CORN HIGHLIGHTS:

• Aggressive selling in the wheat market dragged the corn market lower on the session. The March corn contract closed 4 cents lower, and below the 10-day moving average, which could bring additional selling pressure into the overnight session.
• Despite the small increase in export demand in Friday’s WASDE report, corn ending stocks are still heavy in the market’s mind at 2.135 billion bushels. A stocks-to-use ratio of 14.7% is the largest in 5-years and projects to potentially lower corn prices to trigger additional demand.
• With the recent prices rally, the funds decreased their net short position in the corn market by 45,000 contracts to –160,533 net short contracts. The price move was disappointing, only being 20-25 cents for that short liquidation. The decreased short position opens the door for additional selling pressure in the corn market in the short term.
• Soybeans rallied aggressively to start the week, but that spill over support was ignored by the corn market. The Brazil weather forecast turned warmer and drier on afternoon models, and that triggered buying in the soybean market to start the week.
• After a strong week last week, weekly export inspections for corn were disappointing at 712,000 MT (28 mb) at the low end of expectations. Total inspections in 2023-24 are now at 361 mb, up 28% from the previous year. The USDA is estimating corn exports at 2.100 bb in 2023-24, up 26% from the previous year.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day sharply higher with support from higher soybean meal and oil, along with another export sale reported to China. South American weather was supportive as well today with heat and dryness forecast this week before rains are expected to fall later in the week.
• Export inspections were a little soft today with the USDA reporting inspections at 36.2 mb for the week ending Thursday, December 7. Total inspections for 23/24 are now at 725 mb, which is down 16% from the previous year. The USDA is estimating total soybean exports at 1.755 bb for 23/24 which would be down 12% from the previous year.
• Another flash sale was reported this morning by the USDA totaling 132,000 metric tons of soybeans for delivery to unknown destinations during the 23/24 marketing year. This follows up on two sales from last Thursday and Friday which were 121,000 metric tons and 136,000 metric tons to unknown and China.
• Traders were likely expecting more bullish numbers in Friday’s WASDE report, so the lack of any big changes caused some selling. Ending stocks were unchanged at 245 mb, but Brazilian production was lowered to 161 mmt from 163 mmt.

WHEAT HIGHLIGHTS:

• All three US wheat futures classes posted double-digit losses today. The weakness may have stemmed partly from a technically overbought situation. On daily stochastics, each of the three March wheats show a sell crossover signal, with momentum turning downward. In addition to the technical weakness, funds may be adding back to short positions after last Friday’s USDA report did not offer friendly news to feed the bull.
• Wheat inspections of 10.4 mb bring the 23/24 total inspections to 316 mb. That is down 23% from last year and is behind the pace needed to meet the USDA’s goal of 725 mb from Friday’s updated WASDE report.
• Forecasted rains in the US southern Plains for the middle of this week are expected to limit upside potential for the wheat market, with areas of Texas and Kansas expected to receive widespread coverage. As of the last Crop Progress report, winter wheat conditions are much more favorable compared to last year.
• There is talk that China may be interested in purchasing more US wheat, but with Russia still offering wheat for sale at cheap prices, more friendly news may be needed to rally the market. Unfortunately, there are concerns that demand from north African and Middle Eastern nations may be down from normal and last year.
• Ukraine’s farm ministry has stated that the country reached a record grain yield, and they increased the 2023 harvest estimate to 59.7 mmt. Of that total, wheat harvest is expected to account for 22.2 mmt.
• This week, traders will receive the next statement from the Federal Reserve regarding interest rates. Current expectations are that they may keep rates steady, but last week’s jobs data offered signs of labor market strength. This may mean that they will stick with their “higher rates for longer” stance, which may in turn affect commodity markets like wheat.

DAIRY HIGHLIGHTS:

• The dairy trade started this week mixed, with a slight amount of bidding in the Class III trade, with some offering in Class IV.
• Monday’s dairy spot trade saw cheese blocks as the sole up market, when buyers took the price 2c higher to $1.60lb on 1 load traded.
• Spot cheese barrels, dry whey, and butter were all lower during the session. Butter took a 9.50c hit on no loads traded, finishing the day at $2.5750/lb.
• Fundamentals still lean extremely mixed at this time, leading to a volatile up-and-down market at this time.
• It should be a quiet week for the dairy trade, as no major reports are due and there is no Global Dairy Trade auction this week. Spot trade will dictate price action.

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Author

Amanda Brill