TFM Midday Update 12-12-2023

CORN

Corn is trading higher today but remains in the same rangebound pattern since the beginning of November. The next 7 days are forecast to be dry in Brazil which has given support to the corn market.
While weather has improved recently in central and northern Brazil, the corn crop was planted in dry conditions so dry periods like this upcoming one worsen the drought conditions. This will be favorable for the flooded southern region.
US corn demand has been firm with help from the fact that US corn is cheaper than Brazil with FOB prices yesterday at nearly a 40-cent discount to Brazil. US corn exports are 35% higher than a year ago.
CPI data was released today and showed inflation trending lower in November and rising 3.1% from a year ago. This was in line with expectations.

Soybeans are trading lower today after a strong rally in yesterday’s session that was driven by higher soy products and a hot and dry spell for Brazilian weather.
March soybeans are trading right at the 100-day moving average and have worked back closer to the center of their range. Soybean meal is higher today, while soybean oil is lower.
The USDA is predicting that Brazil’s soybean production will reach 161 mmt this season, but this guess is above CONAB and other analysts which are expecting production in the mid-150 mmt range due to the early heat and drought.
Argentina’s new president Milei was inaugurated on Sunday and yesterday he temporarily suspended its grains export register. This comes as he plans to significantly reduce export tariffs, which will likely cause a large influx of farmer selling if it is enacted.

All three wheat classes are trading higher, with Chicago wheat trading even with the 100-day moving average again despite a lack of fresh Chinese purchases.
The Russian government has banned durum wheat exports until May 31st in order to stabilize prices domestically, but this may indicate that they are beginning to run low on supplies.
China purchased over 41 mb of US wheat last week which caused short covering by the funds, but both French and Australian wheat are cheaper on an FOB basis which could limit further US sales.
Although world ending supplies of wheat are at their tightest levels in 15 years, the USDA’s current estimate of ending stocks is at 4.57 billion bushels. Traders may only get concerned with that number if it falls below 4 bb.

Amanda Brill