TFM Midday Update 02-12-2024

CORN

Corn closed below the 430 level on Friday and has been on both sides of that area today, but in a relatively tight 5-cent trading range. The market may still be trying to figure out whether to trade the USDA or CONAB numbers, in which CONAB lowered Brazilian production more than the USDA last week.
According to the CFTC, the non-commercial net short position in corn is the third largest on record. This could mean the market is primed for a short covering rally, but it may take a spark of friendly news to light that fire.
This week will feature the annual USDA ag outlook forum. Last year at the forum the USDA estimated corn acres at 91 million, compared to 94.6 in reality.
In general, the US is looking at increased competition in corn from South America, as well as increased Ukrainian exports. Right now, Ukraine offers the cheapest corn on the world market.

Both Brazil and Argentina are expected to receive good rains this week. This will likely keep pressure on the soybean market in general, especially as the recent rains in Argentina have helped to stabilize the crop.
At last year’s ag outlook forum, the USDA estimated soybean acreage at 87.5 million. The actual number of acres planted came out at 83.6.
Chinese demand will be key going forward. However, not much is expected this week, due to the fact that their nation is on Golden Week holiday. In addition, Brazil is also currently on holiday, celebrating Carnival.
According to Ag Rural, the Brazilian soybean harvest is ahead of last year’s pace, with 23% of the crop collected, versus 17% at this time last year.

According to Ukraine’s Ag Minister, their winter wheat acres are down from last year and production may also be down. However, spring wheat acres may be higher, potentially offsetting this concern.
At last year’s ag outlook forum, the USDA estimated 49.5 million acres of wheat planted. This was close to the actual result, at 49.6 million acres.
March Chicago wheat is near the middle of the range on some technical momentum indicators, including stochastics and the RSI. The stochastics in particular are getting close to a buy crossover signal, which can indicate a contract may have upside potential. However, Chicago wheat may need to rally above 600 resistance to affirm this signal.
Russian wheat export values continue to be a major limiting factor. While they are said to be up slightly from last week (now at $235 per mt FOB) that is still well below the $250 level at the end of 2023.

Brandon Doherty