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Santa rally unlikely for grain prices

Santa rally unlikely for grain prices

Price increases in November may have ended the chances of a December rally, a commodity strategist said

By Diego Flammini
Staff Writer
Farms.com

Cash crop producers hoping for Santa Claus to bring them higher grain prices near the end of the year may not get what they’re asking for.

November price rallies saw soybeans inch towards $12 per bushel, wheat prices rose to more than $6 per bushel and corn prices touched $4.30 per bushel.

Those points may be as high as commodity prices go for the remainder of the year, said Moe Agostino, chief commodity strategist with Farms.com Risk Management.

“November’s performance may have stolen the party,” he said. “The month of December can be strong, but (commodities’) performance over the past four months says the easy money has been made, so it will be harder to rally from here.”

Weather in South America and demand for corn will be key drivers for crop prices moving forward, he added.

Heading into 2021, the Jan. 12 USDA crop report could have some positive numbers for farmers.

“The report could be another bullish surprise with lower yields and higher export usage,” Agostino said.

News outside of the ag sector could also affect grain prices.

COVID-19 vaccine prospects and the U.S. election results can help provide stability.

“Policy and trade are very important,” Agostino said. “So is a recovering global and U.S. economy.”

If farmers are thinking about selling grain now, Agostino suggests keeping some aside in case prices improve.

“If you need the money, manage the risk and reward gift,” he said. “But keep some bushels dry in the event prices head higher in 2021.”


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The U.S./China trade war has escalated after Trump threatened to slap 100% Tariff on China by Nov. 1 after China placed some export restrictions on rare earth minerals.
But Trump overstepped/overreacted but the meeting with Xi at the end of the month was still on even after Trump threatened China with an embargo on used cooking oil. The U.S./China were going to meet and talk about trade issues today ahead of the meeting with Xi/Trump in South Korea.
Despite the increased tensions and noise both the corn and soybean futures held support at $4.10 and $10 with a corrective bounce higher on news that U.S. corn yields are a concern.
U.S. soybean prices are $0.90 to $1.50 cheaper than Brazil.
News that China was willing to remove the tariffs on Canada if Canada would lift the 100% levies on Chinese EV vehicles sent funds short covering in canola futures. Canadian and Chinese met on Friday to discuss ag issues like canola and meat.
Stocks fell on the increased rise in tensions with the U.S./China and concerns over bad regional loans, but investors shake off the news on strong Q3 earnings from the big U.S. banks.
Wheat continued to trade to new 5-year lows while cattle were breaking out to new record highs as Trump was working his magic on lower U.S. beef prices.
U.S. crude oil continued its trend lower as did Bitcoin.