Grains finished lower on a weak USDA Supply and Demand Report. March corn finished 6 lower at $5.94 ¼, March wheat down 1 at $5.96, and January soybeans down 25 ½ cents at $11.07.
The biggest thing to take away from the report was the larger world corn and wheat supply numbers. The USDA raised its Chinese corn production estimate by 7 ½ MMTs from their November estimate. For wheat the main increases in production could be found between the countries of Argentina, Australia, and Canada. These increases only highlight the fact that the world has options for feed products, and this can continue to put downside pressure on the market.
Until the Quarterly Stocks and January Supply and Demand reports we could see this market continue to have a hard time holding any rallies. We have been looking at some relatively inexpensive March calls just to take us through the reports for upside potential on our hedges.
Weather in South America improved slightly today with important rains coming to some of the drier areas of Brazil. Drying is expected to resume in parts next week and we may see some support come from this if rains aren’t put back into the forecast soon.
Even though today's report was bearish the big reports wont be until January. Between now and the end of the year is the time to make sure hedges are squared away while there is still risk premium built into the market. As to those reports themselves we will have more estimates near the time they are released.
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