TFM Midday Update 1-29-2024

CORN

Chinese real estate conglomerate Evergrande was ordered to liquidate by a Hong Kong court. They reportedly owe $300 billion. China is said to also be facing their worst property market in nine years. With their economy already struggling, this news may further pressure financial and commodity markets.
An outbreak of bird flu in California is leading to an egg shortage there. More importantly, this could also lower feed consumption and demand.
According to the CFTC, the combined short position by managed money in the grain complex is the third largest ever. Funds, as of January 16 hold a net short in corn of more than 265,000 contracts – the most since June 2020.
On Wednesday afternoon, traders will receive the results of the FOMC meeting. Expectations are for the Fed to keep rates steady.

According to Safras & Mercado, Brazil’s soybean harvest is 9% complete, compared to 4.4% at this time last year.
Argentina should have another week or so of warm and dry weather. But rain is in the forecast for the following week, which may be pressuring the soybean market.
Although many private estimates of Brazil’s soybean crop are below the USDA’s projection, Brazilian export premiums are falling. This may indicate that their soybean crop is bigger than these estimates would suggest.
With both Chinese palm oil and soybean oil down on Monday, US soybean oil is also under pressure this morning.

The wheat market may be facing some weakness due to comments by the Egyptian minister that they may only import 7 mmt of wheat this year. This is interesting, given the fact that historically they import about 12 mmt, and the drought in north Africa is said to be expanding.
Russian wheat FOB offers have decreased by five dollars compared to last week, now said to be $240 per mt. This is also weighing on US futures.
May Paris milling wheat futures have a small gap lower to start the week. The weakness in that market is also pressuring US futures but is interesting given the belief that EU and UK wheat production could be 6-8 mmt below last year.
Headlines that three US servicemen were killed in drone attacks in Jordan may further escalate tensions in the Middle East, and lend support to the wheat market.

Brandon Doherty