Editor’s note: Catch Randy Martinson every Friday after markets close on the

Agweek Market Wrap

at agweek.com.

The second week of December started mixed with wheat sharply lower while soybeans were sharply higher. Tuesday’s session had the grains trading in the opposite direction from Monday in what was a true turnaround Tuesday type session. Selling returned midweek but then the grains spent the rest of the week digging out of the hole they dug.

The week started with Argentina announcing their decision to halt all exports for the short term while the new president reevaluates the country’s direction. The grains put in a mixed performance on Monday with wheat crumbling lower, pulling corn with it while soybeans rallied sharply higher. Wheat was under pressure from the absences of export news and from reports of good rains in the U.S. southern Plains. Soybeans were supported by just the opposite, disappointing rains in Brazil as well as from forecasts calling for

hot and dry conditions to dominate Brazil.

Rain continues to fall in parts of Brazil, but the amounts are not enough to counter the excessive heat. Corn was a follower as it followed wheat lower.

Both wheat and corn were disappointed not to see more export sales on Monday. The previous week’s rumors had China in buying grain from the U.S., or in the case of corn seeing multiple earlier sales of Brazilian corn being switched to U.S. origination.

Another rumor that Russia is considering halting wheat exports was confirmed as Russia reportedly issued temporary restrictions on hard wheat exports through May 31. This is in an attempt to help stabilize domestic prices for wheat and wheat products.

The grains put in a turnaround Tuesday type session on Tuesday with the grains virtually closing completely opposite from Monday. Rumors of China buying and continued adverse weather forecasts for Brazil were not enough to support soybeans as technical selling took change. Wheat and corn on the other hand did see support from rumors of China returning.

The grains were under pressure from news out of Argentina. The new president promised to shake things up a bit and that is exactly what he is doing. First off, his economic advisor announced that Argentina will sharply devalue their peso exchange rate to 800 pesos/dollar from 366 peso/dollar. Second, the country will look to slowly eliminate export taxes. No other details were given on the export tax. The country is also looking to cut energy subsidies, cancel public work tenders, and reduce the size of government. Argentina’s main source of revenue is from the export tax on ag products. To eliminate without another revenue source would devastating for the country financially. It will be interesting to see how this administration will pull this off when others have failed.

Weather forecasts for Brazil have not changed as hot and dry continues to be the main forecast. The much talked about weather pattern change is still expected to occur, it just keeps getting pushed back (as most rain does in drought years). At some point it will rain in Brazil, the question is will it be in time to help the soybeans in the northern regions of the country.

The grains put in a tough session Wednesday, Dec. 13, as all of the grains retreated. Technical selling combined with slow demand and news out of Argentina to pressure the gains throughout the session. Additional selling could be attributed to the Federal Reserve press conference, as although the Fed decided to leave rates unchanged this meeting (for the third meeting in a row), the Chairman hinted of the Fed possibly cutting rates three times in 2024. This sent the Dow and S&P 500 sharply higher with both setting all-time highs. The Dow closed at record levels. The return of strong returns in the stock market is likely pushing the funds to liquidate commodity positions and reinvest in the stock market.

The grains continue to trade in a well-established trading range as the market looks for direction and confirmation on Brazil. Wheat and corn continue to follow each other as both look for direction. It was easy for those two markets to push higher when there were exports being reported, but now when the dust has settled, and everyone starts to do year-end planning, wheat and corn have resorted to trading in a range. The Argentina news was a shock to the system and not expected, which was the reason for the sharply selloff. But by the next session wheat and corn were back trading higher on expectations for strong demand and adverse weather in Brazil. Soybeans continue to trade in a range as well, but soybeans are also seeing more direction from Brazil’s weather forecast than the other two grains.

The grains were able to open Thursday’s session higher due to expectations of a friendly export sales estimate. This week’s export sales report showed just how impressive last week’s sales pace was. And there was even another soybean export sales announced as an unknown destination was in and bought 400,000 metric tons of U.S. soybeans. Wheat sales were easily the highest of the marketing year.

The grains posted gains on Friday, Dec. 15, with wheat leading the gainers while corn and soybeans followed. Wheat was supported by technical buying as well as from rumors of export demand. Soybeans were higher but faded the gains throughout the day session. Strong demand continued to put underlining support under the soybeans as two more export sales were reported, but gains were kept in check by long term weather forecasts calling for rain in northern Brazil. Corn continues to play the follower.

The NOPA Crush estimate was released on Friday, Dec. 15. The November crush estimate was at 189.0 million bushels versus the average trade estimate of 186.0 million bushels. That also set a new record for the month of November. Stocks did come in higher than expected at 1.214 billion pounds versus the average trade estimate of 1.138 billion pounds.

Corn got a shot in the arm from news that the Biden administration would use the GREET method for determining if ethanol can be considered for tax credits in the process for sustainable aviation fuel.

As we approach the holidays, news has become quiet and hard to come by. With most of the USDA grain reports wrapped up for the year all the grains have to give them direction is exports and South America news.

Cattle pushed higher in four out of five sessions with most of the strength being tied to technical buying and the need to correct

an overbought market condition.

The lack of a cash trade has kept a lid on the gains in the live cattle market as has the stronger grains in the feeder cattle market. Light activity was centered on position squaring ahead of USDA’s December Cattle on Feed report. The past three reports have shown a larger than expected placement estimate which has added to the pressure. The larger placements have been due to a combination of domestic calves being placed in the feedlots earlier than average as well as from a large increase in imports from Canada and Mexico. Early estimates for the December Cattle on Feed report have On Feed at 102%, Placements at 96%, and Marketings at 93%. This would be friendly cattle and combined with what should be a friendly Cattle Inventory report at the end of January, hopefully that will help spur a rally in cattle.

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