Roundup: Chicago agricultural commodities end higher over week

Chicago Board of Trade (CBOT) grains futures close lower over the week which ended Dec.9, with funds long buying and short-covering.

The most active corn contract for March delivery rose 12.25 cents weekly, or 3.53 percent, to 3.595 dollars per bushel. March wheat delivery added 12 cents weekly, or 2.97 percent, to 4.1625 dollars per bushel. January soybeans rose 10 cents weekly, or 0.97 percent, to 10.375 dollars per bushel.

After gaping higher in late November, the commodity futures price index compiled by the Commodity Research Bureau (CRB) has added to its gains and is breaking a downtrend line to the upside. And there has been an increase investment in index fund into the commodity space that is likely to maintain some sort of rally effort into yearend and the index fund roll in early 2017.

Excluding industrial metals, the fundamentals of most commodity markets remains bearish. Most raw material supplies are outstripping demand at a time when the US dollar is likely to continue to rally.

The week ahead should feature an interest rate increase from the US Central Bank with comment that the pace of rate increases could quicken in the meetings ahead. Analyst maintain a positive bias on the CRB index into early 2017. That would be the next time to worry about the formation of a seasonal top.

U.S. corn futures recovered on the week amid threatening Argentine weather forecasts and the ongoing build of US corn export sales. The US has sold 1,243 million bushels of corn through the 1st quarter of the crop year, or 530 million bushels -some 74 percent more than a year ago.

And U.S. gulf corn is the cheapest origin until Argentine corn becomes available for April or May. U.S. corn sales and exports will continue to build which should allow for a further CBOT recovery. It' s the combination of strong U.S. demand and threatening Argentine weather that looks to nudge corn prices higher to an early 2017 peak.

The Argentine weather forecast is not offering much moisture and early seeded corn will be pollinating in the last half of December. Amid the expansion in 2016 Argentine corn seeding, the dry weather impact on production and price will be expanded. ARC awaits CBOT rallies to sell in the weeks ahead.

U.S. wheat futures were able to shake off larger Australian, Canadian and Argentine crop estimates to finish the week higher. U.S. and world wheat prices are at decade lows and the prospect of improved demand from India and stable Black Sea prices were enough to set the stage for a modest recovery.

The upside price extreme in wheat since harvest has been 4.30 U.S. dollars spot CBOT and analysts see no reason why this resistance will be breached. Black Sea wheat exports are running behind and the new crop competition from Australia and Argentina will keep the wraps on any fund inspired U.S. rally.

Looking at the weekly chart to the left a double bottom is being formed that should hold until more is known about 2017 Northern Hemisphere wheat crop prospects. Analysts argue for a broad sideways trade in wheat with prices to be bound by 3.70-4.40 dollars basis spot CBOT futures. Any bigger rally requires adverse new crop weather next spring or summer.

It was an inside week of trading in the soybean market, that left prices slightly higher for the week at Friday's close. An early week rally back above 10.50 dollars again found good farm selling, while a late week break caught support over Argentine crop worries.

The December World Agricultural Supply and Demand Estimates (WASDE) did not offer any major statistical surprises, with the U.S. balance sheet completely unchanged from November, which had been expected. No changes to S. American production estimates were made, but a slight increase in world production further increased world soybean stocks.

Key parts of Argentina are still too dry, though rains are offered in the extended forecast. But it's still very early in the Argentine growing season, and only 57 percent of the crop has been planted.

The Brazilian crop is in fantastic shape, and with good weather Brazil will start export 8-10 million tonnes per month by March. S. American weather forecasts will drive CBOT soy markets early next week, but until a short Brazilian crop is confirmed analysts recommend farm sales on rallies to 10.80-11.00 dollars. Endit