CORN HIGHLIGHTS:

• After posting a new contract low, March corn futures turned higher with moderate gains on the day. March corn gained 7 ½ cents and posted a bullish turn on the chart. Strong buying in the soybean and wheat markets helped support the corn market.
• With Managed Money holding an extremely large short position in the corn market, today’s price turn posted a key bullish reversal on the charts. The strong price action could lead to additional short covering going into tomorrow’s session.
• Argentina weather has been a focus. Weather forecasts are looking at decent rainfall potential going into February, but temperatures are above normal in the near term. The excess heat could limit some grain production overall, which helped support the market.
• Despite today’s price move, demand remains a limiting factor in the market. US corn is in a key export window compared to more expensive sources. Corn export sales need to reflect improved business over the next few weeks.

SOYBEAN HIGHLIGHTS:

• Soybeans closed sharply higher today taking back all of yesterday’s losses and then some. Yesterday, trade reacted strongly to news of potential weakness in China’s economy, but the selloff may have been an overreaction. Both soybean meal and oil closed higher with larger gains in meal.
• Lower soybean meal has put a significant amount of pressure on soybeans as it reached its lowest price since 2022 in the March contract yesterday. With freight costs falling, some cargoes of South American soybeans have been imported into the Southeast US for crushing. Crush margins have fallen recently but remain profitable.
• In Soybean oil, prices have been steadily falling as well. Both palm oil and soybean oil on the Dalian exchange sold off sharply on worries about Chinese demand, and some analysts are lowering estimates for Chinese imports of soybeans below 98 mmt.
• Argentinian weather is still mostly hot and dry but is expected to become more friendly in the coming days, though confidence may be waning. While the whole of Brazil is receiving scattered showers today. The northern region of Brazil has gotten too much rain while today’s showers are beneficial to the southern regions. Harvest is estimated at 11% complete which is above the average pace for this time of year.

WHEAT HIGHLIGHTS:

• Wheat reversed off of the lows in all three US futures classes, with Chicago and KC both posting double-digit gains at the close. There wasn’t much in the way of fundamental news to drive this rally, but the grain complex as a whole had a positive session. This may indicate that today was a technical bounce that resulted in short covering by the managed funds.
• Winter wheat conditions in the US are looking much better than a year ago. Select states released their crop condition data yesterday afternoon. Kansas, the biggest wheat producing state, rated their crop at 54% good to excellent versus 21% at this time last year. In fact, every reporting state except for North Carolina had better ratings than a year ago.
• US wheat exports have not been stellar, and with only 9.7 mb inspected last week, total inspections are down 17% from last year. One of the limiting factors is exports out of Russia, which continue to dominate the market. According to IKAR, Russian FOB values fell by three dollars to just $235 per mt. This may limit further upside movement in the market.
• Russia exported 4.26 mmt of wheat in January of last year. This year there is an estimated reduction of about 13% to 3.7 mmt; it is believed this is to help maintain reserves and also increase exports in the spring months. Additionally, as of January 26, Russia has purchased 473,000 mt of wheat for their state fund, with plans to buy up to two million metric tons of grain in total.
• The US Dollar Index continues to consolidate, but its direction will be critical for wheat pricing. It was down slightly during today’s session, which may have offered some support to wheat. Tomorrow afternoon, traders will receive the results of the FOMC meeting; the Fed is expected to keep rates steady, but any surprise could affect the direction of the Dollar.

DAIRY HIGHLIGHTS:

• Class III futures saw their nearby contracts give up some value today, while buyers pushed deferred contracts higher in the second half of the year.
• The second month February contract closed 23 cents lower at $16.23 following Monday’s 40-cent jump. Both cheese and whey were slightly higher.
• Class IV action was quieter with two-sided closes. February Class IV futures were down 9 cents to $19.76 after gaining a dime yesterday.
• Spot butter was unchanged at $2.8025/lb with no loads traded, while powder was up a half-cent.

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Author

Brandon Doherty