Headlines:

  • Inflation fears to spur fund demand for commodities in 2017…
    Speculators – including 5,000 Chinese hedge funds trading in commodities – are poised to extend into 2017 their greater interest in raw material markets, Sucden Financial said, foreseeing hopes of revival in coffee prices. The closing weeks of 2016 have “until now been supportive of the majority of the commodities complex”, Sucden said, flagging speculators’ willingness in particular to support contracts with a bullish supply and demand story. “A bullish fundamental picture has led to a promising outlook,” the broker said, flagging in particular gains in prices of the likes of oil and zinc, and copper which has rallied more than 25% during the October-to-December quarter. “However, moves have been exaggerated by speculators.”
  • CME grain futures will close early on Friday, December 23rd, at 1:05pm ET; markets will reopen on Monday night, December 26th at 8:00pm ET.

Summary:

As the long holiday weekend approaches trader participation is waning for these grain markets. The notion of being overweight on positions over the long weekend may not be palpable to fund managers which may explain the weakness that we have seen over the past few days. Corn and Wheat both continued a bit lower today. Soybean managed to post a same 0.3% gain of 3 cents. Corn lost 2.75 cents and Wheat lost 3.50 cents.

Corn has been closing lower weaker for the past 5 days. Competition from South America has been looming. All indications are that the combined balance sheet for Brazil and Argentina will have its largest production on record. The strength in the US Dollar has also added some pressure. Given the backdrop of the bearish narrative it can be said that prices have at least been able to hold up reasonably well.

Today, private exporters reported export sales of 132,000 metric tons of soybeans for delivery to China during the 2016-17 marketing year to the USDA. The demand news hardly made a blip on the radar today. The action that we are seeing is more akin to profit taking ahead year end.

dec-21