TFM Midday Update 01-02-2024

CORN

Central Brazil received good rains over the weekend. Mato Grosso, their top grain producing state, had good coverage with heavy totals. Additionally, more rain is expected this week for the central region.
Though conditions are improving, private estimates of Brazil’s corn crop range from 8-12 mmt below the USDA estimate of 129 mmt.
The CFTC indicated that managed funds, as of last Tuesday, held a net short of 172,000 corn contracts.
This afternoon the grain crushings report will be released at 2:00 PM CST. This will include corn grind (as well as soybean crush) data.

Soybeans are down sharply this morning (with the March contract having gapped lower) likely following China’s weaker Dalian futures, and also on improved South American weather.
October biodiesel and renewable diesel capacity rose nearly 3% in October to a record 5.9 billion gallons. However, production actually fell about 8% in October to a three-month low of 388 million gallons.
Prior to the grain opening at 8:30 this morning, crude oil was up about two dollars per barrel. However, as of writing it has dropped and has been trading both sides of neutral. This decline may be affecting soybeans and the grain markets as a whole.
Despite improved conditions in Brazil, final soybean production could be affected by the early heat and dryness in the north as well as flooding in the south. This has private estimates ranging 6-11 mmt below the USDA’s 161 mmt production estimate.

The US Dollar Index is up sharply. As of this writing, it has gained 0.78 on the day to 102.11. Along with lower corn and soybeans, this is putting pressure on the wheat market.
Paris milling wheat futures remain in a sideways to lower pattern, offering no support to the US market. As of this writing, those contracts are down about one euro per mt, holding just slightly above last week’s lows.
Next week Friday, January 12, traders will receive the next WASDE report. Additionally, the winter wheat seedings report will be released with the first estimate of US 2024 wheat acreage.
According to the CFTC, managed funds hold a net short position in Chicago wheat of about 60,000 contracts, and about 31,000 contracts in KC wheat.

Brandon Doherty