Soybeans Added to its Gains in the Overnight

Soybeans added to its gains overnight, with front-month January futures trading above $8.80 for the first time in a week. Corn was mostly flat while wheat was modestly lower. In outside markets, the US dollar fell after two days of meteoric increases following the Fed interest rate hike, while crude oil and stock index futures were lower.

While the news continues to be mostly bearish for grains, the approaching holidays may be causing short covering by fund traders. Soybeans posted a key reversal yesterday closing up nearly 15 cents even after Argentina’s currency plunged 25% on Thursday as the new President allowed the currency to float for the first time since 2011.

Yesterday, Informa released new US acreage projections for 2016, pegging the corn crop at 88.9 million acres versus 90.1 previously, and soybeans at 84.5 versus 85.3 in their last forecast. Yesterday also brought a large soybean deal with China, with 424,000 MT being sold for 2015/16 delivery.

Crude prices continued to slump overnight. The losses were a continuation of Thursday’s slide, when data provider Genscape Inc. said stockpiles at Cushing, Okla., the delivery point for the benchmark U.S. futures contract, rose by nearly 1.4 million barrels in the week that ended Tuesday. Nearly all of that came in the last half of the week, according a person who had reviewed the report. The Genscape report came one day after the U.S. Energy Department reported a much larger than expected 4.8 million-barrel increase in U.S. crude stockpiles in the week that ended Dec 11.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

—Cody Bills