26/12/2012 (Live Trading News) - Corn, Wheat, Soy and Palm Oil Prices

US Agriculture; After the Closing Bell Grains Report

Wheat: Futures were flat to unchanged Monday due to a lack of fresh news. Traders kept a close eye on neighboring pits as price action in Wheat remains tied closely to that of Corn. Chicago and Kansas City Wheat favored a firmer tone on the close, with Minneapolis narrowly mixed.

Corn: Futures were narrowly mixed in quiet trade on Mondays shortened session as traders have largely moved to the sidelines for the Holidays. Nearby contracts favored the upside and deferred months the downside. But Bears still hold the near-term technical advantage as futures remain in the downtrend established from the November highs.

Soybeans: Futures were supported by short-covering throughout the session Monday, buying was limited as traders wish to limit their risk exposure this Holiday-shortened trading week. Traders were hesitant to extend Long positions due to forecasts for more rainfall chances across much of Brazil’s Soybean belt this week.

Palm Oil Update

Malaysian Palm Oil futures climbed to a near 1-month high Monday as investors pinned hopes on next year’s tight supply of competing Soybean Oil shifting food demand to the tropical edible Oil.

US food prices forecast for 2013, look for an increase of 3 to 4%

Updated food price forecasts from USDA’s Economic Research Service ERS are flashing conflicting signals about the change in food prices for Y 2012.

USDA economists have kept a forecast increase of 2.5% to 3.5% for several months, but that may no longer be the case.

According to the commentary released by ERS on food prices, the agency said their “inflation forecast for both all food and food-at-home grocery store prices in Y 2012 remains unchanged at 2.5% to 3.5%.”

However, the data table that accompanied the update indicated the forecast for all food in Y 2012 is now 2.25% to 2.75%.

It is not clear which set of figures is correct and the ERS were asked for a clarification on this issue. They are still keeping their forecast for Y 2013 at an increase of 3 to 4%.

US Ethanol Inventories Tap 6 Month Highs

US Ethanol supplies in mid-December reached the highest level in 6 months on demand erosion for the Corn-based gasoline additive, CME Group said in a report.

During the week ended 14 December, nationwide Ethanol inventories totaled 20.84-M bbls + 17% over the prior 5 wks and the highest since the middle of June. Stockpiles are up 18% over the same week a year earlier.

“The sharp increase in ethanol inventories comes in the face of virtually unchanged production over that time-frame, suggesting that the surge in inventories is mainly the result of weak fuel demand,” CME Group said in its bi-weekly Ethanol Outlook Report released 24 December.

“The surge in ethanol inventories tracks to some extent with the 9.4% surge in gasoline inventories seen in the past four reporting weeks,” CME Group said.

Ethanol production fell 1.5% over the 2 wks ended 14 December to an average of 822,000 BPD, off 13% from a year earlier. In futures trading 24 December, CBOT Ethanol for Jan delivery was unchanged at $2.225 a gal, down 7.4% this month.