TFM Midday Update 01-16-2024

CORN

According to the CFTC, money manager’s net short position in the Ag space has reached 390,000 contracts, which is the largest amount since spring of 2019. Of that amount, net short corn positions total about 230,000 contracts.
The harvest of Brazil’s first corn crop is said to be about 5% complete, and while the improving weather is too late to help that crop, conditions look like they will be much more favorable for the safrinha crop.
Friday’s increase of US corn yield to 177.3 bpa by the USDA added to bearish pressure in the market, and will be a difficult obstacle to overcome to see prices rally in any significant manner.
The USDA also increased Chinese corn production and raised their carryout by 11 mmt last week. This adds to the negativity in the market and may mean fewer sales of corn to China down the road.

Soybeans are trying to recover from Friday’s negative report. This morning, they were up over a dime, but as of this writing, much of that was given back.
Ag Rural reduced their estimate of Brazilian soybean production by 9 mmt to 150.1 mmt. For reference, the USDA is at 157 and CONAB is at 155. Other private estimates range from 145-155 mmt due to lower than expected yields.
Today’s NOPA crush data is expected to show a record 193 mb of soybeans crushed by members. If true, this would exceed the previous record from last October of 190 mb. Oil stocks may also be higher due to the large crush number.
India has extended a lower import duty on edible oils for one more year. However, they did not make any changes to the export bans on sugar, rice, or wheat.

Yesterday, Paris milling wheat futures had a reversal off the high that ended with a lower close. That offers no support to the US market, and those contracts are trading lower again this morning.
Reportedly, over the past three weeks, 1.3 mmt of ag goods on ocean ships have been rerouted to avoid the Suez Canal. This continues to affect global freight costs as vessels try to avoid conflict with Houthi rebels.
The bitter cold affecting the US Midwest and Plains states has likely not caused much damage to the winter wheat crop, as many areas have snow cover. Also, the moisture from the recent storms will be beneficial for the crops.
India has suggested that they may have a better than expected wheat crop, which may be around 114 mmt. This is above the USDA estimate and if true, might mean they do not have to import wheat this year.
Despite Friday’s roughly 1.5 million acre reduction estimate for US wheat plantings, the increased production estimates for Russia, Australia, and Canada added bearish pressure to the market.

Brandon Doherty