On Wednesday (December 11), the CBOT grain market prices showed a general upward trend, influenced by the latest monthly supply and demand report from the United States Department of Agriculture (USDA). Under the dual push of inventory adjustments and increased international demand, major grain varieties performed strongly. The price fluctuations of wheat, soybeans, soybean oil, soybean meal, and corn have all drawn market attention, while changes in South American weather and international bidding activities have become important variables for future trends.
Wheat: Tight Supply and International Bidding Push Prices Up
Wheat futures closed higher on Tuesday, up 3 cents per bushel, at $5.61-3/4. The main reasons for the price increase include uncertainty in Russian exports due to the Russia-Ukraine situation and expectations of tightening global supply. However, optimistic assessments of crop conditions by Russian agricultural analysis agencies limited the rise.
Regarding international demand, Japan plans to purchase 113,000 tons of food-grade wheat, while Thailand has issued a tender for 120,000 tons of feed wheat, indicating that demand for wheat in the Asia-Pacific region remains strong. However, high prices have led some buyers to hold back, as evidenced by Jordan's recent failed tender. The basis for U.S. hard red winter wheat remains stable, but low prices have caused farmers to be reluctant to sell, and whether supply can meet demand still requires further observation.
Soybeans: Export Demand Boosts Prices, Basis Strengthens
Soybean futures prices also rose, up 4-3/4 cents per bushel, at $9.94-3/4. The significant increase in soybean export demand from the U.S. Gulf, along with China's clearly accelerated pace of purchases, has attracted some buyers despite Brazil's more competitive supply prices due to the U.S.'s shipping schedule advantages. The CIF soybean barge basis strengthened, with the December shipment basis rising to a 91-cent premium over futures, further supporting market prices.
The USDA maintained U.S. soybean ending stocks at 470 million bushels, consistent with market expectations, but the growth in export demand injected vitality into the market. International tenders for non-GM soybeans also benefitted the market, with South Korea planning to purchase 70,000 tons of food-grade soybeans, providing short-term support for soybean prices.
Soybean Oil: Export Demand Drives Prices Higher
The performance in the soybean oil market was particularly strong, with the USDA raising its forecast for U.S. soybean oil exports for 2024/25 from 600 million pounds to 1.1 billion pounds. A continued increase in long positions reflects optimistic market sentiment about growing international demand. Despite the accelerated domestic crushing rate leading to ample supply, strong international market demand supported the steady rise in soybean oil prices. The future soybean oil market may seek a balance between export momentum and inventory pressure, with an expected increase in price fluctuation ranges.
Soybean Meal: Ample Supply Limits Volatility
The recent performance of the soybean meal market has been relatively flat, with the spot basis in the U.S. Midwest slightly weakening due to an accelerated domestic crushing rate leading to ample supply. The USDA's monthly report indicates limited adjustments in soybean meal inventory, lacking strong short-term price drivers. However, funds' net long positions still indicate market caution and optimism for future demand.
Corn: Inventory Downgrade and Export Demand Boost Prices
Corn futures performed outstandingly, closing Tuesday at $4.49 per bushel, up 7-1/4 cents, hitting a five-and-a-half-month high. The USDA lowered U.S. corn ending stocks expectations for 2024/25 from 1.938 billion bushels to 1.738 billion bushels, exceeding market expectations. U.S. corn export prices remain the lowest among major exporting countries, attracting demand from buyers, including Spain. Additionally, the strengthening of the corn barge basis in the Gulf of Mexico further reflects the stable growth of market demand.
Bullish Sentiment Dominates, Risks Remain
Overall, with increased long positions and solid international demand, the short-term upward trend in the CBOT grain market appears clear. However, the market continues to face multiple uncertainties, including international bidding dynamics, South American weather changes, and geopolitical risks. In particular, South American weather could significantly impact the global supply landscape, while uncertainties in Russian supply could further drive market volatility.
Market participants are advised to closely monitor relevant data updates and international tender results over the coming week to better grasp market trends. In the future, the grain market may continue its upward trend driven by tight supply and demand fluctuations, but volatility risks should not be ignored.
