CORN HIGHLIGHTS:

• Buying in the wheat market helped pull corn futures higher on the session Thursday. March corn added 1 ¼ cents in an overall quiet trading session in the corn market with only a 5 ½ cent trading range for the day.
• Technically, corn futures are trying to turn higher with two consecutive high trading sessions, and trading over yesterday’s low. Large supplies keep the rally limited and bullish news remains quiet for the corn market.
• The USDA will release weekly export sales on Friday morning. Expectations are for new sales to range from 500,000 mt – 1.20 mmt for last week. The previous week saw reported new sales of 1.24 mmt for US corn.
• South American weather looks to stay favorable for crops and is a limiting factor to grain prices. Some of the driest areas of Brazil saw recent beneficial rains, and near-term forecasts keep the weather pattern more active.
• Since March futures have become the lead month, the National corn basis has risen around 10 cents and been trending slightly higher. The tight basis may be reflective of slow producer selling into the end of the year, and the cash market may need to firm in order to trigger grain movement out of producers’ hands at these price levels.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower after a slight recovery yesterday, but ultimately posted the lowest close since May of last year. Both soybean oil and meal were lower as well as rains continue to fall in Brazil and the forecast remains favorable.
• While rain has fallen in the driest areas of central and northern Brazil over this past week with more rain in the forecast, some of the soybeans planted earlier in the season were too far gone and have started being harvested early but, in some cases, torn up completely so that safrinha corn could be planted.
• Trade has been mainly focused on South American weather, but the upcoming WASDE report could cause focus to shift. The USDA’s last estimate for Brazilian soybean production was 161 mmt, but estimates from private analysts have been in the range of 151 to 158 mmt.
• China is reportedly planning to ramp up its farm technology and innovation so that farming productivity can be accelerated, and it can become more sustainable domestically. China has invested heavily in agriculture in Brazil but continues to work towards increased self-reliance regarding food security.

WHEAT HIGHLIGHTS:

• The wheat market put some green back on the board, led by double-digit gains in the front months of the Chicago class. Part of the strength in wheat today may be a result of the US Dollar Index finally taking a breather from its recent rally. From a big picture perspective, it is still in an uptrend but has traded lower in today’s session.
• Helping US wheat was a higher close in Paris milling wheat futures. With a reversal today off the contract low in the March contract of 218.00 Euros per mt, that contract gained 2.00 for the day to close at 221.25. Along with being very technically oversold, the reversal may indicate more upside that could offer support to US wheat as well.
• Ukraine said that they have removed mines and explosives on 208,000 hectares of land, the equivalent of about 800 square miles. This land is now available to farmers and if their yields remain consistent with this harvest, they will reportedly be able to grow about 1 mmt of grain on the returned land.
• Russia and Ukraine will experience an arctic storm that brings extreme cold to both countries. While some areas have snow cover, there are some regions without any snow, bringing the threat of winterkill to those parts of the wheat crop. It is difficult to determine the exact impact this is having on trader sentiment; it may take time to see if any real damage is done before the market has any reaction.
• Though it broke below the six-dollar level again today, the March Chicago contract did manage a close above both the 40 and 50-day moving averages which are converged near 605, and also just above the 100-day moving average of 612 ½. This makes the technical picture look a little more friendly and may trigger further buying interest.

DAIRY HIGHLIGHTS:

• Spot cheese posted no changes on the day to stay at $1.4350/lb. Second month cheese futures have seemed to find some support near $1.54/lb and have bounced near $1.5850/lb.
• Class III saw a slight improvement, which can be contributed to the slightly higher second month cheese futures. The Class III average currently sits at $17.53/cwt.
• Spot butter gave back gains saw early in the week to trade at $2.65/lb. Butter futures weren’t any better, with the March contract losing over 5 cents on the day.
• Class IV futures are still holding steady given the relatively strong butter market. Class IV prices hold a $1.95/cwt premium to Class III.
• The FMMO hearing will hold a new record for longest hearing in USDA history when they reconvene on January 16th. The hearing is set to conclude on February 2nd.

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Author

Brandon Doherty