Summary

As farming technologies continue to get better grain production also increases with it. Last week China stated that its grain production for 2015 was 621 million tons. That makes for a 12th consecutive production record. This really comes at little surprise as this has been the norm as far as global production is concerned.

It is official, Mauricio Macri is the new Argentinian president as of Thursday December 10th. Now the grain community will wait to see how he intends on implementing his proposed tax/tariff cuts. Argentine producers are expected to increase production next year in reaction to his proposed market-friendly policies.

Corn

March 2016 Corn lost 6.25 (-1.64%) last week closing at 375.25. The December WASDE report showed the Corn market to be in a weaker situation than Soybeans. The 2015-2016 Corn ending stocks were raised to 1785 million bushels (MB), a 25 MB increase from the 1760 MB released from the November WASDE report. The Corn production number was left unchanged at 13.654 BB, making for the 3rd largest US crop ever!

Additionally, Brazil exported a record 4.9 million tons of Corn in November and early December estimates are calling for even bigger export numbers. CONAB raised their Brazilian Corn estimate to 82 million tons (up 0.9 million tons). Key resistance remains at the 382.50 to 384.25 are for the March futures contract.

Soybeans

January Soybean declined 35.25 (3.89%) cents last week returning all of the gains from the previous week. The picture on the weekly chart is a large snapback reversal. The March contract lost 34.25 cents (-3.78%). If there is follow through we could see a move back down to support near the 844.25 to 858 area sometime this week. Last week’s WASDE report did not release any changes of significance for the Soybean supply and demand picture. The 2015-2016 Soybean ending stocks were unchanged at 465 million bushels (MB). The 2015-2016 production number was also unchanged. Its estimate was 3.981 billion bushels (BB). If this production number holds, it will be a record crop size eclipsing the previous record at 3.968 BB that was made last year.

CONAB raised their Soybean forecast from 102 to 102.5 million tons. The NOPA Soybean crush data will be released on Tuesday, December 15th.

Wheat

March Wheat bucked the trend and actually gained 6 cents (1.24%) on the week. Australia reduced their Wheat crop production to 17 million tons (a drop of about ½ million tons) which was not much of a market mover. The balance sheet remained unchanged. A new cold front is scheduled to hit this week putting the southern plains on alert for possible damage. Weather forecasters have temperatures possibly dipping below 30 degrees and even below 20 degrees in some parts.

Crude Oil

China has reported that they have doubled their crude oil stockpiles and their strategic storage capacity over the past few years. Advanced in technology, oversupply and all-time record low price prices have created an environment for massive inventory stockpiling. Last week Crude traded below 36.00. The last time it reached that level was six years ago. For now there does not appear to be any realistic short as production curbing in the short term horizon.