Roundup: Chicago agricultural commodities rally over past week

Chicago Board of Trade (CBOT) grains continued to trade in a sideways range with the corn and whet futures offering some support late week.

The most active corn contract for December delivery added 14.5 cents weekly, or 4.27 percent, to 3.5425 dollars per bushel. December wheat delivery surged by 26.25 cents weekly, or 6.65 percent, to 3.9475 dollars per bushel. November soybeans rose 5.75 cents weekly, or 0.6 percent, to 9.625 dollars per bushel.

Corn futures rallied to new 3-month highs this past week. The October WASDE has come and gone, and as expected yield was lowered slightly and demand was raised slightly.

And moving forward, the market's focus will shift more and more to demand, and traders note that ethanol margins remain stout, and that US Gulf corn is easily the world' s low cost origin into early 2017.

Ukraine has added logistical constraints to truck movement, which should further boost U.S. export potential through the winter months, and South America will remain absent into late spring.

Fundamentally, fair value is still seen at 3.20-3.60 dollars per bushel, basis Dec, but we do acknowledge funds remain massively short in CBOT futures. The near term outlook is neutral or supportive but longer term, without a South American weather issue, much of the boost in US export demand goes away, and stocks-building will persist into 17/18 marketing year.

U.S. wheat futures rallied on a flood of import tenders, competitive Gulf fob offers and a paring back of funds' excessive short position.

Analysts maintain that world quality issues, which have not been resolved, will funnel additional export demand to the U.S. through the winter months, and already interest from Morocco and Algeria indicates the U.S. will do well in exporting wheat to non-traditional destinations.

There's a full 8 months remaining in the international crop year. Interior Russian prices continue to edge higher, which along with support in the ruble suggests downside risk in world cash prices is limited in the near/medium term. Wheat futures have fallen more than 60 percent since 2012, and current prices fully account for known fundamentals.

However, the longer term outlook still features steady or higher global stocks in 17/18 marketing year without widespread weather issues.

It was a mixed week of trade in the soybean market that left November soybeans slightly higher for the week. Soybeans initially declined following the October Crop Production and WASDE reports, as the USDA increased the estimate of the US soybean yield to a record large 51.4 bushels per acre.

However, U.S. daily export sales announcements, larger than expected weekly sales, as well as late week contracts for 5 million metric tons of US soybeans offered late week support.

Soybean harvest through Sunday is expected to be 60-65 percent complete. With strong export demand continuing, and harvest past the half way point, a seasonal low for both cash basis bids and cash prices is likely in the process of forming.

Analysts maintain that commodities will continue to trade sideways, but they suspect that there will be pressures to the upside as emerging market economies recover. Endit