CORN HIGHLIGHTS:

• March corn futures saw additional selling pressure to end the week, closing the session down 5 ¾ cents and establishing a new life of contract low. Selling in the soybean complex and poor weekly export sales totals help pull corn lower. For the week, March corn futures were 10 ½ cents lower.
• The USDA released this morning the weekly export sales for last week and corn sales were disappointing.  US exports registered new sales of 367,500 mt (14.5 mb) for the week ending December 28. This was a marketing year low, and down 70% from last week. Currently, total sales are trending 37% ahead of last year’s pace and in line with USDA marketing year expectations.
• Corn demand was a concern with yesterday’s ethanol production report. Ethanol production slipped to 1,049,000 barrels/day last week. Ethanol stocks jumped to 23.6 million barrels. Stocks likely grew due to weak gasoline demand during the holiday window. Last week, 105 million bushels of corn were used for ethanol production, and that pace is currently slightly ahead of USDA forecasts.
• Managed Money continues to push their short position in the grain markets. On last week’s Commitment of Traders report, managed funds were short 177,626 net corn contracts, and with the price weakness this week, likely only added to the position as bullish news is still lacking in the corn market.
• Next week will likely bring choppy trade and the market looks toward the key USDA Quarterly Grain Stocks and WASDE reports to be released on Friday, January 12.

SOYBEAN HIGHLIGHTS:

• Soybeans closed lower to end the first week of the year along with losses in both soybean meal and oil. Rains that began to fall in Brazil last weekend, and that continue to fall, have pressured prices despite the upcoming likely event that the country’s production will be lowered.
• For the week, January soybeans lost 41 ¾ cents, March soybean meal lost $16.60, and March soybean oil lost 55 cents. As of last week’s CFTC report, non-commercials still held a net long position of 4,767 contracts in soybeans, but after this week’s losses they have likely flipped to a net short position.
• Today’s export sales report was a poor show with increases of just 7.4 mb of soybean exports reported for 23/24. This was down 80% from the previous week and 85% from the prior 4-week average. Export shipments of 36.8 mb were above the 26.4 mb needed each week to achieve the USDA’s export estimates, and primary destinations were to China, Spain, and the Netherlands.
• As eyes begin to turn towards next week’s WASDE report, private analysts have continued to lower their estimates for Brazilian production. The US ag attaché in Brazil cut their estimate by 3.5 mmt to 158.5 mmt, but many analysts are closer to 150 mmt. When taking Argentina’s improved production estimates into account, Brazilian production would likely need to fall below 135 mmt before this year’s South American crop became smaller than last year’s.

WHEAT HIGHLIGHTS:

• After trading on both sides of unchanged, wheat posted a positive close in all three US futures classes, though Minneapolis futures were only up less than a penny in the front months and slightly negative July onward. The generally higher trade today may be tied to rumors that China is again interested in purchasing US wheat, but so far there has been no confirmation of that. Yesterday’s reversal is also a bullish technical signal which offered some support to today’s trade.
• The USDA reported an increase of only 4.8 mb in wheat export sales for 23/24 and an increase of 0.2 mb for 24/25. Additionally, shipments last week at 10.5 mb were below the 17 mb pace needed per week to reach the USDA’s goal of 725 mb for 23/24.
• Russian wheat export values have risen about $20 per ton since the November low. However, now at $245 per mt FOB, their offers are still very cheap compared to other origins. This is keeping pressure on US exports and therefore, the futures market.
• US wheat futures were also able to post today’s gains in the face of a lower close for Paris Milling wheat. Also, the US Dollar Index has had a wide trading range today, breaking both above the 103 level and below the 102 level. As of this writing, it is closer to the middle of the range but still slightly negative. The direction of the dollar will be key to wheat prices as it directly affects the export market.
• Next week, traders will receive the monthly WASDE report, but will also get the winter wheat seedings report. Expectations are for a reduction in winter wheat by 1.5 to 3.0 million acres. If realized, this could offer a boost to the market and may be the catalyst needed to start a short covering rally by the funds.
• The Buenos Aires Grain Exchange increased their estimate of the 23/24 wheat crop production to 15.1 mmt versus 14.7 mmt last week. For reference, last year’s production was 12.2 mmt. Additionally, they said that 83.7% of the crop is harvested versus 70.9% a week ago.

DAIRY HIGHLIGHTS:

• Spot cheese saw a weekly loss of 1.25 cents to close at $1.42250/lb. Spot whey saw a weekly gain of 2.75 cents this week to close at $0.4125/lb.
• The 2024 Class III average dropped 7 cents to close at $17.72/cwt. The spread between Class III and Class IV has continued to widen since the end of October and currently sits at $3.52/cwt in favor of Class IV.
• Spot butter saw a sharp drop as we head into the weekend. Butter lost 7.50 cents on the day to make that a total of a 9 cent loss over the week.
• Class IV futures were pressured by lower butter prices on the day, dropping 2 cents on the 2024 Class IV average, which sits at $19.71/cwt.

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Author

John Heinberg