Blogging by the Bushel
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Market Report

Wednesday December 20th, 2017

March 17 corn closed up 1 ¾ at $3.49 ¼ and July 18 closed up 1 ¾ at $3.66. January 18 soybeans closed down 2 at $9.54 and March 18 closed down 2 ¼ at $9.64 ½. March wheat closed up 4 at $4.23 ½ and July 18 closed up 3 ½ at $4.50. Crude oil closed up $.55 at $58.13.

The soybean market established another new low for the move in a two-sided performance as trade volumes remain light. We were unable to sustain modest overnight strength in the absence of any fresh fundamental news and an improving environment for Southern Hemisphere crops. The news that was around has potential bearish implications. After some rumbling China has tightened their requirement on foreign matter (FM) allowed into US soybean shipments from 1-2% down to 1% effective January 1 according to the USDA. Boats that meet the new guideline will receive priority for shipment, while soybeans above 1% may be held back for more cleaning creating bottlenecks at our ports and creating premiums for low FM supply. This rule will not apply to Brazil or Argentina. This is a fairly major development that was sprung on the industry with almost no notice with only 12 days until the new rules take effect. As the primary destination for the bulk of US soybean exports this is a very negative development that may not be fully understood or digested by the market.  This gives Brazil and Argentina a leg up on soybean exports at our expense compounding our export demand deficit and any lost trade likely heads straight to our bottom line carryout.

The wheat complex was under a little pressure for much of the night, and entered the morning break a couple cents lower across the board. Once trade moved into the day session the market seemed to find support. We have seen all too often lately how strength has been unable to carry throughout the day. The fact that trade in Chicago held those gains for much of the day gives optimism that we may trigger additional buying as we head into one many believe will be much lighter traded volumes as we end the week. If nothing else, it is another sign that the market will probably be well supported on breaks. Export sales will be out Thursday. Last week’s sales were at the high end of expectations, coming in at 589 MT with an additional 9 MT of new crop for combined sales of 598 MT. Look for one more strong week of sales before the Holiday trade takes over. Look for sales to come in between 450 and 650 MT.

Anna Kaverman

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