MarketsFarm — Despite lighter trading on the Chicago Board of Trade (CBOT) due to the holiday season, grain markets were still on the move before and after Christmas.
Ryan Ettner, a commodity broker for Allendale Inc. at McHenry, Ill., said that while most high-volume traders will still be away for the next few days, there can still be a fair bit of movement amidst smaller levels of activity.
“A few smaller factors are probably having a larger influence,” he said.
Soybeans, wheat and corn all rallied during the week, mostly due to weather-related issues. Dryness concerns in Argentina and southern Brazil continued to have a bullish effect on soybean prices.
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“The forecast is supposed to have light rains over the next five days. But then it turns to dry for the next five days after that,” Ettner said. “Also, the talk of China opening borders and easing COVID-19 restrictions a little bit has people thinking we might see improved demand for beans as their economy speeds back up. That might be a little longer-term than something we can really trade right now.”
The weather in South America is also giving a boost to corn futures, according to Ettner.
“For corn, Argentina is also in play on a smaller scale than it is for beans,” he said. “(It’s) a little bit harder to find the positive side for corn.”
The U.S. Energy Information Agency’s (EIA) ethanol report, which will come out Thursday, is expected to be neutral just as the last few reports have been. The U.S. Department of Agriculture’s (USDA) export report, to be released Friday, is expected to be negative.
Meanwhile, wheat prices have moved up due to a large blast of arctic air hitting drought-stricken growing areas in the southwestern U.S. Plains, creating the potential for winterkill.
“It’s all about the shorter-term, speculative trade versus what we’re going to get on the Jan. 12 (USDA supply/demand estimates). If the USDA leaves both numbers unchanged, the value of corn and beans would look overvalued by a pretty fair amount,” Ettner said.
While there haven’t been any trade predictions as to what the Jan. 12 report would show, he believes that grains will continue on their upward trajectory going into the first week of 2023.
“You can get a few people on the bullish side today and then they can change their mind (the next day), but in general, I would say yes through the rest of this week and we’ll truly put it to the test next week,” Ettner added.
— Adam Peleshaty reports for MarketsFarm from Stonewall, Man.
