CORN

• Corn futures are trying to rebound after a lower start to the session, with prices having turned positive as of writing. Technically, corn is at or near oversold levels and may be due for a correction to the upside.
• Increased freight costs globally may be having an impact on export demand; it has been nearly a month since there were any corn flash sales announced by the USDA. Despite US corn prices being below South America for the spring months, exports of commodities and other goods are being affected by low water levels on the Panama Canal, and the issues in the Red Sea with shipping companies saying they will avoid using the Suez Canal.
• Corn futures in Brazil are well above that of the US, with the March contract around the equivalent of $6.58 per bushel yesterday.
• Funds remain net short a hefty amount of corn contracts, which could prime the market for a short covering rally. However, reversing the strong downtrend would require significant friendly news.

SOYBEANS

• Total South American soybean production between Argentina, Brazil, and Paraguay was estimated to be 219 mmt in the December USDA report, far above the 195 mmt record. The 219 mmt number may be reduced on next week’s report with declines in Brazil, however, it is unlikely to fall enough to allow much of a rally in the bean market.
• The forecast remains wet for the next 10 days in north / central Brazil, keeping negative pressure on US soybean futures. And while some damage to the soybean crop may have been done by early heat and dryness, the recent rains have stabilized the crop.
• Argentina’s soybean meal offers for the April – May timeframe are said to be $40 per ton cheaper than the US. This continues to pressure the meal market, and in turn, soybean futures. With that said, US soybean meal futures may be finding some technical support at these lower levels and oversold conditions.
• US soybean export sales are down 15% from last year, and like corn, there have been no recent flash sales announced by the USDA. For soybeans, it has been over two weeks. This may also be reflective of some of the global freight issues.

WHEAT

• After four consecutive sessions of the US Dollar Index rallying, it has finally backed off and is lower this morning. This is easing pressure on the wheat market, in which Chicago futures are trying to turn positive after being in negative territory this morning.
• Here in the US, a storm system is expected to bring rain and snow to parts of the Plains states, primarily in the central and southern areas.
• On a bullish note, wheat supplies in India are said to be the lowest since 2017. Even if they do not import directly from the US, this could still be a supportive factor for the wheat market as a whole.
• The bitter cold that is moving into parts of Russia and Ukraine may bring the threat of winterkill in wheat areas that have no snow cover. Some areas do have snow, however, traders may not see this as a major threat.

Author

Brandon Doherty