CORN HIGHLIGHTS:

• Mixed trade to start the week in the corn market as corn futures saw two-sided trade before settling slightly higher in the March, with a ¾ cent gain. The corn market was supported by a strong wheat market, but limited by selling pressure in the soybean complex.
• Funds added to their short position last week by selling a net 20,976 contracts to build a net short position of 206,478 contracts in last week’s Commitment of Trader’s report. The improved technical picture after last week’s strength and jump in demand could have the funds squaring positions into the end of the year, supporting a potential limited price rally.
• Weekly export inspections for corn were above analyst expectations at 1.158 mmt (45.6 mb). The stronger than anticipated exports could be an indication the US corn export window could be starting to open.
• South American weather will stay a focus of the grain markets going into December and the end of the year. The weather has improved, but overall conditions still have limitations. The current South American weather could potentially be a larger corn story in late spring and summer based on its impacts for the planting of the second crop Brazil corn crop.
• The USDA announced a flash sale of corn to Mexico this morning. Mexico purchased 267,000 mt (16.2 mb) of corn for the current marketing year.

SOYBEAN HIGHLIGHTS:

• January soybeans ended the day lower, breaking out of the bottom of their range after better-than-expected rains fell throughout South America this weekend. A flash sale and strong crush numbers were friendly, but ultimately, this market is trading weather.
• The focus for the soy complex has fallen almost exclusively on Brazilian weather over the past few months, but a wetter weather pattern appears to be emerging. Despite extremely tight US ending stocks, if a large soy crop comes out of South America, it may be difficult for prices to remain this elevated.
• Demand has been a high point of the soy complex with a flash sale reported to the Philippines by private exporters of 183,000 mt of soybean cake and meal for the 23/24 marketing year. In addition, October crush came in at a whopping 201.1 mb, another record-breaking month. Weekly export inspections, on the other hand, came in lower than expected at 1.109 mmt, versus 1.573 mmt last week.
• Soybeans have been the only product in the grain complex that funds have maintained a net long position in, but they have recently begun reducing that position. As of last week, they were sellers of 14,025 contracts, which brought their net long position down to 67,562 contracts, and this pattern could continue if South American weather remains favorable.

WHEAT HIGHLIGHTS:

• Wheat closed higher in all three US futures classes, with Chicago contracts leading the charge, despite the uptick in the US Dollar Index. Support came from an announced sale to China for the 23/24 marketing year in the amount of 440,000 mt. There is likely also some short covering happening, as the correction from being technically oversold continues.
• Today’s rally also comes despite a poor export inspections number. For the week ending November 30, the USDA reported that wheat inspections were 6.9 mb, bringing total 23/24 inspections to 306 mb. That is down 24% from last year, and inspections are running behind schedule to meet the USDA’s goal.
• According to the Bahia Blanca Grain Exchange, a crop tour in Argentina found that wheat production in the southwestern region could be 27% below last year at 2.8 mmt, due to the lack of rain that caused poor yield results. It should be noted, however, that this decline in production should be more than offset by increases in the coastal areas, which received better precipitation.
• According to CFTC data, the combined short position of the funds in Chicago, Kansas City, and Minneapolis wheat is a record short as of last Tuesday’s close. With the recent reversals higher, it is likely that funds are covering some of that short position. This could be due, in part, to Russia’s wheat values starting to creep higher, which is, in turn, easing pressure on the US market. There is also talk about the potential threat of winterkill for some Russian wheat, adding fuel to the fire.

DAIRY HIGHLIGHTS:

• Spot cheese was up in Monday’s trade, closing at its highest level in 8 trading days with a $1.54125/lb finish. Spot whey closed at an even $0.40/lb.
• This was not enough to avoid a only a mostly higher Class III close as February and March futures were red with the remainder holding small gains.
• On the Class IV side, the January and February contracts were down while most others were unchanged. This had the second month futures ending the day at $19.14.
• Monday saw spot butter closing higher for the fourth trading day in a row, gaining 2.75 cents to close at $2.6725/lb. Spot powder fell a half cent to $1.17/lb.
• Today’s Dairy Product Production report showed continued strong cheese production and a seasonal shift higher for butter.

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Author

John Heinberg