TFM Midday Update 12-21-2023

CORN

The USDA said corn export sales were 39.9 mb for 23/24, and total commitments are now 37% above last year at 1.109 bb.
The migrant crisis in Mexico has caused the closure of two major railway bridges. This has limited the supply of corn shipped from the US to Mexico, and it is estimated that they have about 2-3 weeks of supply left. It is also said that a total of about 1 mb of grain are being held back per day. If the issue is not quickly resolved, Mexico may turn elsewhere to secure their needs.
Yesterday’s ethanol data was above expectations and the pace needed to reach the USDA’s corn usage forecast. However, ethanol inventories have also reached a four month high.
China’s internal corn prices have recently hit seven month lows. However, there is a good chance that over the coming months they may purchase US corn, as it is currently cheaper than South American offers.

Soybeans are trading lower this morning, despite good export sales of 73.1 mb for 23/24 and 5.2 mb for 24/25. However, total commitments of 1.299 bb are 16% below last year.
Overnight rains in parts of north-central Brazil resulted in some areas receiving 1 to 1.5 inches of rain. This is pressuring futures this morning, although, rains have been disappointing in Mato Grosso, which is Brazil’s biggest grain producing state.
Most private estimates of the Brazilian soybean crop are around the mid 150’s, whereas the USDA and CONAB projections are just over 160 mmt.
Both soybean meal and oil are lower this morning, offering resistance to soybean futures. Going forward, the expected rise in biofuel production may be positive on the oil side, but this may also mean an abundance of soybean meal, which may weigh on the market.

Wheat export sales of 11.9 mb for 23/24 were on the softer side, and total commitments of 546 mb are down 3% from last year.
The US Dollar Index is under pressure this morning and may be lending some support to the wheat market. Additionally, the index is forming a bearish pennant chart pattern, which may point to more of a decline (which would be supportive for wheat).
Russia’s wheat export values remain near $260 to $265 per mt FOB. This keeps them the leader on the export market, fulfilling recent tenders by Egypt and Saudi Arabia.
Rumors that China will purchase more US wheat continue to circulate, but so far, there has been no confirmation. If they do step up, it would offer a boost to the market, but it may be unlikely; global importers currently have cheaper options than from the US.

Brandon Doherty