Holiday mode dominates the markets this week.  It seems that the of the year is rather mundane with thin, volatile trade.  This holiday season was extremely slow, and mostly lower trending.  Producers have been holding out, waiting for a post-harvest rally, or any rally for that matter, to boost prices closer to break even production costs.  Unfortunately, the rally has not been seen.  The few days when prices have tried to move higher, it was mostly due to fund short covering, and it was very short lived.  Fundamentally speaking, there is a lot of corn and soybeans in the US and the world, with little new demand on the horizon.

Looking ahead, we could be facing a very similar marketing situation as we had a year ago when we had a big crop and no demand.  Last year many held out for a rally until July, only to watch storage costs eat up most of the cash price gains.  Since this scenario is possible again this year, the question is will we see history repeat, or will the producer give in sooner, opting not to pay the additional storage?  This means the next two to three weeks, when most minimum storages comes to an end, will be a very telling time.  Board carries aren’t strong enough to cover most storage rates.  If commercially stored grain is sold first, that first flush of corn will likely be significant enough to negatively impact both futures and basis.

As for market drivers, the only input on the radar right now is the January crop report, in which the USDA will release the final yields for 2015 crop.  Should those yields be reduced for any reason, the market could see that as friendly and move higher, however the lackluster demand should outweigh any yield gyrations.

If you would like to receive the Weekly Grain Recap via email each week, just send Aaron an email and I will get you on the list. aaron.ulland@chsinc.com

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CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234

This Material has been prepared by a sales or trading employee or agent of CHS Rochester and should be considered a solicitation.  The information contained in this presentation is taken from sources which we believe to be reliable, but is not guaranteed by us as to accuracy or completeness and is sent to you for information purposes only.  There is a risk of loss when trading commodity futures and options.  CHS Rochester bases its recommendations solely on the judgment of CHS Rochester personnel.

After a strong close to last week, follow through buying failed to materialize this week.  Soybeans took the biggest beating, down over 23 cents on Monday.  Corn futures briefly tried to work higher before falling off sharply on Monday and sideways the balance of the week.  Ultimately, the fundamentals the world markets are not friendly grain prices, capping any gains.  A big US crop in the bin, a large projected South American crop, combined with stagnant world demand lead to stale prices.  Fund short-covering is the only reason we see any rallies at all.

Argentine politics grabbed some headlines this week, with the new president taking office on campaign promises of lower taxes on grain exports.  Now that he is in office, President Macri is indicating change will be slower than anticipated, putting the market back on edge as to when South American producers will sell grain.

Locally, basis is steady on corn but getting weaker for beans.  General consensus is that grain will move en masse from the producer after the first of the year.  Should this take place, this flush of grain could push basis lower very quickly.  Be cautious moving forward, but be proactive as well.  Give us a call to discuss pricing targets and have offers working to help avoid missing your goals, especially as we move through the busy holiday season.

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CHS – Rochester Grain Team
Kasson: 507-634-7545 ext 7
Ostrander: 507-657-2234