CORN HIGHLIGHTS:

• Corn futures saw positive money flow for the third consecutive session on Wednesday as the market saw additional short covering and position squaring going into the end of the month and First Notice Day on the March futures. March and May corn futures added 5 cents respectively during the session.
• On Wednesday’s EIA report, weekly ethanol production slipped last week to 1.078 mbd, down slightly from last week and 7% from last year. There were 107 million bushels of corn used in ethanol production last week, which is still trending ahead of the pace needed to reach USDA projections. Ethanol stocks increased to 26 million barrels, which was at the high end of expectations and well above last year’s 24.8 million barrels level.
• The USDA will release weekly export sales on Thursday morning. Expectations for new sales to range from 600,000 – 1.2 mmt. Last week’s sales were 820,400 mmt. Corn sales need to push the top end of the range in this time window since the US is still competitive with global corn prices.
• The recent push higher in corn prices could be met by farmer selling, which will likely limit the potential in the near term since the corn market is still working through a picture of heavy front-end supplies of corn.
• Current Brazilian weather is still considered non-threatening for crops, helping the key second crop Brazilian corn crop get off to a strong start. Moisture levels overall are still limited, so rainfall will need to stay timely as the crop develops.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day higher, but like yesterday, faded significantly from earlier morning highs. Soybeans have not rallied off their contract lows as well as corn has with the May contract just 12 cents off the low from Monday. Poor export sales and an ongoing Brazilian harvest have been bearish.
• Soybean meal finished the day higher after making a new contract low yesterday while soybean oil closed lower and near its contract lows. While crush margins have narrowed recently, they remain profitable, and domestic crush demand has been relatively supportive.
• South American weather has improved from January with harvest progressing in Brazil and now more than 40% complete, while Argentina has benefitted from scattered showers consistently. Argentina’s crop is expected to end up double the size or larger of last year’s drought ridden crop.
• Yesterday, there was bullish news early in the day of an announcement by private exporters of 123,000 metric tons of soybeans for delivery to unknown destinations for 23/24. This was the first flash sale reported in over a week as cheaper Brazilian soybeans take export demand from the US.

WHEAT HIGHLIGHTS:

• Wheat closed lower in all three US classes, except for March Kansas City, which gained 2 cents on the day. Weakness can be blamed in part on Paris milling wheat futures, which closed sharply lower. Also, the US Dollar Index was marginally higher at the grain close, but well off the daily high that provided early pressure as well. GDP data today showed that the economy remains strong; inflation might also show signs of easing. These factors may lead to the US Dollar strengthening which would continue to pressure wheat.
• Black Sea weather has been mostly favorable this winter, with good soil moisture levels, and the wheat in that region may be coming out of dormancy early due to warmer conditions. However, a cold front may move in next week. Nonetheless, nothing seems to be slowing down Russia’s exports. Their FOB values are said to have reached as low as $209 per metric ton. And with Ukraine’s grain shipments in February up 12% year on year, it is not surprising that US wheat is struggling.
• European Union soft wheat exports, as of February 22, were down 3% year on year at 20.5 mmt. Their export season begins July 1, and last year’s exports for this time frame totaled 21.1 mmt. North African countries were the leading importers of this wheat, with Morocco the front runner at 3 mmt.
• The warm and dry February here in the US has left the Mississippi River with low water levels; usually they are rising at this time of year. NOAA is projecting near-normal precipitation for March, which should help if forecasts verify. Currently, the upper Mississippi is set to reopen between March 4-16 which is a typical spring start date. While the direct impact to the wheat market is minimal at this time of year, the river is one of the main routes for US grain exports and is also vital for the shipping of fertilizer.
• With dryness and heavy winds, wildfires were said to have impacted 60 Texas counties, primarily in the panhandle. The fires are said to have also spread to parts of Oklahoma and Nebraska. This may have caused some damage to the wheat crop, but it will take some time to assess.

DAIRY HIGHLIGHTS:

• Spot cheese was higher for the fourth day in a row and for the sixth time in the last eight trading days, closing at $1.6425/lb.
• Conversely, spot whey is now down 8.25 cents on the week with another 1.25 cent drop today. It sits at $0.44/lb after hitting $0.53/lb on the 15th.
• Class III futures held small to moderate losses with the March through August contracts losing anywhere from 4 to 15 cents.
• Class IV futures were either unchanged or under pressure as well with the April contract down a penny on no contracts traded.
• Spot butter was down 3.50 cents on 5 loads traded to close at $2.80/lb while powder closed a penny higher at $1.19/lb.

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Author

John Heinberg