TFM Morning Update 02-21-2024

CORN

After printing minor gains on Monday, corn futures are trading lower this morning in sympathy with neighboring soybeans and wheat.
The Biden administration and the EPA will approve the request from a group of Midwest Governers to allow year-round sales of E15 gasoline, but the measure is not set to become fully effective until 2025.
Ag Secretary Vilsack made comments to that he is confident that waivers will be available this summer to sell E15, and that he is also working to ensure that there will be guidance under new US tax credits to include biofuels as feedstock for Sustainable Aviation Fuel.
On the world front, US corn export prices are becoming less competitive around $190 per metric ton. Brazil is currently closer to $183, and Ukraine is down around $167.
Managed Funds continue to carry a near-record net short position. Yesterday funds bought an estimated 2,000 contracts and are currently net short an estimated 306,000 contracts of corn.

The soybean complex is mostly lower this morning, currently giving up a large portion of yesterday’s gains. Soybean meal and oil are lower as well, adding pressure to beans.
South American crop watcher Agroconsult lowered its estimate of Brazil’s soybean crop to 152.2 mmt from their previous estimate of 153.8 mmt. The agency cited the adverse weather and poor conditions in key states.
There are concerns in the trade that the soybean market will be unable to sustain rallies ahead of the South American harvest. Currently, Brazil’s export prices are more competitive than the US for both beans and meal. Brazil is close to $411 per metric ton versus US at $463, and US meal is currently about $416 per metric ton versus Brazil’s $404.
Funds continue to hold the largest short position since May of 2019, and have been net sellers of soybeans for 13 weeks in a row. In yesterday’s rally, its estimated that funds bought about 3,000 contracts of soybeans. With that, they currently hold an estimated net short of 143,000 soybean contracts.

All three wheat classes are a little weaker this morning as short-term speculators likely attempt to book any profits from yesterday’s rally.
There is little news to explain yesterday’s strong short covering rally. After printing fresh contract lows in the March and May contracts for both Chicago and Minneapolis, the wheat complex market appeared to run out of sellers and rallied into the close posting bullish reversals across all three classes.
Wheat prices in the EU, Australia, and Russia continue to trend lower and have offered resistance for US prices and exports. Russia continues to dominate the world wheat export market with prices near $217 per metric ton, compared to US offers that are closer to $253.
While managed funds have been net buyers in the wheat complex lately, they continue to hold a net short position across all three classes of wheat. Yesterday, it’s estimated that managed funds bought 8,000 contracts of Chicago wheat, bringing their net short in Chicago to 64,000 contracts.
El Nino is expected to steadily weaken this spring with four of the seven climate models predicting a neutral ENSO pattern by April, with all seven in agreement that the current El Nino pattern will end by May.

Scott Masters