Roundup: Chicago agricultural commodities rose slightly over the week

Chicago Board of Trade (CBOT) grains futures close higher over the week which ended Nov.20, as some raw material markets were able to shrug off the bearish impact of a rising U.S. dollar and soaring US interest rates.

The most active corn contract for December delivery rose 5.25 cents weekly, or 1.54 percent, to 3.455 dollars per bushel. December wheat delivery dropped 5 cents weekly, or 1.24 percent, to 4.08 dollars per bushel. November soybeans rose 7.75 cents weekly, or 0.79 percent, to 9.9375 dollars per bushel.

The rising USD is the main worry for US commodity producers as it reduces importer purchasing power and stimulates production. For instance, Brazilian and Russian farmers are seeing new crop prices rise to levels not seen since mid summer in their own local currencies.

December corn rallied over 5 cents on the week despite ongoing strength in the US dollar, favorable South American weather and ongoing weakness in emerging market currencies. CBOT corn futures continue to trade in a rather narrow range.

Analysts suggest this trend continue into early 2017. The longer term outlook is neutral to bearish without a South American or U.S. weather problem, but the market's goal of boosting demand is already being achieved.

US ethanol production continues at a record level, Gulf corn is the world's cheapest through March, and the US is slowly building a rather sizable demand base. This demand is needed amid US stocks of 2.5 billion bushel plus and record global supplies.

The next move will be a function of South American crop yields, with very early corn harvest to begin in Brazil in late January or early February, but the bulk of South America's surplus won't be available until early summer. This, along with seasonally rising Black Sea cash prices, should offer support on breaks through the next 45-60 days.

U.S. wheat rebounded slightly this week as funds had again established a near record net short position, and as the US's position in the world market remained competitive for non-traditional demand through the winter.

Russian fob wheat offers were weaker following a correction in the ruble, and Argentina and Australia became more aggressive. There is also further evidence that sourcing high protein and high quality wheat is getting more difficult.

Analysts maintain that it could provide an additional boost to US export potential in the December-February quarter. And while global wheat stocks are by far a record, and look to remain sizable in 17/18 with normal weather, the bulk of the bearish move has occurred.

CBOT soybean futures closed the week higher as values were able to firm on Friday on the heels of a surge in soy oil and grain values. January soybeans have been able to hold above their key 50 day moving average which crosses at 9.805 dollars per bushel early in the week ahead.

Analysts maintain that soybean prices forged an early post harvest high on their rally to 10.20 dollars per bushel in late October.

U.S. 2016/17 soybean end stocks are likely to rise above 500 million bushel amid a further increase in U.S. soybean yield and a cut in U.S. soybean exports. Such stocks argue for a test of 8.50 dollars at some point when another large harvest is assured in South America. Endit