TOP STORIES:

Soybeans Higher on Expectations of Further Demand Rationing

Soybeans for March delivery rose 1.1% to $13.61 1/2 a bushel on the Chicago Board of Trade Wednesday as traders continued to pile into soybeans on expectations of further demand rationing. Corn for March delivery rose 0.7% to $4.95 a bushel. Wheat for March delivery fell 1% to $6.47 1/2 a bushel.

The rise seen in soybean prices over the past six months is seen as necessary for the market to grapple with the pressure of higher demand and constricted supply, said Joe Stone, head of Cargill's agricultural supply chain division. "The function of the market now seems to be rationing demand. We're just at the beginning of that process" said Mr. Stone, speaking on a virtual forum held by the U.S. Soybean Export Council. The weather in Argentina will dictate how the world soybean supply fares in 2021, he said.

Large Fund Rebalancing May Hit Grains Prices -- Market Talk

13:28 ET - Large investment funds are expected to do a large portion of their portfolio rebalancing this month, which may cause buoyant CBOT futures to turn lower. "Index funds must rebalance to their stated portfolio objectives each January - some more frequently," Arlan Suderman of StoneX says. "This rebalance typically takes place the 5th - 9th trading day of the new year." With grain futures, particularly soybeans, gaining so much in the past year, funds may opt to dump their positions and move that money into cheaper commodities--an effort to rebalance the percentages certain goods make up their portfolios. Row crop futures on the CBOT are all up to their highest levels in six or seven years this week. (kirk.maltais@wsj.com; @kirkmaltais)

STORIES OF INTEREST:

US Ethanol Inventories Drop For First Time in Months -- Market Talk

1119 ET - Inventories of ethanol in the US have posted a drop this week, the first time since October that they've done so. According to data released by the EIA, ethanol inventories totaled 23.28 million barrels, which is down 220,000 barrels from last week. Meanwhile, ethanol production rose slightly this week, up 1,000 barrels per day to 935,000 barrels per day. After weeks of rising inventories and stalling weekly production figures, this week's report may be considered bullish among grains traders hoping to see ethanol fuel consumption pick back up. (kirk.maltais@wsj.com; @kirkmaltais)

Agri-Food System Needs Revolution to Fight Hunger, Meet Climate Goals -- Market Talk

1117 GMT - Agriculture, forestry and other land use make up around a quarter of the world's greenhouse gas emissions, Morgan Stanley says. However, the agri-food system will need to simultaneously deliver around 50% more food to eliminate malnutrition for 2.5 billion people and cut roughly 13 gigatons of emissions to meet the goals of the Paris Agreement by 2050, analysts at the U.S. bank say. Some "solution stocks" that can help reinvent the system are plant-based food maker Kerry Group, methionine producer Bluestar Adisseo, plant-protection seller Nufarm, agriculture equipment maker Deere and animal drug maker Elanco, they note. (dieter.holger@wsj.com; @dieterholger)

THE MARKETS:

Livestock Futures Finish Lower -- Market Talk

15:05 ET - After starting higher Wednesday, CME livestock futures turned lower to close out trading Wednesday. Lean hog futures made the biggest swing, starting trading higher Wednesday before sinking to a close of 69.775 cents per pound, down 1.6% today. "The huge premium of February to the cash market has helped to spark some selling," says RJO Futures. The big swing continues the volatility seen in hog futures to start the year. Meanwhile, live cattle futures finished down 0.1% to $1.15 per pound. (kirk.maltais@wsj.com; @kirkmaltais)

(END) Dow Jones Newswires

01-06-21 1737ET