CORN HIGHLIGHTS:

• Today’s lower close in corn marks the end of a three-session rally for the March contract. Without much fresh news to drive the market and a more favorable outlook for Brazil, corn did not find much footing today. Additionally, shortened holiday weeks tend to be a bit choppy with lighter trade volume.
• Private estimates of the Brazil corn crop are as low as 117 mmt, whereas the USDA is using a figure of 129 mmt. There may be some delays to safrinha planting due to weather issues, but without the crop in the ground, it may be too early to determine if that will significantly impact the crop.
• According to the CFTC, as of December 19, managed funds added nearly 30,000 short corn contracts to bring their total short position to 180,724. This may be adding some pressure to the market, but also primes it for a short covering rally, provided there is a catalyst to trigger it.
• China has approved 26 seed companies to sell GMO corn and soybean seed in certain provinces. As China works to become more self-sufficient, it may mean that they import fewer goods and commodities from the US. However, this will be bearish in the long term, and is not necessarily a major concern now. With that said, it has been reported that Chinese corn producers are planning to more than double their GMO corn planting next year versus 670,000 hectares in 2023.

SOYBEAN HIGHLIGHTS:

• Year end trade added to the volatility in the soybean complex, which saw two sided trade on relatively low holiday volume. Soybeans reversed course, ending the day higher after trading lower in the overnight session. Soybean oil lent support to soybeans as it posted a bullish reversal and also closed higher on the day, while meal closed lower, but well off its lows.
• Overall, Brazilian weather is improving with showers throughout central and northern Brazil and a wet forecast with shower activity set to favor the northeastern areas, though the forecasts have improved, they still need to verify into actual rainfall, which at times has been less than expected.
• The situation in Argentina has improved considerably from last year, with favorable weather overall and expectations of a normal to possibly above normal crop. The potential increase in Argentina’s production could more than offset the potential losses in Brazil, which is adding resistance to prices.
• Brazilian crop watcher, Dr. Michael Cordonnier, lowered his estimate of Brazil’s soybean production to 153 mmt, and cited the variable rain amounts and coverage over the past week for his conclusions.
• In other news, according to China’s Ministry and Agricultural and Rural Affairs, China approved 26 seed companies to produce, distribute, and sell GMO corn and soybean seeds. The move comes as the country attempts to become more self-sufficient in securing its own food supply.

WHEAT HIGHLIGHTS:

• Most of yesterday’s gains in wheat were erased today with lower closes in all three US futures classes. In addition, the spread between the March contracts of Chicago and Kansas City wheat has been narrowing as the conditions in the US southern Plains improve with more moisture.
• Wheat also saw weakness today, even though the US Dollar Index continues to drop. At the time of this writing, it has broken below the 101 level and is the lowest it has been since July 27. This should make US wheat more attractive to global importers. But Russia continues to be the cheapest origin with FOB values around $240 to $243 per mt.
• Coceral, a grain trade association, has estimated that EU soft wheat production next year will be 139.4 mmt, up just 0.1 mmt from 2023. This is practically no change and comes even though France may have reduced production due to weather issues that delayed planting; Spain is expected to make up the difference.
• According to Russia, their 2023 grain harvest is the second largest on record at 142.6 mmt. Of that total, wheat accounted for about 93 mmt. That is down from 104.2 mmt of wheat in 2022, but is still a large amount that is sure to keep Russian prices low and a dominance in terms of the export market.

DAIRY HIGHLIGHTS:

• Spot cheddar saw blocks gain 2.50 cents while barrels climbed 4.50 cents. Spot cheese is up 5.25 cents so far from last week at $1.44250/lb.
• Class III saw another day in the green with the January and February contracts improving 15 and 16 cents respectively. The Class III average now sits at $17.73/cwt.
• Spot butter had an impressive day trading 8 cents higher to close at $2.6225/lb. Powder saw prices improve half a cent to $1.1650/lb.
• Class IV has also seen back-to-back days of gains with the January contract gaining 28 cents. The Class IV average now sits at $19.61/cwt.

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Author

Brandon Doherty