CORN HIGHLIGHTS:

• Corn futures traded higher for the first time in four sessions as the March contract gained 1 ¾ cents on the day. Corn prices shook off a move to new life of contract lows early in the session to post a higher gain.
• Corn and grain markets in general are heavily oversold. The firming price action on the session posted a reversal on daily charts and could lead to additional technical strength going into the weekend on Friday.
• Demand will stay a key focus of the market, and the USDA will release weekly export sales on Friday morning. US corn is moving into a typical window to see export demand as global supplies from competing nations are minimized. Last week’s export sales for corn were disappointing at 488,000 MT, which was at the low end of expectations.
• The national average corn basis was improving over last week. Currently the National Average basis is trading at 24 cents, up from last week, but still below the 5-year average. Lack of producer selling is likely helping support basis levels.
• Average ethanol production last week was 1.054 million barrels/day, down 0.8% from last week, but up 4.6% compared to last year. Ethanol stocks were 25.695 million barrels, which was an all-time high for the date. Total corn used to date for ethanol production totaled 1.987 billion bushels which running ahead of the needed pace to reach the USDA target for the marketing year.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day higher after mixed trade that resulted in March soybeans, making a new low at $12.01 before rebounding at the close. The US Senate also passed a bill today to avert a government shutdown which likely supported the markets in general.
• There have been no flash sales reported for soybeans in weeks as the world’s main buyer, China, seems to be stepping aside from even Brazilian purchases. Tomorrow’s export sales report for soybeans will likely show very weak sales and may pressure the soy complex.
• Today, soybean meal closed slightly higher while bean oil was lower. Both soy products have been trending lower, but despite that, December’s NOPA crush report showed a record number of soybeans crushed which indicates that domestic demand at least is firm.
• Last Friday, the USDA projected Brazilian soybean production at 157 mmt, and many analysts agree that this is too high. The majority are estimating production around 150 mmt, but some guesses have come in as low as 135 mmt. The actual numbers won’t start to roll in until combines roll in larger numbers within the next few months.

WHEAT HIGHLIGHTS:

• After a rough morning of new lows, all three classes of US wheat reversed by the close to post session gains. KC wheat led the charge higher, gaining more than a dime in the front month March despite a lack of fresh news. This may be more of a technical correction than anything else, as wheat is very oversold. However, support also came from corn and soybeans turning higher.
• The recent storms brought snow cover which should protect much of the winter wheat crop from another round of sub-zero temperatures expected to hit many areas of the Plains states and Midwest by this weekend. Additionally, soil moisture levels look much better than a year ago, so the crop should be in better shape as well.
• According to StoneX, the Brazilian 23/24 wheat crop is estimated at 8.25 mmt, down from their previous estimate of 8.59 mmt. Additionally, Brazil is expected to import more wheat at 7.05 mmt vs 6.37 mmt previously.
• Due to lower Chinese demand, as well as competition from the Black Sea region, French wheat exports for 23/24 are expected to drop according to FranceAgriMer. This includes declines both within and outside of the European Union.
• Egypt purchased 360,000 mt of wheat in their tender with the majority coming from Russia. One cargo was sourced from France; however, this did not do much to help Matif futures which remain near contract lows. Like US wheat, that market is also very oversold technically, which could mean that the market is searching for a bottom.

DAIRY HIGHLIGHTS:

• While spot whey was unchanged at $0.4050/lb, spot cheese was under pressure again with a close at $1.4550/lb. It is down almost a nickel entering Friday.
• Class III futures saw the nearby futures under pressure with second month February futures down 6 cents at $15.65. Last week’s intraday high was $16.43.
• Spot butter was down 1.50 cents while powder fell 1.25 cents to pressure the Class IV market.
• Futures for Class IV saw February unchanged while the March through June contract held losses.

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Author

John Heinberg