Grain Market's Bumpy Ride Continues

January 5, 2017 04:43 PM
Grain Market's Bumpy Ride Continues

Soybeans seesawed down Thursday, backing off from Wednesday’s rally, while corn and wheat rose as funds continued to rebalance positions, according to analysts.

January soybeans slid 2 ¾ cents to $10.03 ½, but Chicago March wheat climbed 7 3/5 cents to $4.26 1/5 and March corn went up 1 1/2 cents to $3.61 ¼.

“We’re just after the first of the year, with more and more rebalancing by different funds [ahead of next week]", says Don Roose, president of U.S. Commodities in West Des Moines, Iowa. “We know there has been a heavy commitment to the short side on corn and wheat, and to the long side on beans.”

Funds may try to rebalance 50,000 to 80,000 contracts on corn and 30,000 to 40,000 contracts on wheat, and rebalance soybean contracts by selling, according to Roose.

In addition to the annual rebalancing by index funds, South American weather is an even more dominant factor moving markets, he explains. Meanwhile, U.S. soybean exports are dwindling as Brazil’s first soybean harvest gets underway, Rosse observes.

“We’re going to have range-bound trade until one of these factors moves the needle,” says Roose.

Analyst Dan Heuber, of the Heuber Report, in Sycamore, Ill., shares a similar view.

“I would anticipate additional short-covering and rebalancing buying between now and the reports next week, but again, [I] am not expecting to see prices come out of ranges we have realistically been stuck in for months now,” he writes in the Heuber Report blog.

South American weather forecasts call for rain in northeastern Brazil next week and rain over the weekend in Argentina.

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