CORN HIGHLIGHTS:

• With carryover weakness from wheat and soybeans, and only minor support from today’s positive ethanol numbers, March corn broke through downside congestion from the past few days and printed a new contract low and fresh closing low at prices not seen since December of 2020.
• Adding to the pressure in the corn market was word that the Rosario Grain Exchange raised its estimate of Argentina’s corn crop by 3 mmt to 59 mmt. This is 4 mmt above the USDA’s current forecast of 55 mmt. Additionally, Argentina’s current March – May export prices are below US offers, though Ukraine’s are currently the cheapest on the world market for February.
• Ethanol production for the week ending February 9 came in at a strong 7.581 million barrels, averaging 1.083 mbbl/day. This represents a 4.8% increase from last week and a 6.8% increase from last year. Estimated corn usage for the week was 107.5 mb, which is well ahead of the pace needed to reach the USDA’s forecast of 5.375 bb.
• The USDA will hold its annual Ag Outlook Forum Thursday and Friday. Expectations are often for bearish numbers since the board typically uses trendline yields. For this year, the average trade guess for the Board’s 24/25 carryout is 2.493 bb with 91.6 ma planted, versus 2.172 bb from 94.6 ma this year.
• Showers are expected to be widespread and heavy for much of Brazil by this weekend. The southern areas of Brazil, which is in need of rain the most, is expected to return to a drier pattern next week. In Argentina, heavy rain returned to the area and provided much needed moisture to stabilize the crop.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day significantly lower to make new lows for the year as pressure from an anticipated large soy crop from South America pressures the market. Both soybean meal and oil ended the day lower as well with lower soybean oil pressured by lower crude and heating oil (diesel).
• This morning, the Rosario Grain Exchange in Argentina increased their estimate for soybean production by 2 mmt to 52 mmt on improved weather following the recent dry spell. This estimate is above the USDA’s most recent 50 mmt guess, and many analysts have Brazilian production pegged near 149 mmt, below the USDA’s 157 mmt estimate.
• No flash sales have been reported this week and weekly export sales tomorrow are expected to be on the lower side around 300,000 metric tons. On the positive side, domestic crush demand has been firm, and crush premiums remain profitable enough to incentivize processors.
• On Thursday, the USDA will begin its annual Outlook Forum and they will release their initial estimates for 24/25. Analysts are expecting that corn acres will be lowered by 3 million acres and that soybean acres will increase by 3.1 million acres to 86.7 ma.

WHEAT HIGHLIGHTS:

• Chicago Wheat led the charge lower this morning. And while still posting sharp losses for the day, it managed to come back to close near the middle of the daily range. In any case, much of the commodity complex was under pressure today in tandem with the grains. Some of this negativity may be a result of anticipated bearish numbers at the USDA during the Ag Outlook Forum tomorrow and Friday.
• Also weighing on wheat today in particular was the International Grains Council stating that weekly wheat prices dropped in many nations globally. These include Argentina, Canada, Europe, Australia, Russia, and Ukraine. To boot, Ukraine is reportedly on track to export their entire surplus of 50 mmt of grain before their season ends in June (80 mmt of grain was harvested in 2023). This is despite the infrastructure damage caused by Russian attacks. According to consultancy APK-Inform, the Ukrainian grain harvest has reached 25.2 mmt as of February 9. And, according to Ukraine’s Ag Ministry, they are anticipating planting 2% more wheat this spring.
• According to a Bloomberg analyst survey, 24/25 wheat planted acreage is expected to decline by 2.1 to 47.5 million acres. Additionally, carryout is expected to increase for wheat, corn, and soybeans. Wheat carryout in particular is expected to be at 720 mb, up 62 mb from 23/24. It should be noted that these numbers are separate from what will be released by the USDA at this week’s Outlook Forum.
• European Union soft wheat exports totaled 18.6 mmt as of February 2. This is down about 8% year on year, compared to the 20.2 mmt last year, according to the European Commission. The top destinations were to north African nations, with Morocco in the lead at 2.67 mmt, followed by Nigeria and then Algeria.
• As of February 14, the export duty for Russian wheat is said to have increased by 11.8%, from 3,804.6 to 4,058.9 Rubles per mt, according to their Ag Ministry. In June of 2021 the Russian government implemented a “grain damper” mechanism, essentially requiring export duties on wheat, corn, and barley, with the funds used to subsidize ag producers.

DAIRY HIGHLIGHTS:

• The US block cheese market was offered 7c lower on Wednesday, with no loads traded. The price closed at $1.5150/lb for the day and the best bid was even lower, down at $1.50/lb.
• The cheese barrel market fell 2.50c lower to $1.5750/lb. This week’s Central US cheese report said cheese demand is slowing, while there is talk of rising inventories out East.
• Milk futures were softer on the day as a result of the bearish spot trade. March Class III fell 41c to $17.02, while April fell 37c to $17.30.
• The Class IV trade was slightly lower, as the April contract was down 6c to $20.17. Butter added 0.50c to $2.7175/lb, while powder fell 1.25c to $1.18/lb.

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Author

John Heinberg