Roundup: Chicago agricultural commodities end lower over the week

Chicago Board of Trade (CBOT) grains futures close lower over the week which ended Dec. 16, on profit taking and ample crop stock.

The most active corn contract for March delivery fell 3.25 cents weekly, or 0.9 percent, to 3.5625 dollars per bushel. March wheat delivery dropped 7 cents weekly, or 1.68 percent, to 4.0925 dollars per bushel. January soybeans fell 0.75 cents weekly, or 0.07 percent, to 10.3675 dollars per bushel.

The commodity futures price index compiled by the Commodity Research Bureau (CRB) settled back as energy and metal markets softened on profit taking and the surge in the U.S. dollar to its highest levels since 2003.

The dilemma for the commodity markets is that as the USD rallies, inflation will be noted in emerging economies as the cost of raw materials rise.

Corn futures ended slightly lower on mixed input. The U.S. dollar made new highs. Argentina fob corn offers have gotten a bit more aggressive in April and beyond, but in the near term U.S. demand will remain solid.

It's still a big supply/big demand and as such analysts expect futures to be range bound through much of winter. Ethanol margins have soared to multi-year highs, weekly ethanol production last week was record large, and The United States Department of Agriculture's (USDA) total corn demand is some 50-75 million bushels too low.

Export sales have been a bit better than expected in the last two weeks, and indeed Gulf corn is cheaper than even Argentine offers through March. And money is flowing slowly into commodities as a hedge against inflation in 2017.

There's no compelling argument for a bear move in the next 1-2 months, and the market scored a monthly reversal this week. However, analysts maintain rallies to 3.70 dollars, March, and 4.00 dollars, and December contract should be sold.

Analysts suggest there's ample global grain priced just above Gulf corn, while South American and South African weather is so far favorable. And the issue longer term is whether the U.S. can hold onto this year's share of world trade with larger crops expected elsewhere in 2017. It's a big concern going forward for U.S. grain.

March delivery wheat fell slightly, though on a continuous basis the market has found support above 4.00 dollars. Analysts also mention that spring wheat futures ended higher, and are readily supported on breaks, as global quality discrepancies persist.

They maintain there's little new to report, and a neutral outlook is maintained. Harvest is progressing normally in Argentina, and world cash business is starting to include Argentina as an origin; most notably in this week's Algerian tender.

The USDA's upward revision to global stocks last week will provide yet more buffer against weather issues next spring/summer, and analysts suggest that drawing down global inventories from record levels will be a multi-year affair.

Following a week of uneventful trading, soybeans were near unchanged at Friday's close. The market has been caught between a record large US export pace and the potential for a record large South American crop.

Early harvest in Brazil is thought to be just 3-4 weeks away, with meaningful exports to be underway by late February. Brazilian beans for March are offered at 4 dollars per tonnes under the U.S. versus 19 tonnes a year ago, though price spreads should widen as harvest gets underway.

Argentine weather and weekend rains are likely to be the focus at the start of the week, though the forecast offers above normal rains across the driest parts of the country over the next week. If the rains prove disappointing, March soybean futures could quickly rally to 10.80-11.00 dollars. Its still big demand that rules current pricing. Endit