Soybeans Rise as Vegetable Oil Strength Seen Ahead -- Daily Grain Highlights
December 01 2021 - 04:01PM
Dow Jones News
By Kirk Maltais
--Soybeans for January delivery rose 0.9% to $12.28 1/4 a bushel
on the Chicago Board of Trade Wednesday, supported in part by hopes
improved crude oil prices will provide a boost to soybean oil
prices.
--Corn for March delivery rose 0.7% to $5.71 1/2 a bushel.
--Wheat for March delivery rose 0.4% to $7.90 1/2 a bushel.
HIGHLIGHTS
Finding Support: Soybean futures led the CBOT agricultural
complex higher Wednesday, fueled in large part by expectations that
the recent fall in soyoil prices--due in part to the selloff in
crude--has attracted buyer interest. "The action today suggests
that the liquidation is done," said Charlie Sernatinger of ED&F
Man Capital. "Soyoil, in particular, looks like it should catch a
commercial bid, as the demand structure is hitting on all eight
cylinders now." China appears to be increasingly interested in
buying U.S. soybean exports, Mr. Sernatinger added.
Lesser Risk: Indications that the Covid-19 variant Omicron isn't
as severe as the previous Delta variant caused commodities traders
to reverse from Tuesday's heavy selling. "The EU Gov't reports that
their quarantined omicron infections are mild with headaches, a
tired feeling and modest fever," said AgResource. "This is
providing a 'risk return' from several hedge fund managers in their
investing mindset this morning."
INSIGHTS
Christmas Volatility: With volumes expected to turn light as the
Christmas holiday draws closer, grain traders are expecting further
volatility in trading this month. "We...have the Christmas Holiday
that trade will position for which brings thin volume and makes
futures much easier to manipulate," said Karl Setzer of AgriVisor.
"This can cause exaggerated trade activity from now until we turn
the calendar to 2022." Mr. Setzer adds that the upcoming WASDE
report for this month may add further stress, although interest in
this month's report is expected to be limited. "Only commodity
demand is updated this month which tends to decrease trade interest
in the data," said Mr. Setzer. "We have seen several surprises from
the USDA in reports this year though and cannot rule out anything
in this one either."
Shock Susceptibility: World wheat prices could be in for further
volatility if any sudden supply shock were to emerge, said Marex
Spectron. "Nominal supply trade will continue to decline in
December which is in line with the seasonal pattern of the trade,"
the firm said. "We reiterate that what worries us the most is the
abnormally low level of inventory which will not allow the
softening of any potential supply or demand shock." Traders have
been watching for supply forecasts out of major wheat-exporting
countries including the U.S., Canada, Australia and
Russia--reacting to any indications of weather hurting production
in these countries.
Planting Pains: Record-high costs for fertilizer ingredients
like nitrogen and phosphate are expected to continue into the 2022
planting and growing season--which will force farmers to seek
higher prices for their crops in order to secure a profit. "While
the situation will eventually correct itself, our analysis suggests
that high fertilizer costs will persist into the spring 2022
planting season at minimum," CoBank said in a report released
Wednesday. "We base this conclusion in part on a recent farmer
survey and university study, both of which place the odds of high
prices persisting at 70% or above." A La Nina storm system may also
exacerbate drought issues in the U.S. and elsewhere.
AHEAD:
--The USDA will release its weekly export sales report at 8:30
a.m. ET Thursday.
--The CFTC will release its weekly commitment of traders report
at 3:30 p.m. ET Friday.
--The USDA will release its weekly export inspections report at
11 a.m. ET Monday.
Write to Kirk Maltais at kirk.maltais@wsj.com
(END) Dow Jones Newswires
December 01, 2021 15:46 ET (20:46 GMT)
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