CORN HIGHLIGHTS:

• Corn futures finished with moderate gains on Tuesday, as late buying strength in the grain markets, and a strong wheat market helped push corn prices higher. March corn added 5 cents and posted its highest close in nearly two weeks.
• Funds have built a net short position of 206,478 contracts in last week’s Commitment of Trader’s report. The improved technical picture and the price strength in wheat is leading to an end-of-year short covering rally in corn. The upside may stay limited due to large supplies, but an improved demand picture could help sustain the rally into 2024.
• The USDA will release the next WASDE report on Friday, December 8. The grain market is likely going to square positions going into the report, and for corn, could see additional short covering and possible price support.
• The corn market is waiting for Chinese export demand, which is currently down 71% year-over-year at this point, but China has been active in the US wheat export market recently, and that has helped trigger some optimism in the extremely short corn market.
• Weak price action in the crude oil market could limit buying strength in corn, as well as other commodities. Ethanol margins are still positive, but could be squeezed with crude oil challenging the lower $70 a barrel price level.

SOYBEAN HIGHLIGHTS:

• Soybeans traded both sides of unchanged throughout the day, but ultimately closed mixed, with the January contract slightly lower, March unchanged, and November slightly higher. Soybean meal was lower throughout the day, but rallied into the close, which supported soybeans.
• Brazilian weather has improved significantly, with rain having fallen in some of the driest areas of the country with more expected. Despite this change, 4.2% of Mato Grosso, which is the largest soybean producing state, will need to be replanted, and many analysts are revising their estimates of total production lower. Many estimates are now closer to 150 mmt, compared to the 163 mmt estimated by the USDA.
• In Malaysia, palm oil reserves have reportedly risen to a 4-year high at 2.48 million tons. This is the seventh month in a row that palm oil stockpiles have risen there as production outpaces export demand. These large supplies could be a factor in pressuring US soybean oil.
• Yesterday’s soybean inspections were reported at 40.7 mb, which was on the low end, and although export demand has picked up recently, sales are still down by 17%. Yesterday, a sale of soybean cake and meal was reported to the Philippines totaling 183,000 mt. This Friday, the USDA will release their WASDE report, and it will be revealed if any changes are made to demand.

WHEAT HIGHLIGHTS:

• Wheat was able to rally today in the face of a lower close for Paris milling wheat futures, and a US Dollar Index that is making another leg higher. Fund short covering appears to persist, as another announced sale of US wheat to China was confirmed today by the USDA. Today’s sale was for 198,000 mt of SRW wheat, in addition to yesterday’s 440,000 mt sale, their largest purchase in three years.
• Globally, there is still uncertainty about what wheat production will look like. Bearish figures were released by both Stats Canada and ABARE (Australia). The Canadian wheat production estimate was pegged at 31.954 mmt, higher than trade expectations and last month’s number of 29.835 mmt. Additionally, the estimate of Australian wheat production was raised to 25.5 mmt, which is 1 mmt above the current USDA projection.
• With a current wheat import duty at 40%, India is said to be considering lowering that to between 15% and 20% to import up to 1 mmt of Russian wheat. India’s internal wheat prices remain high, and this may be an effort to reduce food price inflation.
• The next WASDE report will be released this Friday. Pre-report estimates call for little to no change for US wheat ending stocks, with the same being true for corn and soybeans. The world ending stocks are projected to remain neutral as well, with no major changes expected.

DAIRY HIGHLIGHTS:

• Global Dairy Trade cheese had nearly a 10% jump in this morning’s auction which brought buyers in on Class III, which finished with double digit gains in nearly all contracts.
• Spot cheese closed at $1.60/lb late morning, thanks to a 5.25 cent jump in blocks and a 6.50 cent rally in barrels. Spot whey was unchanged at $0.40/lb.
• While Q1 Class IV futures were unchanged, the later months closed higher but on very little volume. Second month January remains at $19.14.
• Spot butter dropped 1.25 cents today along with a half cent drop in powder. GDT prices were slightly higher for both.

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Author

Amanda Brill