We kicked off the day with Wholesale Inventories MoM and Wholesale Trade at 9:00 A.M., Export Inspections and Consumer Inflation Expectations at 10:00 A.M., 3-Month & 6-Month Bill Auction at 10:30 A.M.Managed funds in the week ending Dec 4th were net sellers of corn, soybeans, and CBOT wheat. Fund’s net short position in the major CBOT ag markets was 53,000 vs. 43,000 contracts the previous week. Funds were flat in mid-November, and have since been more active in fading rallies/recoveries. In years of adequate/loose global crop supply & demand, fund’s short is often rather sizable. Ag Resources (ARC) fears fund selling occurs in bulk in early 2025, which will collide with additional US producer sales as a new tax year commences.The strategy remains to leverage strength into USDA’s final crop report in January to advance 2024 & 2025 cash sales. South American cash prices shed premium in January onward without the arrival of adverse weather.
Unexpected Heavy Rain Impacts Argentina Last 24 Hours; Regular Precipitation Resumes in Central/Northern Brazil After Dec 12th:South America’s forecast remains favorable, and ARC’s confidence in the return of normal rainfall across key areas of northern Brazil is rising. The GFS, EU, and AI models agree that following 5-6 days of dryness, near daily showers return to Mato Grosso, Goias, and Minas Gerais in the 6-15 day period. Meanwhile heavy rainfall upward of 2-5”: is offered to the southern third of Brazil Sat-Wed. All of Brazil will be well watered in the next 10-days.Equally important is that rainfall of 1.2-3.9” fell across the driest area of Argentina on Friday. 30-day percent of normal rainfall in Argentina is now or near above normal across the whole of Argentina’s corn ag belt. A two-week period of dryness is forecast in Argentina, which will be monitored, but recent rainfall has buffered against near-term crop stress. It’s still difficult to identify a south American weather problem.
Abnormal Central US Warmth Next Two Weeks; Precipitation Confined to Delta/Eastern Midwest:The Central US forecast has trended warmer in mid-December, while periodic bouts of freezing temps return major threats to cattle/winter wheat are not indicated. The GFS ensemble’s two-week anomaly forecast shows warmth will be spread across all of North America, with high temps across the Southern and Central Plains this weekend pegged in the 40’s and low 50’s. Major snow events stay absent from the US Plains into late month. This becomes an issue for wheat should bitterly cold temps emerge in January, but in the medium term there’s no sign that dangerous winter weather appears. Rather, heavy rainfall favors the Delta/Southeast soaking showers impact LA, MS, TN, and KY today through Wednesday.
CBOT Corn Extends Rally as Chart Turns Supportive Ahead of Tomorrow’s WASDE; Next Resistance at $4.45:Global corn markets ended mixed, with additional buying in Chicago as March’s major moving averages now sit below the marketplace. Breaking news is absent, and unexpected rainfall in Central Argentina overnight keeps trend/above trend yield potential in place there. Use any further advance early next week to catch up on 2024 cash sales. Ag Resources (ARC) reiterates US corn disappearance will be massive during winter. This has supported interior cash markets amid the need to keep ethanol plants/export terminals supplied. The FOB premiums worldwide have moved lower, with Ukrainian & Argentine origin again competitive with the US into Asia for Jan-Feb. Cash ethanol margins are the weakest of the season. Ag Resources (ARC) sees no fundamental reason for CBOT contracts to trade above $4.50 without prolonged adverse weather in South America – which is not apparent today. Managed funds last Tuesday were long 88,000 contracts, and were estimated to be net long 105,000 contracts as of Friday evening.More By This Author:Exports Vs. Global Currency Weakness. The Corn & Ethanol Report
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