CORN HIGHLIGHTS:

• Corn futures broke to new lows during the session as selling pressure from the soybean market spilled over into the corn market. March corn lost 7 ¾ cents and May corn dropped 8 ¼ cents during the session.
• The March futures contract reaches First Notice Day, February 29. Until then, producers with basis contracts will need to roll to the next month or price bushels against the basis. The combination of pricing basis contracts and a large commercial net long position can pressure the corn market in this time window.
• With a strong harvest pace for Brazil soybean, the second crop corn planting is running well ahead of schedule. As of last week, an estimated 45.3% of the crop was planted versus 33.3% last year. The key producing state of Mato Grasso was 67.1% completed with the second crop corn.
• South American weather is currently non-threatening overall. The improved forecast should help maintain the forecasted strong Argentina corn crop and promote a good start to the second crop Brazil corn.
• The weekly corn export sales report will be pushed back until Friday morning due to the President’s Day holiday. US corn is very competitive on the global market at this point, and current export sales are trending 30% higher than last year’s levels.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day sharply lower, wiping out all of yesterday’s gains and then some with pressure from improved South American weather and South American cash offers that are well below those from the US. Both soybean meal and oil closed lower as well while crude oil moved higher.
• US soybeans are currently 4% per metric ton more expensive than Brazil with the basis difference US +$1.58 over Brazil for the month of March. While yesterday’s export inspections were stronger than anticipated, the possibility of Chinese cancellations in favor of Brazilian soybeans remains.
• Brazil’s soybean crop is now estimated to be over 30% harvested, and estimates for total production are still being lowered. Agroconsult sees production at 152.2 mmt which is a reduction of 1.6 mmt, and another crop scout is estimating production at 145 mmt, far below the USDA’s last estimate of 156 mmt.
• While US soybean export sales are currently behind those of last year, Brazil’s exports remain strong. However, Brazilian export sales are expected to fall slightly for the month of February from last year. Exports are expected to reach 7.3 mmt for February, which compares to 7.55 mmt in the same month a year ago.

WHEAT HIGHLIGHTS:

• After trading in negative territory the majority of the day, March Chicago wheat managed to come back just above water by the close, with a gain of a half-cent. Even though the rest of the Chicago contracts posted small losses, they still closed well off session lows – a potentially encouraging sign. What is discouraging is the fact that yesterday’s strength did not follow through today. But pressure from the rest of the grain complex as well as a lower close for Matif wheat offered no support during this session.
• On a bearish note, according to their Agriculture Minister, Russia may export 70 mmt of grain in 2024. This is an increase from the previous 66 mmt estimate. The planted area in 2024 is also expected to increase by 300,000 hectares to 84.5 million ha. This does not bode well for the export market, in which Russia is already dominant.
• According to the World Organization for Animal Health, a bird flu outbreak on a farm in Peru led to the death of 4,000 birds via the virus; the remaining 27,000 animals were culled. While this may not have a direct impact on wheat at this time, the concern is that if the virus is spread on a large scale, it could affect feed demand.
• After a near-term peak on the US Dollar Index last Wednesday, the trend since then has been downward. If it continues to fall, it will make US exports more competitive, benefiting the market. However, according to IKAR, Russia’s hard wheat FOB values fell this week by five dollars to $218 per mt. With what seems like a steady drop in their export values, it will be a difficult obstacle to overcome.

DAIRY HIGHLIGHTS:

• A light spot trade kept the Class III and IV milk futures mostly unchanged on Wednesday. Spot butter and whey were unchanged, powder added 0.25c, and cheese fell 0.375c.
• By close, March Class III lost a penny to $16.98 while March Class IV was up 5c to $20.04. The Class IV market continues to hold a strong premium to the III trade.
• After the market closed, the USDA released the January 2024 milk production report. The report showed a 1.10% decline in milk production year-over-year.
• This is the seventh month in a row that milk production declined from a year ago.
• US dairy cows in January fell 23,000 head from December.

Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency. A customer may have relationships with all three companies. TFM Market Updates is a service of Stewart-Peterson Inc. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.

Author

Amanda Brill