Now that November is in the books, some CBOT grain traders said commodity index funds will also begin to close their books for the 2007 year, cementing robust gains. For the first 11 months of 2007, wheat posted the biggest jump — up 73 percent — followed by soybeans, up 58 percent. 

    USDA skips December for U.S. crop production reports, with final harvest ideas pretty well set and next year’s planting ideas too vague to feed trading as yet. South American weather is a volatile factor after the first of the year. The year-end holidays also drain the markets of liquidity as traders take time off.

    So with less of a heavy hand from big speculators, grain traders were expecting a little more range-bound trade based on fundamentals in Chicago Board of Trade grain and soy markets in the coming month.

    That would follow one of the most volatile harvest seasons in memory — wheat regularly jumping and falling the 30-cent daily trading limits, soybeans notching 34-year highs and corn for next year’s harvest already priced at $4.30 a bushel, more than double the decades-long mind-set of $2 corn. Whoa.

    In December, one thing won’t change: Chicago grain traders will continue watching outside markets for direction — crude oil, the value of the dollar, and prospects for yet another interest rate by the Fed Reserve when it meets on Dec. 11.

    On the fundamental side, South American weather will be a daily key. Traders are most focused on Argentina, the world’s No. 3 soy producer. Fields there have been hot and dry this week, depleting soil moisture as the newly seeded soybean crop tries to emerge.

    Argentina is expected to see showers by Tuesday, which will help alleviate stress to the young plants. But any change in the forecast, either less or more, will feed into the daily calls for CBOT soybeans, meal and oil.

    Fresh export sales, possible cancellations and actual shipments reported by USDA will also be market-leading news.

    Wheat traders will be zeroed in on fields closer to home. Worries continue about the dryness in the western Plains hard red winter wheat belt. That crop accounts for about half of U.S. wheat and most of U.S. bread flour. But the crop is rated in the worse shape in six years due to an exceptionally dry fall. It will go dormant with cold weather but lack of snow cover can also expose the seedlings to wind damage.

    The current La Nina — a global weather anomaly based on cooling sea surface temperatures in the Pacific Ocean — is rated as the strongest in 20 years. That is being blamed for the persistent dryness in the western Plains wheat belt.

    The strengthening La Nina could also cause some abnormal dryness in southern Brazil and Argentina as the crop season progresses — a development that would feed speculative buying in very edgy global grain markets already spooked by fears of global warming, China’s limitless appetite and the wild card of biofuels demand that has been eating into the world food system’s grain supplies.

rtr chi cds