TFM Midday Update 12-22-2023

CORN

Two railway crossings in Texas are still being affected by the migrant crisis. This is limiting the flow of US grain into Mexico, and as of writing the issue has not been resolved. According to Union Pacific, there is up to $200 million of freight per day, including grain, that can’t get to its destination.
While the forecast shows conditions improving, the weather issues in Brazil so far may mean delays to safrinha corn planting down the road. Planting in a less optimal timeframe may lead to production losses.
The Buenos Aires Grain Exchange said that 59% of Argentina’s corn crop is planted. Additionally, the improved weather conditions are reflected in the crop condition, with 90% rated good to excellent.
March corn is in oversold territory according to daily stochastics and is very close to a buy crossover signal between the K & D lines on this technical indicator.

The January / March soybean spread has narrowed to a carry of less than a nickel after it was more than 20 cents just a few short weeks ago. Recent sales to China and unknown destinations may be offering some support, as is the fact that commercials are short nearby futures.
The forecast for the drier areas of Brazil looks like it will get wetter, and it is expected to remain that way into January. The next week or so may have less rain than initially forecasted, but temperatures will also not be as hot.
According to the Buenos Aires Grain Exchange, Argentina’s soybean crop is 69% planted. Additionally, 97% of the crop is said to be in normal to good condition.
Soybean meal is near or at oversold levels from a technical perspective. Much of the recent decline has to do with the anticipation of a good Argentina crop. But meal is trading higher this morning, which may be the start of a technical correction, and this is providing some support to soybean futures.

The US Dollar Index continues to fall, which should offer support to the wheat market. As of this writing, all three US classes are above water, but not by much, and may be seeing some upside resistance due to relatively poor export sales yesterday.
More rain is expected in the US southern plains beginning Saturday. The front is expected to move into the central Midwest by Sunday. The moisture should benefit both hard and soft red wheat areas, but the forecast turns drier early next week.
Recent heavy rains and snow in France have led to some of their wheat area not being planted. However, the market does not seem overly concerned, with Paris milling wheat futures having been in a lower trend since the first week of December.

Brandon Doherty