TFM Midday Update 01-08-2024

CORN

Corn is trading lower again this morning but has moved 3 cents off its lows from earlier in the morning as it makes new contract lows. Improving Brazilian weather has added pressure.
More bearish pressure comes from an increase in global shipping rates, mainly due to issues in the Red Sea with the ongoing war. That trade route traffics 12% of world trade.
Friday’s WASDE report could offer some support if the USDA lowers Brazilian production by more than trade is expecting. The last guess was 129 mmt, but many private analysts are expecting closer to 120 mmt due to drought early in the season.
For the week ending January 2, non-commercials were sellers of 19,700 contracts of corn, increasing their net short position to a very large 197,326 contracts.

Soybeans are trading lower today but have also moved off their earlier lows by about 8 cents. Both soybean meal and oil are lower with bean oil posting the largest losses.
Saudi Arabia has announced that they would reduce the price of their crude oil for all buyers rather than just Asian countries. This has caused crude oil futures to fall and has put pressure on soybean oil.
Despite an expected decline in Brazil’s soybean production, total soy exports for January are expected to reach at least 1.3 mmt which is a significant increase from the previous year which saw 940,000 exported.
With the WASDE report being released this Friday and the funds now holding a net short position, it is possible that they will cover some of those shorts ahead of Friday in case the USDA announces lower than expected Brazilian soy production.

Wheat is leading the grain complex lower today, but it has also recovered slightly from earlier lows. The rising value of the dollar combined with high shipping rates has negatively impacted all grains today.
In the US, a large winter storm is expected to bring large amounts of moisture to winter wheat areas in the central and southern Plans as well as the Midwest. Winter wheat ratings have improved recently.
Last week’s export sales were extremely disappointing across the board, but especially for wheat. There have been no sales reported to China in weeks, but there are rumors starting to circulate that China is seeking SRW offers.
Friday’s CFTC report showed non-commercials as sellers by only 718 contracts which increased their total net short position to 60,277 contracts.

Brandon Doherty