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Grains Pause in a Slow overnight trade

Will grains continue to rise? Or is this a golden opportunity for producers to take advantage of sharply higher prices following Tuesdays rally?

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In the overnight session corn is down 2 ¼ cents, soybeans are down 5 ¾ cents, but wheat has been able to hold onto overnight gains of 2 ¼ cents. The dollar index has found some support in the overnight and turned back higher while crude oil turned lower on news that crude stocks rose more than 6 million barrels last week.

Informa economics revised their South American forecast higher increasing both corn and soybean production in Argentina by 1 million metric ton to 23 MMT and 57 MMT respectively. Informa left Brazilian soybean production estimates unchanged at 93.5 million metric tons but increased corn production to 72.8 million metric tons. Further increases in Brazilian soybean production seem unlikely with the northern growing region still struggling with significant dryness.

Ethanol production numbers will be announced mid-morning and may start to show signs that crush margins are beginning to weigh on overall ethanol production. Yesterday, Acher Daniels Midland said ethanol producers will have to cut output amid high stocks and stagnant demand. Ethanol production remains 5.6 percent ahead of last year’s pace while the USDA expects only a .8 percent increase year over year.

StatsCanada announced this morning that total wheat stocks were at 24.82 million metric tons which is down 13.5 percent from a year earlier and right on par with the average trade guess of 25 million metric tons. Canola Stocks were 11.10 million tons as of December 1st which was higher than the average guess of 10.7 million metric tons. Barley stocks were above the average trade estimates with 5.38 million metric tons recorded at the end of the year compared to expectations of around 4.9 million metric tons.

China offered 40,270 metric tons of U.S. soft winter wheat this week in an auction and ended up selling only 6.1 percent out of state reserves a decline from 30 percent that was sold the previous week.

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