CORN HIGHLIGHTS:

• It was a quiet news day in the corn market as prices traded off early session lows to finish mixed on the day. March corn gained ¾ of a cent in a day that saw a 6 ¾ cent trading range. Steady selling pressure in the soybean market limited the corn market’s upside potential on the day.
• The Brazil Ag agency, CONAB, released their January corn production estimates this morning. CONAB lowered its projection for the 2023/24 corn crop to 117.6 mmt, down 0.93 mmt from their December projections and down 14.35 mmt from last year. CONAB did leave their second crop corn projection unchanged at this point. Poor early season weather and reduced planting area was the reason for the decrease.
• USDA will release weekly export sales totals on Thursday morning. Expectations are for corn sales to range from 400,000 to 1.0 mmt. Corn should be entering a more active export window, but the market hasn’t had a published export sale since December 19.
• The key news event this week will be Friday’s USDA WASDE and Grain Stocks reports. Expectations are for corn carryout projections to be reduced slightly as the USDA adjusts harvested acres and yield. Demand and first quarter usage will be closely watched, as improved feed demand at the end of the year could tighten overall supplies.
• Managed and speculative funds are maintaining the pressure on the short side on the market. With this week’s overall selling pressure, funds are expected to be short over 200,000 net contracts of corn, likely the largest short position since 2020, as the prospects of growing supplies and demand concerns are in control of the market.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower but have maintained a trading range over the past three days with the March contract finding support at 1235. Both soybean meal and oil were lower with soybean oil pressured by lower palm oil and crude oil.
• CONAB numbers were released and were higher than expected for soybeans which pressured the market today. CONAB projected that Brazil will produce 155.27 mmt of soybeans for 23/24, but many private analysts have their projections closer to 150 mmt. The USDA’s guess in December was 161 mmt which certainly seems too high, but on Friday it will become a question of how much they reduce that number by.
• Soybean exports have begun to slow down as the export window in the US is closing with some parts of Brazil harvesting their soybeans that were damaged from heat and dryness. Monday’s export inspections report was disappointing, and there has not been a flash sale announced for soybeans since December 19.
• South American weather is forecast to be wet throughout this week before turning drier. Argentina’s crop has benefitted from good weather throughout the growing season, but some areas of Brazil delt with the heat and drought for too long, and the recent rainfall has not been as beneficial as had hoped.

WHEAT HIGHLIGHTS:

• Wheat had a mixed close and was close to neutral. Chicago and Minneapolis posted small gains while KC was down slightly. The market may be entering a “wait and see” mode ahead of Friday’s USDA reports. In addition to supply and demand, traders will also receive the winter wheat acreage estimate and private guesses are calling for a reduction of at least one million acres.
• The US Dollar Index has been consolidating for the past several sessions. If it breaks out to the upside, it will pressure the wheat market, but if it trends lower again, that would offer support. With Russia still taking the lead on exports, it would be beneficial to see the Dollar trend lower.
• Another issue faced by not only wheat, but the commodity complex as a whole, is the continuation of drone attacks on merchant vessels in the Red Sea. This is affecting trade routes and raising freight costs, and reportedly the number of attacks yesterday was the largest to date.
• From the beginning of their season on July 1, as of January 7, EU soft wheat exports totaled 15.8 mmt. This represents an 11% drop from the 17.8 mmt last year. The top destinations were countries in North Africa, including Morocco, Algeria, and Nigeria.
• Another major winter storm is set to hit the Midwest later this week. While the moisture may be beneficial, the extreme cold temperatures may not. Areas with little to no snow cover may face the risk of crop damage, but at this time the consensus is that it won’t be a major issue. In addition to the US, colder temperatures will also make their way into Europe and the Black Sea.
• Egypt purchased 420,000 mt of wheat in their tender. The majority of which, was sourced from Russia, but one cargo was said to come from Ukraine. Other tenders include Algeria and Japan; Japan is looking to purchase from the US and Canada.

DAIRY HIGHLIGHTS:

• The US spot cheese block/barrel average price is up 9.75c already this week, tacking on another 3c on Wednesday.
• There appears to be an export demand shift due to the fact that the US has the cheapest cheese on the globe at this time. US cheese export sales jumped 8% from October to November.
• Class III futures reacted positively to the uptick in cheese once again. The February ’24 contract gained 24c to $16.22 and is now roughly 75c off of the recent low.
• The rest of the spot market was fairly quiet, as whey added 0.75c to $0.43/lb and powder fell 1.25c to $1.1925/lb.
• Class IV milk remains as steady as ever, with all contracts holding over $19.00. Second month gained 9c to $19.17 on Wednesday.

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Author

John Heinberg