- Selling across the grain markets helped pressure corn futures lower to start the week as bullish news is hard to find. March corn lost 6 cents on the session. Charts stay weak technically, and the March contract established a new contract low daily close of 440 ¼. Prices look poised to test the recent contract trading low of 436 ¾.
- The USDA released weekly corn inspections during the session. Last week, US exporters shipped 35.5 mb (900,000 mt) of corn. This was up from last week’s total. Total inspections for the 23/24 marketing year are at 616 mb, up 30% year over year.
- Argentina weather was a focus last week helping support prices, but weather forecasts are looking at decent rainfall potential going into February. This helped pressure both the corn and soybean markets.
- Brazilian soybean harvest is trending 9-11% complete, which is nearly double the 5-year average. The earlier harvest date should allow Brazil’s key second crop (safrinha) corn to get planted in a timely fashion and have a full growing season available.
- Hedge funds continue to grow their large short positions in the corn market. On last week’s Commitment of Trader’s Report, hedge funds held a net short position of 265,285 contracts. This is approaching all-time highs with the corn market in general looking over-supplied and lacking true bullish news.
- Soybeans closed sharply lower in the front months but only 5 cents lower in the November contract with pressure coming from lower soybean oil and the news of Chinese real estate developer, Evergrande, being court-ordered to liquidate the company. This news adds to the concern regarding the Chinese economy and their demand.
- Export inspections for soybeans were within trade expectations at 32.7 mb for the week ending January 25 which is down 24% year over year. Total inspections for 23/24 are at 1,017 mb, with the USDA estimating total exports at 1,755 mb, a decrease of 12%.
- Weather in Argentina has been hot and dry but is expected to turn around in a few days with increased moisture and cooler temperatures. Brazil has received too much rain in the northern region but has recently dried up opening the door for harvest. Brazil is now 9% done with harvest which is above last year’s 4.4%.
- Friday’s CFTC report showed funds as sellers of 15,045 contracts of soybeans which increased their net short position to 91,842 contracts last week. Funds currently hold the second largest net short position in history with corn, soybeans, and wheat combined. The last time they were this short was May of 2019.
- News that a major Chinese real-estate firm, Evergrande, was forced by the courts to liquidate may have played a role in today’s weakness in the commodity complex. This corporation was said to owe $300 billion in debt, and with the existing concerns about China’s economy, this collapse just adds fuel to the fire.
- According to the Egyptian supply minister, Egypt may only import 7 mmt of wheat this year, and that their reserves are sufficient for over four months. Historically they import about 12 mmt of wheat per year. What makes this statement a bit puzzling is the fact that drought is said to be expanding in North African countries, including Egypt. In any case, his statements may have offered some weakness to the futures market.
- Over the weekend it was reported that three US military service members were killed in drone attacks in Jordan. President Biden was quoted as saying “we shall respond”. What exactly this entails is unclear. However, there is concern that this will increase the tension in the Middle East and bring the US into the war. This may lend some support to the crude oil and wheat markets but could also continue to raise freight costs if ships continue to avoid the Suez Canal.
- Farmers unions in France have reportedly threatened to blockade highways surrounding Paris. There have also been alleged calls for a siege of the capital. French farmers have been protesting higher production costs, fewer subsidies, as well as strict European regulations. According to Interior Minister Gerald Darmanin, about 15,000 police officers will be positioned to prevent tractors from entering Paris and other cities.
- Spot cheese caught another strong bid in Monday’s report showing blocks gaining 7.25 cents while barrels improved 8.00 cents. Spot cheese has moved nearly 10 cents higher from the week closing at $1.58/lb today.
- Class III continued its move higher from last week gaining 53 cents in the March and April contracts while rising 14 cents on the Class III average which now sits at $17.56/cwt.
- Spot butter has continued to climb since the week of January 16th trading at $2.8025 on the day. Powder improved slightly seeing its best close since October at $1.2250/lb.
- Class IV was higher on the day thanks to strong products trading. The Class IV average improved 7 cents to finish at $20.23/cwt.
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