Friday, December 3, 2021

Today’s Grain Market Update

by Amelia Siroky
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DTN reports:

Grains and the soy complex moved sharply higher Thursday, led by wheat futures markets. The markets in general, appear to be more at ease with early indications that the new omicron variant of COVID seems to be milder and risk managers are re-entering the long side of energy, equity and ag markets. Wheat is also gaining some support on reports of increasing tensions between Russia and Ukraine and rumors of hard red interest.


Despite still poor export sales data, wheat markets soared Thursday, supported by strength in outside markets, less focus on COVID, an increasing concern over the tensions between Russia and the Ukraine, and unconfirmed rumors of interest in U.S. hard wheat. U.S. Secretary of State Anthony Blinken reportedly warned Russia of the consequences of another Russian invasion of Ukraine, further stoking the flame. The idea of two of the world’s largest wheat exporters once again getting embroiled in a conflict sent buyers into the futures markets. Weather is a mixed bag, with the forecast seeming to dry out for soggy eastern and southern Aussie wheat areas, while the U.S. Southern Plains remains very dry with record temperatures on Thursday. Surely drought conditions are on the rise in hard red winter country. On a bearish note, U.S. export sales last week fell to a marketing-year-low of only 2.9 mb, with total commitments now down a hefty 23$% from a year ago. Wheat tenders include Saudi Arabia, popping up for 550,000 mt of hard wheat with 12.5% protein. There is some thought that part of this Saudi tender could involve U.S. hard red winter wheat, as that basis is soaring. With the recent plunge in wheat prices, wheat importers are likely looking to extend coverage, with the tightest world exporter stocks in years. DTN’s National HRW Index closed at $7.91, 28 cents below the March contract.



Corn futures rallied back Thursday for the second consecutive day, finishing mid-range, buoyed by a bit less concern about the new COVID variant and the recovery in crude oil values from the morning low. After the panic from the last several days — beginning last Friday — as news of a new variant swept through equity, energy, and commodity markets, recent statements regarding the omicron variant suggested the 300 or so people who have tested positive worldwide are experiencing only mild symptoms. That has eased the panic risk-off selling that we have seen of late. U.S. corn sales last week were 40.2 million bushels (mb) with 36.9 mb shipped. The shipments lagged the weekly average of 53.9 mb needed to achieve the USDA’s projection, while sales are still down 7% from a year ago. Mexico, Canada and Japan bought the lion’s share of sales last week. Rumors are that China may have bought more Ukraine corn for December-January. Ethanol production last week fell more than expected, by 44,000 barrels per day (bpd) to 1.035 bpd but is still on pace to exceed the corn for ethanol usage estimate from USDA. Corn is surely picking up some strength from the surging wheat market, as wheat was up sharply. More concern that the conflict between Russia and the Ukraine has created a tail wind for wheat prices. A Russian invasion of Ukraine would again embroil two of the major wheat exporters in a battle and possibly hinder wheat supplies. Funds, after having exited some of their corn longs, were likely back on the buy side on Thursday, having bought an estimated 7,000 contracts by noon. DTN’s National Corn Index closed at $5.61, 10 cents under the March contract