CORN HIGHLIGHTS:

• Strong support from the wheat market and news regarding E15 helped support corn futures to start the week. March corn added 2 ¼ cents and May was 3 cents higher on the session.
• The Biden administration will approve the request from a group of Midwest Governors to allow year-round sales of gasoline with higher ethanol blends. This paves the way for E15 but will wait for 2025 to start. The news brings mixed reactions – glad that change is coming, but disappointed to have to wait until 2025.
• The USDA announced a flash export sale of corn to Japan. The 6.1 mb (155,000 mt) was slated for the 24/25 marketing year.
• Weekly corn export inspections last week reached 36.2 mb (919,000 mt), which was within expectations. Total inspections are now at 713 mb, up 32% over last year’s disappointing totals.
• The March futures contract reaches First Notice Day, February 29. In this window, producers with basis contracts will need to roll to the next month or price bushels against the basis.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day higher but backed significantly off their earlier morning highs by about 10 cents. Soybean meal ended the day higher while soybean oil closed lower along with lower crude oil. A potentially strengthening Chinese economy, good exports, and funds nearing their record large short positions were all friendly today.
• Over the weekend, China’s government announced that it would cut the country’s benchmark 5-year loan prime rate which was the first time it has been lowered since June. The move comes as the Chinese government looks to stimulate the economy which could be friendly for soybean demand.
• For the week ending February 15, soybean inspections totaled 43.6 mb. This was towards the higher range of estimates and was a good number for this time of year. Total inspections of 1,175 mb are down 23% from last year.
• The USDA announced a flash sale of soybean meal to the Philippines this morning.  The sale of 228,000 mt of soybean meal were scheduled for the current marketing year. In addition to this, China is back from their holiday which could bring more purchases from the US.
• Last week’s CFTC report showed non-commercials as sellers of 4,200 contracts of soybeans which increased their net short position to 134,500 contracts and nearing their record short position.

WHEAT HIGHLIGHTS:

• It was a banner day for the wheat market, with all three US classes posting double-digit gains. The first two months in Chicago wheat in particular rallied more than 20 cents. Bull spreading was noted, in which nearby futures showed more strength than deferred contracts. This may indicate some of today’s action may be short covering by the funds as well as a technical correction of oversold conditions and last week’s lows.
• Weekly wheat inspections of 14.0 mb bring the 23/24 total to 444 mb. This is down 18% from last year and is running below the USDA’s projected pace. Exports for 23/24 are estimated at 725 mb.
• As stated by their Agriculture Ministry, only 1% to 2% of Ukraine’s winter wheat crop will be damaged and not survive the winter. Over 95% of wheat in Ukraine is winter wheat, and on average, up to 7% of the crop dies due to frost or ice. This year’s winter has been relatively mild, which accounts for the less-than-normal damage.
• France’s wheat crop is said to be rated just 68% good to excellent versus 93% at this time last year. This is the poorest rating since 2020. Heavy rains during planting are cited as the reason for the lower rating. Additionally, France also planted less wheat acres than average due to the earlier weather issues.
• Despite another three-dollar per ton FOB decline in Russian wheat values last week, Ukraine is said to have offered wheat even more cheaply. At $218 per mt FOB, Ukraine found some business in Egypt’s tender, in the amount of two cargoes. Regardless, Russia is sure to remain stiff competition on the export market since both IKAR and Sov Econ estimate their wheat crop to be around 93 mmt.
• According to the Australian Bureau of Meteorology, El Nino still persists, but is also steadily weakening. Four out of seven international climate models suggest that the pattern will return to neutral by April, while all seven models agree on a neutral pattern by May.

DAIRY HIGHLIGHTS:

• The Global Dairy Trade Auction improved 0.50% for the sixth up auction in a row. This now makes 10 out of the last 12 auctions seeing improvements.
• Spot cheese was up on the day led by blocks which gained 4.50 cents to close at $1.5225/lb, while barrels went unchanged at $1.6075/lb.
• Class III milk as a result of better spot trading in cheese and an up auction on the GDT saw the first half of the year contracts trading higher. March futures climbed 15 cents followed by the May contract which traded 11 cents higher.
• Spot butter saw 15 loads traded to climb 2.50 cents at $2.7750/lb. Butter on the GDT improved just 0.10% but was still enough to boost spot butter prices. Powder also saw a gain of 2.25 cents nearing back towards the $1.20/lb level.
• Class IV milk futures were lackluster on the day with only 37 contracts traded. The 2024 Class IV average lost a penny as a result and sits at $20.65/cwt.

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Author

Brandon Doherty