CORN HIGHLIGHTS:

• Corn futures broke to new lows for the second consecutive session and have traded lower 5 out of the past 6 sessions. March corn lost 5 cents, and May was 5 ¾ cents lower on the day. Going into Friday, the March corn futures is trading 10 ½ cents lower on the week.
• Friday’s session could have an increased amount of volatility as March grain options expire. Markets can typically move to areas with a large open interest for specific options and increase volatility during the trading day.
• 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.
• The Rosario Grain Exchange in Argentina lowered its estimated corn crop for this growing season to 57 MMT down 2MMT from 59 MMT last month. The exchange stated that production losses due to heat wave in January and early February impacted production forecasts.
• The weekly corn export sales report will be pushed back until Friday morning due to the President’s Day holiday. Expectations for new corn sales are to range from 700,000 – 1.5 MMT for last week as U.S. corn is still competitive in the global export market at this point.

SOYBEAN HIGHLIGHTS:

• Soybeans closed sharply lower for the second consecutive day for a combined loss of 31 cents in the March contract. Pressure has come from the ongoing Brazilian harvest, improved weather in South America, and cheaper Brazilian soybean offers compared to the US.
• Both soybean meal and oil closed lower today as well with both March soybean meal and soybean oil making new contract lows. Crush margins have narrowed significantly from January but remain profitable for now.
• In Brazil, soybean basis fell today and soybeans FOB in Paranagua have reportedly fallen to 80 cents below March futures in the US. This comes amid harvest in which Brazil is over 30% completed. Estimates for total production are still within a very wide range with the lower estimates at 145 mmt and the USDA’s highest estimate at 156 mmt.
• A large factor in yesterday’s lower prices in the grain complex came from the release of the Federal Reserve meeting minutes which showed that the Fed is more concerned about cutting rates too fast rather than keeping them high. This could cause the dollar to rally, which is bearish for commodities.

WHEAT HIGHLIGHTS:

• After a strong start to the session, wheat closed with only small gains in Chicago, and losses in Kansas City and Minneapolis futures. Early strength may have been fund short covering, however spillover weakness in the corn and soybean markets may take some of the blame for the sharp turnaround.
• Paris milling wheat futures closed with a gain of 3.75 Euros per metric ton in the front month March contract. This, along with a significant decline in the US Dollar added to early support. However, the Dollar gained strength throughout the day, adding pressure back onto the market by the close.
• Reportedly, the Biden administration may issue new sanctions on Russia beginning March 1. The announcement may be made as soon as tomorrow. At any rate, wheat out of the Black Sea region continues to be offered much more cheaply than other origins, as long as this remains the case it will be difficult for US futures to rally.
• Managed funds are still said to hold a hefty net short position in both Chicago and KC wheat. If the market does receive friendly news in the form of weather, politics, or something else, it could lead to a short covering rally. However, they are also momentum traders, and may add short positions until there is a better sign of a bottom.

DAIRY HIGHLIGHTS:

• Class III rose by nearly 50 cents in April futures bringing with it the Class III average which closed higher by 19 cents at $17.89/cwt. The market responded to the bullish milk production report from yesterday which showed a decline in January production.
• Spot cheese was mixed with blocks losing a penny and a half while blocks gained a quarter. Cheese market tones are still somewhat bearish, but Midwest processors say that cheese loads are going above market pricing with many ready to take loads regardless.
• Spot butter gained 3.75 cents trading above $2.80/lb for the first time since January 30th. Powder has been rebounding since last week finishing at $1.1975/lb.
• Class IV futures followed products and Class III higher with the May contract climbing 18 cents. The 2024 Class IV average as a result gained 9 cents to close at $20.78/cwt.

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

Brandon Doherty