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GRAIN MARKETS: Weather worries boost wheat prices

Grain prices finish another mixed, narrowly traded session.

By Ben Potter

Winter wheat futures rose by as much as 1% in Wednesday’s session as exposed crops in the Central Plains may soon see much more frigid weather this weekend. Other grain markets saw mixed results after another round of technical adjustments as the Christmas holiday closes in.

Wednesday and Thursday weather forecasts bely what’s to come later, with daytime highs reaching into the 60s as far north as western Nebraska. But by the weekend, daytime highs for much of the Plains and Midwest won’t make it out of the 30s. Some northern locations will find even more frigid temperatures in store.

The House sealed President Trump’s first major legislative victory Wednesday, re-voting on the tax bill to approve it. The President is expected to sign the bill into law soon. Investors are split between the bullish news of corporate tax cuts versus bearish news of adding significantly to the national debt (about $1.5 trillion over 10 years, by some estimates).

The Dow slipped 8 points in early afternoon trading to 24,767. U.S. home sales added some more bullish economic fuel to the fire, with sales at an 11-year high and supply still tight. Energy prices were on the rise Wednesday, with crude oil trading back over $58 per barrel. The U.S. dollar continues to make small downward adjustments.

Corn prices found small gains in Wednesday’s session, although large world stocks kept a low ceiling on those advances. March and May futures added 1.75 cents apiece, finishing the day at $3.4925 and $3.5750, respectively.

Corn spot basis bids firmed at some locations, particularly at river terminals, which saw 1 to 5 cent increases. Some locations at Midwest elevators and ethanol plants also saw small gains. Overall sales have slowed as the Christmas holiday approaches.

Trade estimates ahead of Thursday’s USDA weekly export sales report for corn ranges between 31.5 million and 47.2 million bushels for the week ending December 14.

Weekly U.S. ethanol production fell slightly, by 12,000 barrels per day, to 1.08 million barrels per day. Production remains historically high, however. Stocks lowered slightly as well, to 22.32 million barrels. Ethanol prices were up 1.3% in early afternoon trading.

The weekly amount of grain traveling on U.S. railways slipped 3.3% from this week a year ago, to 23,571 carloads. The cumulative railway grain volume for 2017 is up to 1,112,808 carloads, which is 2.5% below year-to-date totals from 2016.

Turkey received offers in its two tenders to buy 6.1 million bushels of corn, but no purchases have yet been made.

Preliminary volume estimates were for 147,326 contracts, nearly 20% higher than Tuesday’s final total of 117,963.

Soybean prices continue to grind out losses largely attributed to South American rains, which could give a much-needed boost to soybean yield potential in Argentina and Brazil. January futures dropped another 2 cents to close at $9.54, while March futures fell 2.25 cents to close at $9.6450.

Soybean spot basis bids were largely unchanged Wednesday, with two Midwestern locations reporting 1-cent gains.

Trade estimates ahead of Thursday’s USDA weekly export sales report for soybeans ranges between 47.8 million and 71.7 million bushels for the week ending December 14.

China, the world’s No. 1 soybean importer, said it will reduce the amount of foreign material that is allowed in U.S. soybean shipment. Current allowances between 1% to 2% will be trimmed to 1% or less, starting January 1, 2018.

Preliminary volume estimates were for 255,032 contracts, about 9% higher than Tuesday’s final count of 233,342.

Wheat prices continue to test small gains as colder-than-expected weather descends on the Northern and Central Plains this weekend. Without ample snow cover, damage and even winterkill from exposure is a possibility in some areas. March Chicago SRW futures added 4 cents to close at $4.2350, and March Kansas City HRW prices rose 2.75 cents to close at $4.2275. Spring wheat prices couldn’t replicate that trend, however with March MGEX prices shifting down a half-cent to close at $6.1750.

Trade estimates ahead of Thursday’s USDA weekly export sales report for wheat ranges between 11 million and 22 million bushels for the week ending December 14.

Japan is in search of 4.4 million bushels of feed-quality wheat but has not yet made any offers in a regular tender that closed Wednesday.

Preliminary volume estimates were for Wednesday were 37% higher than the day prior, with 83,917 CBOT contracts.

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