CORN HIGHLIGHTS:

• Corn futures traded lower for the second consecutive session as selling pressure in the wheat and soybean market spilled over into the corn market on Friday. March lost 5 ½ cents on the day but did finish ¾ cent higher on the week.
• Argentina weather became a focus this week with a hotter, drier forecast, but early season weather allowed the Buenos Aires Grain exchange to raise their corn crop outlook for the season by 1.5 mmt to 56.5 mmt, which would reflect record production.
• Corn export shipments through January 18 totaled 605 mb, up 28% from last year. Shipments last week were 36.7 mb, below the required 45.4 mb needed to reach the USDA target of 2.100 bb. Overall, the corn shipment pace is still ahead of schedule to reach the USDA target.
• Corn basis may flatten out in the days ahead as producer selling did pick up on the recent corn rally. The warmer weather and snow melt across the Midwest likely aided corn movement into the cash market.
• Hedge funds were holding a large short position in the corn market, over 260,000 net short contracts as of last week Tuesday. With the strength in the market this week, funds have likely begun working out of some of these short positions. The corn market in general looks over-supplied and lacking true bullish news.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day lower to finish the week as South American weather improves and the lower production estimates begin to come into question. Some analysts are raising their earlier predictions for Brazilian estimates, while Argentina raises theirs as well.
• For the week, March soybeans ended up losing 4 cents, March soybean meal lost $7.50, and March soybean oil gained 0.03 cents. Soybeans trended higher for the beginning of the week on thoughts that South America would be drier over the following 10 days, but prices turned around on Thursday following disappointing export sales and an Argentinian forecast that turned wetter.
• With Argentina’s good growing season so far, the Buenos Aires Grain Exchange updated its estimate for the soybean crop to 52.5 mmt from 52 mmt previously, but they are taking into consideration the risk of drier weather through the rest of the month. Brazil’s production may not be as short as some had anticipated as now that harvest is moving along, cash prices have fallen significantly and are now cheaper than US offers.
• This morning, the USDA reported a flash sale of 100,000 tons of soybean meal to unknown destinations for the 23/24 marketing year. Last week’s export sales for soybeans were on the lower end of expectations with an increase of 20.6 mb for 23/24. This was down 28% from the previous week but up 6% from the prior 4-week average.

WHEAT HIGHLIGHTS:

• The wheat market, along with the rest of the grain complex closed with losses for the day. All three US wheat classes traded lower, with Chicago and KC leading the way with double digit losses. Matif wheat futures also settled sharply lower, offering no support. This price action may have been primarily driven by headlines that Chinese authorities have, for the first time, approved imports of wheat from Argentina.
• In other global news, there are reports that China is talking with Iran and encouraging them to reduce attacks on vessels in the Red Sea. If more ships begin utilizing the Suez Canal again, it could reduce global freight and shipping costs.
• Argentina’s Buenos Aires Grain Exchange increased their corn and soybean production estimates; wheat production was left unchanged at 15.1 mmt, but harvest is now reported to be 100% complete. This year’s 15.1 mmt crop represents about a 24% increase from last year’s 12.2 mmt crop when drought was a much bigger issue.
• One factor that may have added pressure today is the forecast for more rain and snow in the central and southern plains states expected next week. This should help soil moisture levels, may lead to much better growing conditions this spring compared to last year. On the other side of the coin, drought is said to be increasing in northern Africa, meaning that those nations may need to import more wheat.

DAIRY HIGHLIGHTS:

• Spot cheese was up 2.25 cents on the day led by barrels, which gained 3 cents. Cheddar is now 4.75 cents higher than last week and just above that $1.50/lb level.
• Class III was given a boost this week on better demand for products. The Class III average finished just a penny higher from the start of the week, but rallied almost a quarter from the bottom put in on Wednesday to close at $17.42/cwt.
• Spot butter rose another 7.25 cents to finish out the week at $2.76/lb. The friendly Cold Storage report from Wednesday helped with the gains.
• Class IV continued to show its strength heading into the weekend with the May contract gaining 40 cents. The Class IV made new highs now sitting at $20.166/cwt.

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Author

Brandon Doherty