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3 Big Things Today, December 28

Soybeans, Grains Slightly Lower Overnight; Wheat Caught in Fundamental Demand, Weather Battle.

1. Soybeans, Grains Lower on Profit Taking Ahead of Year End, Weak Demand

Soybeans and grains were down overnight on profit taking ahead of the year’s end.

With only two trading sessions left in the year, investors are likely squaring up positions, and those who made money are liquidating their long contracts, analysts said.

Prices also are falling amid weak demand for U.S. products. Russian exporters are undercutting U.S. shippers on wheat prices, and USDA data show that export sales of corn, beans, and wheat are all trailing the year-ago pace.

Still, dry weather in Argentina is underpinning soybean prices, while extremely cold weather in the Southern Plains is boosting wheat futures. With prices little changed overnight and volume extremely low, futures could rebound on the slightest bullish news.

Soybean futures for March delivery fell 3¾¢ to $9.63¾ a bushel overnight on the Chicago Board of Trade. Soy meal futures lost 80¢ to $317.70 a short ton, and soy oil gained 0.07¢ to 33.20¢ a pound.

Corn for March delivery fell a penny to $3.52¾ a bushel in Chicago.

Wheat for March delivery declined 2¢ to $4.26 a bushel overnight, while Kansas City futures lost 2¢ to $4.23½ a bushel.

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2. Wheat Being Pushed, Pulled by Bears, Bulls in Demand Vs. Weather Battle

While it seems fundamentals are lacking for corn and beans, that’s certainly not the case for wheat.

The problem, however, is that there are equally bullish and bearish stories for the grain. Let’s start with the bad news (so we can end with the good).

The bears – those betting on lower prices – are looking at export sales, which have been fairly miserable so far in the current marketing year.

Inspections of wheat by the USDA for shipment to overseas buyers from June 1 through December 21 have fallen to 14.2 million metric tons, down from 15.1 million tons during the same time frame a year earlier.

Total commitments to purchase U.S. wheat from overseas buyers are down 7% year over year. As an aside, that’s pretty bad, but it’s still better than corn, whose sales are down 26% vs. last year, and soybeans, which are down 16%.

Russia seems to be getting all the business. Romania last week won an Egyptian wheat tender, but that was the first time a country not named Russia won such a tender in nine tries. So much wheat is flowing out of Russia, in fact, that one of its grain ports has added a third shift to cope with record shipments from the country, Bloomberg reported.

Now, the positive news – for prices, that is.

Bulls are looking at the weather maps in the Southern Plains, and the forecasts aren’t looking very good. Temperatures in the Southern Plains where hard red winter varieties are grown are expected to fall into the negatives this weekend and have been below the ever-important 28˚F. for several days.

That means any wheat plants that don’t have a protective layer of snow, and that’s reportedly a lot of acres, are at risk of winterkill. Kansas Wheat CEO Justin Gilpin said last week that growers were extremely concerned about losses stemming from the cold snap that’s now moving through the region.

While the negative demand news is keeping a lid on prices, the extreme cold in the Southern Plains is underpinning them. Right now, it’s a tossup to see who’ll win the battle.

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3. Extremely Cold Conditions, Snowfall to Continue in Much of Midwest, Plains

The bitter cold that’s enveloped much of the nation will continue on Thursday as temperatures and wind chills remain well below zero in many areas.

In North Dakota, for example, wind chills are expected to be around -40˚F., which will cause damage to exposed skin in as little as 30 minutes, according to the National Weather Service.

Along with the cold, up to 8 inches of snow are expected to fall starting late tonight in the state, the NWS said. The heaviest snowfall is expected Friday.

The cold and snow isn’t limited to the extreme Northern Plains. In parts of Iowa and Illinois today, some scattered snow showers are expected to move from west to east. A quick inch of snow is expected in parts of both states with up to 3 inches on Friday.

Bitterly cold weather will continue, with wind chills nearing -30˚F., the NWS said.

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