Volatility high in equity and energy markets
The wheat complex was under pressure all week but saw some buying at the new contract low of $5.445 in Minneapolis. The U.S. dollar continues choppy trade, experiencing a fifth session of back-and-forth 50-point moves. The Dec. 27 session was lower to the $96 level. Matif wheat futures have backed off of recent two month highs to $203.25 per metric ton.
Weather shows favorable snowfall over the former Soviet Union area for fall seeded crops. The European Union lowered its wheat production to 128.5 million metric tons, down from 129.2 million metric tons but they did leave exports unchanged at 20 million metric tons.
Weekly export inspections were 543,126 metric tons for the week ending Dec. 20. This was within expectations of 475,000 to 700,000 metric tons. Inspections remain at a -14 percent pace compared to last year.
SovEcon estimates Russia will export 2.9 million metric tons of wheat in December. This puts the yearly total at 23.6 million metric tons. The announcement from Dec. 21 increased total Russian exports to 42 million metric tons, of which 37 million metric tons was wheat. This would equate to a Russian export pace of 13.4 million metric tons over the next six months, which would be about 30 percent less than last year's same time period. So the numbers still point to U.S. export pace picking up. The month of December finally showed some weekly U.S. improvements in the 25 million to 27 million bushel range.
Funds were net buyers of all wheat according to Commodity Futures Trading Commission data released Dec. 18. Funds bought 16,800 Chicago, 4,700 Kansas City and 3,100 Minneapolis contracts. Funds are currently net short 5,600 Chicago and 3,000 Minneapolis while being net long 7,100 Kansas City.
For the week ending Dec. 27, March contracts for Minneapolis wheat were down 9 cents at $5.5225, down 3 cents at $5.105 for Chicago wheat, and down 7 cents at $4.95 for Kansas City wheat.
Managed money funds sold 6,000 contracts of corn in Dec. 26 trade which led to 4.5 cent losses in that session. This was the big move for the holiday shortened week as March futures lost 3.75 cents for the week ending Dec. 27.
The EU increased its 2018 corn production by 4.6 million metric tons to 67.5 million metric tons. USDA's current estimate is 60.4 million metric tons. This was a fairly large increase, so all-in-all, the corn market seemed to handle it well in Dec. 27 trade.
The energy markets continue to demonstrate high volatility. Crude oil futures continued their choppy downward trend, experiencing $3 losses in Christmas Eve trade followed by $4 gains in the Dec. 26 session and $1 losses in Dec. 27 trade. Natural gas futures followed a similar pattern with steep losses in Dec. 24 trade followed by recoveries midweek.
There were wire reports that the government may not be releasing weekly export data due to the government shutdown; However, weekly inspections numbers were released Dec. 26. Weekly corn inspections totaled 995,732 million metric tons (39.2 million bushels). This was within market expectations of 800,000 — 1,100,000 million metric tons. This number was up from the 24.4 million bushels for the same period a year ago. Net inspections are 669 million bushels, 72 percent higher than a year ago and continue their brisk pace.
$3.725 is current support for the March contract. Resistance is at $3.905 and then the six-month high set the beginning of August at $3.9875. Support for March corn is the Nov. 26 lows of $3.6725 and then is then the lows of $3.5475 set mid-September.
Soybean futures were under more pressure and saw double-digit losses in the holiday-shortened week. This recent sell-off comes on the heels of funds selling as the year comes to an end, an a lull in China's soybean buying, another week of disappointing U.S. soy export inspections, and rain in Brazil. Rains over the weekend in Brazil is helping relieve some of their dry conditions and is keeping the bears in control.
Even with the latest weekend rains, regions in Mato Grosso are concerned that the dry, hot weather in December may lead to reduced soybean yields. Many analysts are pushing their Brazil yield projections back below 120 million metric tons vs. the USDA's 122 million metric tons. Estimates are from 115 million to 121 million metric tons for Brazil's upcoming soybean crop. Parts of central Brazil experienced 20 days of the dry, hot conditions during that period. Forecasts are calling for excessive 4 to 8 inch rains for central Argentina in the next 10 days while a third of Paraguay and 10 percent of Brazil will remain day.
South American weather is something to watch for the next month as it will be the leader for price movement along with trade negotiations with China.
A U.S. trade negotiation team will travel to Beijing the week of Jan. 7 o hold trade talks with Chinese officials. Deputy U.S. Trade Representative Jeffery Gerrish will lead the U.S. delegation.
Soybean weekly export inspections totaled 23.9 million bushels for the week ending Dec. 20, down from 47.3 million bushels for the same week a year ago. Inspections for 2018-19 total 581 million bushels, down 42 percent from a year ago and far below USDA's estimate for an 11 percent reduction.
January soybeans support is the month lows of $8.57, then the summer lows set July 16 of $8.2625 and then the new 10-year lows set on Sept. 18 of $8.1225. January soybeans broke through the three-month high set Oct. 15 of $9.0625 on the January contract and now major resistance is the end of July's high of $9.3275. January soybeans were down 15.75 cents for the week ending Dec. 27.
For the week ending Dec. 27, January Canola futures were down $1 to $474.5 Canadian per metric ton. The Canadian dollar was at .7330. This brings the U.S. price to $15.78 per hundredweight.
• Velva, N.D., $15.77 per hundredweight, January at $15.77
• Enderlin, N.D., $16.75 per hundredweight (Nexera)
• Hallock, Minn., $15.54 per hundredweight, January at $15.71
• Fargo, N.D., $16.45 per hundredweight, January at $16.50
Cash feed barley bids in Minneapolis were at $2.60, while malting barley received no quote. Berthold bid is $2.50 and CHS Southwest New Salem, N.D., bid is $2.55.
Cash bids for milling quality durum are $4.50 in Berthold and at $4.50 in Dickinson, N.D.
Cash sunflower bids in Fargo were at $17, January at $17.25
For the week ending Dec. 27, soybean oil was down 58 cents at $27.31 on the January contract.