Roundup: Chicago agricultural commodities close mixed in past week

Chicago Board of Trade (CBOT) grains futures close mixed in the past week, with soybean futures surging more than 5 percent to reach record high since August.

The most active corn contract for December delivery rose 3.75 cents weekly, or 1.09 percent, to 3.4925 dollars per bushel. March wheat delivery dropped 5.75 cents weekly, or 1.35 percent, to 4.195 dollars per bushel. January soybeans rose 10.46 cents weekly, or 5.26 percent, to 10.46 dollars per bushel.

The commodity futures price compiled by the Commodity Research Bureau turned higher with the U.S. dollar stabilizing and the world equity markets advancing to record highs.

Debate over Trumponomics -- how much U.S. infrastructure will get built, how far the U.S. dollar can rally, how high U.S. interest rates rise, and how much can the U.S. tax code be changed were all topics of discussion over the U.S. Thanksgiving Day Holiday.

The world commodity market also ponders these topics, but investors have been willing to make large bets in industrial metals and a host of other commodities.

Corn futures ended slightly higher this week amid spillover buying from the soy complex. Reports maintain export sales were again at the higher end of trade estimates, the pace of U.S. ethanol production remains record high, and breaks will be absorbed via end user demand.

The EPA did update its mandated blend volumes for 2017, but unlike biodiesel, the call to raise U.S. ethanol blending to 15 billion gallon means very little for the corn balance sheet.

Already, total U.S. ethanol supplies are well above this, and plants are likely to produce just over 15 billion gallon in 2016 calendar year.

The Environmental Protection Agency (EPA)'s update this week is supportive, but by no means market-changing. Otherwise, U.S. exports will stay rather lofty through the next 2-3 months.

Thereafter, new demand will increasingly switch to South America without a weather problem there. South American weather so far has been favorable, and traders expect a secondary high to be scored in the next few weeks.

Traders remain sellers of moderate rallies, and any test of 3.90-3.95 dollars per bushel, basis December delivery of 2017, should be targeted to catch up on new crop sales.

The corn market lacks a meaningfully bullish story without widespread adverse weather. The upside appears limited to 5-12 cents.

Wheat prices ended lower as the market struggles for new input, and narrow price ranges continue. Wheat is immune from this week's changes in EPA mandates, and global cash markets are very little changed.

Analysts note that Gulf Hard Red Wheat futures is again the world's cheapest through the winter months, and export sales have shown that demand is being found on breaks.

Traders found that sourcing high quality milling remains difficult, as evidenced by an ongoing rally in Chinese futures, and widening protein spreads.

But there's no shortage of spot wheat supplies, the Southern Hemisphere harvest will be accelerating in the next 30 days, and there are hints that Argentine exporters will be very aggressive in early 2017.

Drought and abnormal dryness continues to expand in the U.S., but elsewhere across the Northern Hemisphere conditions are favorable. Rallies will struggle without widespread adverse weather next spring, and recall non-U.S. wheat seedings are increasing.

It was a sharply higher week of trade in the CBOT soybean markets, with spot soybean futures reaching their best levels since August.

Fundamentally there was not much news to drive markets higher or lower, rather increased investment flows along with active Chinese pricing put CBOT soybean futures against 10.50 dollars per bushel resistance.

The near term focus is still on the record large U.S. export pace, while the trade awaits more information on the South American crop size. However, exporters are offering new crop Brazilian beans for export below U.S. offers from January forward.

There is no good reason for a soybean rally, though short term technical trends have turned higher. Analysts advise producers to use this rally for both old and new crop sales. Endit