March contracts of corn and winter wheat finished with modest gains Tuesday, helped by bull-spreading in corn and another export sale announcement of SRW wheat to China. January soybeans ended down 3/4 cent, still pressured by a wet forecast for Brazil.
March KC wheat closed up a nickel at $6.62 3/4, encountering resistance near the November high of $6.70 1/2 after another export sale of wheat was reported. Earlier Tuesday, USDA said 7.3 million bushels (mb) of SRW wheat was sold to China for 2023-24, bringing China’s known total up to 60.6 mb, more than the U.S. sold to China all of last season. Funds that CFTC said were obligated to buy back 620 mb of SRW wheat as of Nov. 28 are likely growing a little more nervous about how much more China might want to buy.
December Chicago wheat closed up 25 cents at $6.20 3/4 and the March contract was up 10 3/4 cents at $6.31 1/4, encountering resistance near the 100-day average at $6.33. Like corn, Tuesday’s bull-spreading suggests increased commercial demand for a commodity that just hit a new contract low on Nov. 27 and has had lots of deliveries. The recent rally in U.S. wheat prices has largely been due to the combination of new buying interest from China for cheap SRW wheat plus short-covering among specs. Lacking credible information from China, it is difficult to know how much more wheat China might want and that is apt to keep buyers cautious, apart from the short-covering.
In the meantime, another tender offer for Egypt is taking place and there is plenty of competition to be the low bidder, including from Russian sources. Low price competition from Russia continues to hang over the wheat market and it will be interesting to see if some of that pressure eases this winter.
Even with technical signs of support emerging, the trends remain down for the March contracts of all three U.S. wheats as prices still fall short of resistance. DTN’s National HRW Index closed at $5.96 Monday. DTN’s National HRS Index closed at $7.00. Late Monday, the CME reported five new deliveries of December KC wheat and 228 new deliveries of Chicago wheat, now totaling 2,197 contracts. There were no new deliveries reported for December Minneapolis wheat.
March corn gained a nickel to $4.90 1/2 Tuesday, supported by an 8 1/4-cent gain in the December contract. Late Monday, the CME announced 532 new deliveries of December corn, bringing the total to 1,405 with 1,691 contracts still open early Tuesday. In spite of the deliveries, Tuesday’s higher close and the bull-spreading versus March show active commercial demand for corn at these lower prices, the first positive sign of support the market has seen since harvest.
In South America, the main struggle of the moment is too much rain in southern Brazil for the first corn crop. More heavy rains are expected to keep coming this month. Planting the larger, safrinha corn crop will likely start in late January and it remains to be seen how much soil moisture will be available for that crop. USDA currently estimates Brazil’s corn crop at 129.0 million metric tons (mmt) or 5.1 billion bushels (bb) and Argentina’s crop at 55.0 mmt or 2.17 bb with both estimates set to be updated Friday, Dec. 8. So far this season, the weather is generally favorable in Argentina, much better for harvest prospects in early 2024.
One positive in this week’s U.S. weather forecast is a chance for moderate rain amounts in the eastern U.S., which will also include areas around the lower Mississippi and Ohio rivers. In spite of five higher closes, the trend in March corn remains down, limited by increased supplies, while prices are also finding support from active demand and early weather uncertainty in Brazil. DTN’s National Corn Index was priced at $4.49 Monday evening, 37 cents below the March futures.