Roundup: Chicago agricultural commodities end down over week

Chicago Board of Trade (CBOT) grains futures close lower over the week which ended Dec.2, with corn and wheat falling to multi-month lows on swelling global supplies, soybeans ending modestly lower after a choppy session.

The most active corn contract for March delivery fell 2 cents weekly, or 0.57 percent, to 3.4925 dollars per bushel. March wheat delivery dropped 15.25 cents weekly, or 3.64 percent, to 4.0425 dollars per bushel. January soybeans fell 18.5 cents weekly, or 1.77 percent, to 10.275 dollars per bushel.

The commodity futures price index compiled by the Commodity Research Bureau(CRB) close higher on the week amid the strong rally in West Texas Intermediate (WTI) crude oil futures following the first coordinated cut in OPEC oil production in 8 years.

The OPEC decision caught the market short and prices quickly pushed above 52 U.S. dollars barrel. The rally in crude supported a broad CRB rally and the price is encouraging for further gains heading into the end of the year.

Corn fell nearly 2 percent on negative input. The baseline of the United States Department of Agriculture (USDA), released early in the week, revealed the USDA' s rather pessimistic outlook for total US corn consumption in the coming years.

Very little growth is indicated, and to pull end stocks below 2 billion bushels, it appears a weather problem is needed, either in the U.S. or another major exporting country. The dollar also maintained strength with crude oil rallying. South American weather looks non-threatening into the second half of December.

Unlike a year ago, Gulf corn is still the world's low cost origin, and is even competitive against new crop Argentina quotes. Ethanol margins have soared to over 1.00 dollars per gallon, which along with decent ethanol export demand should boost ethanol' s demand draw another 25-50 million bushels higher in 2016/17.

Analysts maintain that funds will be willing to push March corn below 3.30 dollars for any length of time, but ender user won't be chasing rallies above 3.60 dollars without a major South American weather issue.

U.S. wheat prices plunged to new contract lows in Chicago. This is partially a function of the December delivery period and was expected amid ongoing very weak basis west of the Mississippi River.

The rally in EU and Black Sea cash prices has also taken a pause, and late this week followed U.S. futures lower. The U.S. Gulf is still well positioned to boost non-traditional export demand through winter, but global trade growth is somewhat weak, and it may not be enough to push spot Chicago Mercantile Exchange (CME) futures above 4.40-4.50 dollars per bushel over the next 3-4 months.

Even boosting U.S. export demand another 50-75 million bushels, which is reasonable, keeps U.S. ending stocks above 1.0 billion bushels, and so the market lacks a compelling stocks story.

It was a mixed week of trade in the soy markets, with soybeans initially trading to a 5 month high before turning down and closing the week lower.

Cash basis across the U.S. Midwest remains weak, but cash prices are still holding well over a year ago and the push above 10.50 dollars at the CBOT brought out good farm movement. South American farmers have also been noted as sizable sellers on push higher as real and peso weakness has increased new crop bids.

AgResource, a commodity futures consulting company said in its note that they have been neutral on the last leg up in the soybean market, and their view is bearish on rallies for both old and new crop production.

"November 2017 delivery soybeans contract pushed to new contract highs, and then closed back under the old high from June. Producers can still get soybeans for next year sold for well over 10 dollars in the cash market." AgResource said. Endit