CORN HIGHLIGHTS:

• Corn futures set a new contract low for the March contract before seeing some positive price action to finish with slim gains. March corn gained 1 ½ cents on the session.
• Despite the light price strength on Wednesday, the technical weakness in the charts after Tuesday’s session will keep sellers active as prices consolidated at the bottom of yesterday’s lows. The corn market is just lacking friendly news to push prices higher.
• 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 beneficial rains over the weekend, and near-term forecasts keep the weather pattern more active.
• The impacts of recent weather and economic concerns have the market anticipating a reduced second corn crop this summer based on reduced acres. Some analysts feel the crop could be 10-12 mmt below last year.
• Favorable weather in Argentina is supporting the corn crop, which market analysts feel could double last year’s drought reduced production. Argentina corn is rated 38% good to excellent versus 15% last year. Harvest of these supplies will limit the potential for the corn market to rally in late spring into summer with competing bushels in the market.

SOYBEAN HIGHLIGHTS:

• Soybeans began the day lower but recovered later in the day with only the January contract (which is in deliveries) ending lower. Both soybean meal and oil ended the day higher with soybean oil getting support from higher crude oil.
• While yesterday’s selloff can likely be attributed to heavy rains over northern and central Brazil last weekend and an improved forecast, trade may now be focused on the upcoming WASDE report next Friday, which could feature cuts in South American production as well as a reduction in US ending stocks.
• The USDA’s most recent estimate for Brazilian soybean production was 161 mmt, which now seems very high as many analysts are projecting a number between 150 and 155 mmt. At the same time, Argentina is expected to produce at least double the amount of soybeans from last year which would offset the loss in Brazil and then some.
• The soybean harvest has already begun in Mato Grosso, Brazil, which is the primary growing state in the country. So far, the crops have been called very poor in certain areas, but yields have ranged from 27 to 49 bpa. It is worth noting that these soybeans are being harvested early due to the poor conditions and so second crop corn can be planted in a timely fashion.

WHEAT HIGHLIGHTS:

• Wheat traded lower again today with losses across the board in all three US classes. This is despite new Russian attacks on the port of Odesa in Ukraine on Tuesday and an arctic storm that will bring very cold temperatures to wheat growing areas of both countries.
• Adding to pressure in the wheat market is the continued recovery of the US Dollar Index which is higher again today. It may have currently run into some resistance around the 21-day moving average of 102.63, but if the uptrend continues it is sure to keep pressure on US exports. Additionally, Russian wheat FOB values are said to be around $245 per mt, keeping them the main global exporter.
• To point to a silver lining, though March Chicago wheat broke below the six dollar level today, it did close above that important psychological support level. But to be realistic, it may be difficult for wheat to rally significantly without the support of corn or soybeans. And with more rain in the forecast for the drier areas of Brazil, this could keep a lid on the grain complex as a whole.
• Winter wheat conditions in select states are improving. As of December 31, Kansas’ good to excellent rating came in at 43%, versus 39% for the week ending December 10. During a similar time period, conditions in Oklahoma were at 67% G/E versus 53%, and Texas was at 49% G/E versus 46%.
• Despite a larger planted wheat area for 2023 in Brazil, production was lower due to weather issues. According to CONAB, Brazilian wheat production may reach 8.14 mmt in 23/24, down 22.8% compared to the record of 10.55 mmt. However, this would still be the second biggest crop on the books.

DAIRY HIGHLIGHTS:

• The cheese trade took a step back on Wednesday as sellers moved 3 loads of inventory, dropping both blocks and barrels 2.50c.
• The reversal in cheese kept Class III futures in the red. The second month January contract lost 10c to $15.31 while February fell 8c to $15.55.
• The Class IV market saw steady bidding in the nearby months with contracts up as many as 13c. Each contract from Dec ’23 on is now back above $19.00 per cwt.
• This week’s Midwest Cheese report said demand is somewhat steady in the Midwest. Cheese market tones remain somewhat bearish, though.
• Spot whey jumped 1.50c back to $0.40/lb.

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Author

Amanda Brill