The December USDA Supply and Demand Report will be released at noon Eastern time today (Dec. 10).
It remains to be seen how this affects the markets, but some prices were higher Monday as the traders got evened up ahead of the report.
Soybeans made new recent highs on Monday, with the January contract up to 13.46 3/4 after a 13.46 posting a week ago. This constitutes a double top, often a big chart sell signal. This is the highest prices have been since Sept. 19.
March corn futures, on the other hand, are just fighting off the new contract low made last Monday, at 4.18 1/2. We got as high as 4.39 1/2 by the 4th, just two days after the low. Since then we have been mostly sideways, and are now trading 4.26, down two cents on Tuesday in early trading.
It is significant that a good rally in ethanol prices has not helped corn prices much.
Since Thanksgiving, January ethanol futures have gone from $1.686 per gallon to $2.02. This has happened while gasoline futures have been steady.
So, while ethanol and gasoline and corn all seem to be priced together, it is not happening right now. This may be because corn is seen to be in such large supply that demand does not help price.
Meanwhile cheap gas may be a result of import volume that has some industry oil experts talking about cheap gas this year.
The wheat markets may be the most negative, with a nice rally giving way to a new contract low. In the middle of November, the March Chicago wheat contract traded 6.52 on the 18th and the 19th. After that, we rallied 22 3/4 cents to the high of 6.74 3/4 on Dec. 2.
Now we have lost 25 1/2 cents to the low of 6.49 1/4 on Monday. We have continued lower Tuesday, where we are currently down almost three cents at 6.47 3/4.
This is the time of year when we frequently begin to rally wheat prices as traders fear winter weather that kills off the wheat crop in the Plains.
This year, we enter the cold period with less fear than normal because the wheat is seen of be well-established, with good root growth to fight off winter heaving. Still, we are in our first cold spell, and the wheat condition needs watching. Maybe it is significant that, with the fear of cold, we are seeing new lows.
The market for now is not afraid.
Looking at numbers to compare with the actual coming out, we see that the trade expects corn ending stocks of 1.861 billion bushels. Remember that we have to get down to one billion for the commercials to start to feel “tight.”
Traders guess that USDA will put soybean ending stocks at 153.8 million bushels.
Meanwhile, Brazil is saying their soybean crop is better than expected, and will yield 90.03 million metric tons, versus 88.66 in their November report. USDA will include their estimate for the Brazilian crop in their report today.