Corn, Wheat Advance in Volatile Year-End Market

December 29, 2016 04:08 PM
Corn, Wheat Advance in Volatile Year-End Market

Wheat and corn advanced Thursday in light year-end trading, while soybean futures slid for the second day in a row.

January soybeans went down 3 ½ cents at $10.03 ¼ while March corn edged up 1½ cents at $3.49 ¾. Chicago March wheat gained 3 1/5 cents at $4.04 3/5. Wheat rose despite the global glut, likely pushed up by short covering, according to analysts. Favorable South American weather and an increase in Argentina’s wheat acreage were additional bearish factors, they note.

“Today's trade is the perfect mix of holiday activity and weather,” says Mike North, president of Commodity Risk Management Group in Platteville, Wis., adding that “corn and wheat are the poster children for such activity."

“Higher values carried in the overnight bean trade could not hold against traders seeking to lighten positions ahead of tomorrow’s first notice day for January soybeans and products,” he says. “This was aided by the fact that tomorrow is the last trading day of the year in a shortened session.”

Meanwhile, the weather trade is being shelved until updated information is available for the reopening of markets next Tuesday, he notes.

The lighter holiday trading increased the market's volatility this week, according to analysts.

“We’ve been back and forth this week. We had a rally on Tuesday, a sell-off Wednesday, and we’re back a little bit higher today in the grain markets,” says Joe Vaclavik, president and founder of Chicago-based Standard Grain. “I think the holiday week and lighter trading volumes has perhaps made the market a little more susceptible to volatility."

Other analysts also noted the  volatility in soybeans.

“Soybeans have shown volatility back and forth with large moves and ranges that can be typical with thinner trade this time of year,” notes the marketing firm Water Street Solutions, of Peoria, Ill.

Corn posted a small gain on stronger than expected feed demand, strong exports, and good ethanol margins, the firm notes.

Meanwhile, China officials announced the country plans to increase the production of biodegradable plastics and animal feed made from corn to use up surplus stocks over the next three years, and also announced plans to increase arable land by 3.2 million acres, according to Water Street Solutions.

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