CORN HIGHLIGHTS:

• Weekly corn export sales were within expectations at 954,800 MT (37.6 mb) for the 2023-24 marketing year. This is the key export window for US corn exports over the next couple months, and the market is looking for sales numbers to grow. Current total sales commitments are up 29% over last year.
• China stays absent from the US corn export market, but Mexico has been buying corn at a record pace.  As of January 18th, Mexico has bought 15.3 MMT (602 mb), well above previous high from 2022. Mexico is responsible for 47% of all US corn sales for the current 2023/24 marketing year.
• Weather forecasts in Argentina have turned hotter and drier going into February. The change in weather has been enough to trigger some short covering, supporting the market this week. Argentina is forecasted to produce a record corn crop this season after two years of drought.
• Hedge funds were holding a large short position in the corn market, over 260,000 net short contracts as of last week Tuesday. Funds have likely begun working out of some of these short positions with the strength in the market this week. The corn market in general looks over-supplied and lacking true bullish news.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day significantly lower as a result of softer than expected weekly export sales, scattered showers in Brazil, and a Brazilian cash market that could be pointing to a larger crop than many analysts have been predicting.
• To start the day, soybean meal was higher and had been trending higher since last Thursday, but reversed lower after export sales were released. Soybean oil was lower as well despite a very strong palm oil market, but it did not help that palm oil was not trading today due to a holiday. With the value of soy products falling, crush margins are narrowing which could slow the record crush numbers that have been recently reported.
• In Brazil, weather has improved, and even Mato Grosso and Parana are beginning to receive scattered showers again. There has been a lot of talk among analysts of a shrinking Brazilian soy crop, but recent rains and a steep decline in basis today as harvest ramps up may be indicating that total production will be closer to the USDA’s estimate of 157 mmt than the lower estimates by analysts of 145 mmt or below.
• Export sales for soybeans were on the lower end of expectations with an increase of 20.6 mb for 23/24. This was down 28% from the previous week but up 6% from the prior 4-week average. Last week’s export shipments for soybeans of 41.1 mb were well above the 23.9 mb needed each week to achieve the USDA’s estimates. Primary destinations were to the Philippines, Japan, and South Korea.

WHEAT HIGHLIGHTS:

• After trading both sides of neutral, all three US wheats closed higher. This marks six higher closes out of the past seven sessions for March Chicago wheat. The exception was on Tuesday when prices settled unchanged. This continued recovery for wheat comes despite today’s rebound in the US dollar, as well as lower corn and sharply soybean futures.
• The USDA reported an increase of 16.6 mb of wheat export sales for 23/24 as well as an increase of 2.2 mb for 24/25. Shipments last week at 11.9 mb were below the 17.0 mb pace needed per week to reach the USDA’s goal of 725 mb. However, commitments are now at 608 mb which is slightly above the USDA’s pace.
• One of the factors that may have supported the wheat market today is talk that drought in northern Africa could expand, requiring them to import more wheat. A neutral to mostly higher close for Paris milling wheat futures also offered some support.
• SovEcon has estimated the Russian 2024 wheat crop at 92.2 mmt. For reference the 2023 crop totaled 92.8 mmt. Though this is a decline, it is only a 0.6% drop and is unlikely to have a major impact if true. In addition, SovEcon’s projection for 2024 was actually an increase from their previous estimate by 0.9 mmt. For the time being, Russia is likely to remain aggressive on exports, which may limit upside potential for futures.

DAIRY HIGHLIGHTS:

• Class IV futures were sharply higher today with the second month February contract garnering 49 cents to move to $19.55.
• Spot butter jumped 11 cents to close at $2.6875/lb., testing resistance again as it stays rangebound. Powder gained a penny to push over $1.20/lb.
• The Class III contracts got in on some of the fun with February and March up 28 and 29 cents, respectively.
• Spot cheese was up a quarter cent today, but blocks are up almost 8 cents on the week. Spot whey was unchanged at $0.4425/lb.

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Author

Amanda Brill