CORN HIGHLIGHTS:

• Corn futures finished lower again to end the week as the lack of bullish news kept the sellers active.  March corn placed another round of new contract lows as the futures dropped 4 ¼ cents on the session. For the week, March futures lost 13 ¾ cents and has traded steady or lower for the past seven sessions.
• The weak price action in the corn and soybean markets make it difficult for buyers to step in the market. March corn has drifted through a key level of support at both 440 and 430 levels. This leaves the door open for additional technical selling next week.
• Corn prices reflected the negative sentiment of increasing US supplies. Despite the small adjustment in Thursday’s USDA report, corn ending stock still increased by 10 mb. This is the third time in four months that corn ending stocks in the US have increased. The stocks-to-use ratio has been raised to 14.9%, the highest since 2018-19 marketing year.
• Managed money continues to grow its large short position in the grain markets. Last week, managed funds were short 280,151 contract of corn, and that position likely grew this week with the additional selling pressure. The next Commitment of Traders report will be released on Friday afternoon.
• With the CONAB lowering anticipated Brazilian corn production to 113 mmt, a big focus will be on the Argentina crop this spring. Expectations are for a record crop near 55 mmt, but recent hot and dry weather has helped support the market. This week, weather forecasts have moderated and turned more friendly to crop production, which has weighed on both corn and soybean futures.

SOYBEAN HIGHLIGHTS:

• Soybeans closed lower today on the heels of yesterday’s bearish WASDE report, which saw US ending stocks increased and Brazilian production not lowered as much as expected. Both soybean meal and oil ended the day lower as well, despite gains in crude oil.
• For the week, March soybeans lost 5 cents, March soybean meal lost $10.00, and March soybean oil gained 2.53 cents. Pressure has come from steady selling by non-commercials, improved Argentinian weather, poor export sales, and anticipation of a large upcoming South American harvest.
• Yesterday, traders were slightly divided between the estimates over Brazil’s soybean production by the USDA and CONAB. The USDA maintained their position that Brazil would have a larger soy crop at 156 mmt, while CONAB’s estimates were far lower at 149 mmt. Historically, the USDA is typically more accurate, but the numbers had trade questioning the USDA’s accuracy.
• Also, in yesterday’s WASDE report, soybean export demand was lowered from 1.755 billion bushels to 1.720 bb as China notably looks to South America for the bulk of its purchases. US shipments are currently down 22% from the previous year.

WHEAT HIGHLIGHTS:

• Wheat closed mixed among the three US classes. This is despite a strong reversal off the contract low with a sharply higher close for March Matif wheat. Overall, March Chicago wheat has been in a relatively narrow trading range recently and seems to be limited to the upside around the six dollar level. Spillover pressure from lower corn and soybeans today may have also limited the rally in wheat.
• Bull spreading was again noted in Chicago wheat futures, in which nearby contracts rallied more strongly compared to deferred contracts. With the funds still net short a sizeable amount of wheat, this may indicate that they are exiting some of their positions in the front months ahead of the potential polar vortex predicted towards the end of this month.
• The Indian government is reported to have cut the wheat stockpile limits in half for traders and chain retailers, from 1,000 to 500 mt. Stock limits were also said to be reduced for wheat processors. According to the Ministry of Consumer Affairs, wheat stocking entities will be required to register and update their position each week. This is all said to be in attempt to eliminate the potential for artificial scarcity of the crop.
• As of February 3, barge shipments on the Mississippi River have increased to 598,000 tons versus 342,000 tons the week prior. Of that total, just 26,000 tons were wheat. However, that is nearly a 770% increase from 3,000 tons as of January 27.
• According to the US Climate Prediction Center, there is a historical tendency for a La Nina weather pattern to follow a strong El Nino pattern. The current El Nino pattern is forecasted to become neutral between April-June, but could then return to La Nina; there is a 55% chance of this happening according to the CPC. If accurate, this could affect wheat production in the US down the road.

DAIRY HIGHLIGHTS:

• Poor spot trading resulted in a lower dairy market. The March futures contract took the biggest hit losing 21 cents on the day to close at $16.98/cwt.
• Spot cheese lost more than 2.50 cents over the course of the week to close at $1.57375. Spot Whey was unchanged at $0.52/lb which remains the high for 2024 and above the 2023 high.
• Spot butter posted a 5.50 cent loss with 4 loads traded to close at $2.69/lb. Powder saw plenty of sellers with 10 loads traded to close at $1.20/lb.
• Class IV was down on the due to loss seen in butter. The March contract was down 9 cents while the Class IV average for the year was down 3 cents to finish at $20.56/cwt.

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Author

John Heinberg