CORN HIGHLIGHTS:

• Positive money flow led by strength in the wheat market and some concerns regarding Argentina weather has helped the corn market trade higher for the 5th consecutive day. March corn gained 5 ¾ cents on the session and is now trading 16 cents off the January 18 low.
• Weather forecasts in Argentina have turned hotter and drier going into February. The change in weather has been enough to trigger some short covering in an oversold market. Argentina is forecasted to produce a record corn crop this season after two years of drought.
• Like corn, the wheat market has traded nicely higher over the past five sessions supported by a break in the US dollar, and short covering. Chicago wheat futures closed through some key technical barriers today and could leave room for additional upside that could support corn futures.
• Ethanol production dropped 22.4% last week as snow and extreme cold temperatures limited grain movement affected overall production. Ethanol producers used 81.19 million bushels of corn last week, down significantly from the week prior, but cumulative corn usage is still on target to reach USDA targets.

SOYBEAN HIGHLIGHTS:

• Soybeans traded on both sides of unchanged today but ultimately closed mixed, with March slightly higher, May and July slightly lower, and November up a cent. March soybeans are up on the week so far by 27 cents after rebounding from oversold conditions with support from a dry 10-day Argentine forecast.
• Soybean meal has been on a steady trend lower since November but appears to have found support near last June’s low of $355.00. Today, meal ended higher while soybean oil was lower despite gains in crude and palm oil. While crush margins have narrowed recently, they remain profitable to processors.
• The Chinese government in an effort to boost their struggling economy has announce two rounds of stimulus over the past couple days. The potential help of stimulus has pushed some traders to cover short positions with the optimism that China may be looking into the US market for soybeans.
• South American weather is mixed with the short-term forecast for Argentina on the dry side, but scattered showers are expected for Brazil. There is quite a bit of debate by private analysts about Brazil’s potential production with the lowest guess at 135 mmt but the general consensus is closer to 153 mmt, still below the USDA’s January estimate of 157 mmt.
• Argentina weather forecasts have turned warmer and drier going into early February. Though Argentina is still forecasted to produce an above-average soybean crop, the weather concerns have triggered short covering in soybean meal, helping to support soybeans overall this week.

WHEAT HIGHLIGHTS:

• Wheat continues to recover, with Chicago posting double-digit gains at the close. There has not been much fundamental news to support this rally, which may indicate that funds are covering short positions on a technical bounce. However, there are a few supportive factors that may have helped; the US Dollar Index was down sharply today, and there is talk that China is trying to stimulate their economy (which may have a positive impact on the commodity complex).
• In other global news, there is word that China is attempting to de-escalate Red Sea tensions. Exactly what this means is unclear. But if they succeed, it could mean that more vessels resume using the Suez Canal, which would lower freight costs.
• According to their trade ministry, Iraq is expecting a wheat harvest exceeding 6 mmt. For reference, production in 2023 was 5.19 mmt. With domestic wheat consumption at 4.5 to 5.0 mmt annually, they may have a surplus if these projections are accurate.
• As of January 19, EU soft wheat exports totaled 17.4 mmt since the season began on July 1. Last year, exports for the same timeframe reached 18.8 mmt. North African countries were the leading export destinations, with Morocco in the lead at 2.42 mmt.

DAIRY HIGHLIGHTS:

• Class III milk futures were down double digits again on Wednesday despite a pretty steady spot trade overall. Feb ’24 Class III lost 12c to $15.58.
• In the spot trade, spot butter added 3.25c, powder was up 0.25c, and whey gained 0.75c. The only market that closed lower was cheese, but it fell just 0.125c.
• Spot whey had its highest close since April 3, climbing back over the $0.44/lb level.
• This afternoon’s release of the milk production and Cold Storage report saw mixed results. Milk production fell 0.30% year-over-year for December, while cheese inventories were down just slightly from December 2022.
• US dairy cows reportedly fell 1,000 head from November to December.

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Author

John Heinberg