Chicago Board of Trade Market News
Outlook
U.S. interest rates rose this week accentuating the weakness in U.S. stock market indices that featured profit taking after a very strong run to end 2023. After posting a 3-month low at the end of 2023 the U.S. dollar moved higher this week. Crude oil prices bounced off recent lows and ended the week slightly higher, but the bounce in crude oil prices did not carry through to ethanol prices as they remained steady.
A slow pace of farmer selling coupled with a steady demand by domestic processors has kept a floor under basis bids for corn. Farmers are showing reluctance to make fresh sales with futures prices hovering near contract lows.
Although it is a new year, the trading desks are not fully populated and won’t be until Monday, January 8th and even then large trading firms are awaiting next Friday’s USDA January crop report before returning to normal ag trading activity. Historically, the USDA January crop report will contain some changes in total acreage harvested and total production.
CBOT market participation, as measured by total market open interest, remains historically low. CBOT corn open interest fell to a 9-year low in late 2022 and then improved in 2023, however, the seasonal high in corn open interest was the lowest since 2014. Open interest for 2023 in the three major CBOT grain contracts peaked in late October to early November and has since declined. Compared to a year ago, corn and wheat open interest are 10% higher and soybean open interest is 5% greater. Ag markets are currently “out of favor” with fund managers but if U.S. treasury yields decline and the U.S. dollar falls, that could revive interest in agricultural commodities later this year.