On December 3, the CBOT major grain futures market experienced varying degrees of fluctuations. Wheat and corn prices slightly rebounded, recovering the previous trading day's losses, while soybean prices rose slightly but were suppressed by expectations of a record crop in Brazil. The market focus remains on changes in South American weather, U.S. export demand, and fund position changes, indicating the potential for significant price reversals in the coming months.
Wheat: Fluctuating at Low Levels, Demand and Supply Battle
The wheat market continues to fluctuate at low levels. On December 2, CBOT wheat closed at $5.48-3/4 per bushel, up 0.3% from the previous day. Although the basis for U.S. Hard Red Winter wheat (HRW) has recovered, some regions experienced volatility due to the switch of futures contracts to March, but international market supply remains ample. Australia's production forecast has been raised to 31.9 million tons, exerting downward pressure on prices.
Recent international tenders have been somewhat favorable, with Jordan and Turkey issuing wheat purchase tenders, which are expected to provide some support for prices. However, with the backdrop of a global surplus in wheat supply, the potential for price increases remains limited. Speculative fund positions show that commodity funds have increased their net long positions on wheat, yet market sentiment remains cautious, and short-term price fluctuation is likely.
Soybeans: Strong Export Demand but Increasing South American Supply Pressure
The soybean market is caught in a supply-demand tug-of-war, with strong export demand countered by forecasts for a bumper South American crop that is gradually suppressing price rebounds. On December 2, CBOT January soybean futures slightly fell to $9.85-1/4 per bushel. Although the USDA reported that U.S. exporters have signed contracts to sell 134,000 tons of 2024/25 soybeans to China and domestic crushing hit a record high, the market remains concerned that Brazil's record soybean production could continue to pressurize prices.
Major Brazilian institutions are forecasting soybean production to reach 166-170 million tons, a substantial upward revision, and recent rainfall in Argentina has improved crop growth conditions, providing more assurance for global supply. In terms of speculative fund positions, commodity funds have increased their net short positions on soybeans, further adding to market uncertainty. Future market trends will be primarily influenced by Chinese demand and weather changes in South America.
Soy Oil: Steady Demand, Stable Basis
The soy oil market has recently stabilized. Despite pressure on soy oil futures on December 2, basis quotes remained stable. The growth in biofuel demand supports the U.S. soy oil market, enhancing domestic crushing capacity. However, global supply is expected to be sufficient, and Brazil and Argentina's bumper soybean harvests may exert downward pressure on soy oil prices.
Regarding speculative positions, an increase in net short positions by funds reflects cautious market sentiment. In the short term, soy oil prices are likely to fluctuate within a certain range, with biofuel demand and international market procurement movements continuing to be key factors influencing price volatility.
Corn: Seeking Rebound Opportunity Amidst Slump
The corn market is searching for rebound opportunities amidst a slump. On December 2, CBOT March corn futures slightly dipped to $4.32-1/2 per bushel but saw a slight rise in early trading on December 3. Internationally, Jordan's wheat tender may indirectly affect corn demand, and improved rainfall in Argentina has enhanced corn planting conditions, with future supply expected to increase.
Speculative fund positions show a recent decrease in speculative net short positions for corn, although it remains in a long-term net short trend. The divergence in market sentiment suggests that corn prices may persist in a weak short-term pattern, with export demand and weather factors playing crucial roles in market trends.
Future Outlook:
Overall, the short-term trend of the CBOT major grain markets will continue to be dominated by South American weather, global supply-demand fundamentals, and changes in fund positions. The wheat market may continue to fluctuate, with attention on international tenders and basis performance; soybeans and related products will continue to face pressure from South America's bumper crop, yet export demand remains a key support; corn will require external demand and weather changes to break free from the current predicament. Traders should pay attention to position changes and global supply-demand dynamics to flexibly respond to market fluctuations.
