors for corn, wheat, and beans over the near-term.

Soybeans:

CME Jan soybeans gave gained 17½ cents last week to finish at 1285¼.

CME soybeans finished near higher on a continuance of strong US export data, despite strength in US currency and strong expectations for the new crop across South America.

Domestically, as with corn, the 2021 harvest is all but complete, with attentions turning to historic post-harvest rally tendencies and projections of 2022 planted area.  As with corn, current cotton prices keep it competitive with corn for southern acreage.  Fall weather did not permit a great deal of wheat sowing across the southern states, which could further curb 2022 southern soybean acreage.  However, soybeans are much less costly to produce than either cotton or corn.

Net export sales and shipments were lower Vs the previous assay period at approximately 48M and 70M bu, respectively.  Sales and shipments were again well ahead of the pace required to meet the USDA’s latest projection.  The US is 72% committed and 46% shipped Vs the USDA’s target.  Sales are notably ahead the average expected pace for this point of the season; shipments are also ahead of the expected pace.

Internationally, growing conditions across South America remain generally favorable, with Conab predicting record production for the new crop.  Overall, expectations are high for aggregate South American new crop production, with many believing the crop will prove significantly larger VS USDA’s expectation.

CFTC Commitments of Traders data for the week ending Dec 14 (futures only) showed that the trade increased its aggregate net short position to approximately 832M bu; large specs notably their net long to around 202M bu.

For this week, the weekly technical analysis for and money flow into the Jan contract have turned bullish.

CME Wheat:

CME SRW Mar futures lost 10¼ cents last week at 775.

CME futures finished lower, on strength in US currency and notions that Russia’s troop build-up on its border with Ukraine is merely saber rattling.  An improvement in weekly export data likely offered support to the market.

Domestically, dryness across much of the Great Plains continues to cause concern for 2022 production.  Sowing of the new WW crop is complete, with nearly 100% of the crop emerged.  Most US producers are now concerned with receiving some snow cover for winter insulation of the new WW crop.

Net export sales and shipments were higher Vs the previous assay period at approximately 24M and 10M bu, respectively.  Sales were ahead of the average weekly pace required to meet the USDA’s official target while shipments were off the pace requirement.  The US is 67% committed and 45% shipped Vs the USDA target.  Sales are modestly ahead of the average long-term pace for this point of the season while shipments are significantly off their expected pace.  SRW sales were higher at around 3.1M bu.

Internationally, weather across the Black Sea region (especially Russia) remains generally favorable for winter crop development.  Still, the most pertinent news is that tensions remain high across the region, with Russia congregating troops along its border with Ukraine, which should be supportive for CME futures.

CFTC Commitments of Traders data for the week ending Dec 14 (futures only) showed that the trade reduced its aggregate net short position to approximately 375M bu while large specs notably increased its aggregate net short to around 48M bu.

For this week, the weekly technical analysis for and money flow into the Mar contract are supportive.  The 800 level is now a point of initial, and potentially strong, resistance.

Have a great week!

    Subscribe to be notified when this post is updated!

    ---

    This Market Report constitutes copyrighted material and may not be reproduced in any manner, either in part or in whole, without prior written consent from Rose Commodity Group. However, redistribution via forwarding of the full link to the report is permitted. Quotations (limit 3) from the report are permitted, so long as they are accompanied by attribution to Rose Commodity Group and a link to the full report.

    ---

    This publication is presented for informational purposes only. While the information contained herein is believed to be accurate and factual, the possibility of error exists. Commodity trading is an inherently risky proposition and there is no guarantee that trades based on the information enclosed herein will result in profitable outcomes.

    This post was written by Louis Rose