TFM Morning Update 01-31-2024

CORN

Corn is back to trading lower after yesterday’s significantly higher prices that attracted sellers looking for rallies. Funds were likely taking part in short covering.
Non-commercials bought back roughly 5,500 contracts of corn yesterday, but the previous day they had sold 4,500 contracts. Their net short position is one of the largest held in history.
The EIA report will be released today and estimates for ethanol production are seen higher than the previous week at 964k b/d while the stockpile estimate is expected to be lower than a week ago.
South Africa is expected to increase corn plantings by 2% which could lead to an increase in production totaling around 15.3 mmt.

Soybeans are trading lower this morning and have given back about half of yesterday’s gains. Both soybean meal and oil are lower this morning with pressure from lower crude oil.
On Monday, markets reacted very negatively to the negative news regarding the Chinese economy, but it was likely an overreaction which caused prices to correct yesterday. Given the overall bearish fundamentals, traders were quick to sell the rally.
Estimates for Brazil’s 23/24 soybean crop have been lowered to 145.40 mmt compared to 150.7 mmt in the previous estimate according to Agresource, but South America is still set to produce more than the previous year.
The USDA December soybean crush is being estimated at 206.1 mb which would be another record for any month ever, and the third month in a row where crush exceeded 200 mb.

All three wheat classes are trading lower this morning along with corn and soybeans as traders come back in to sell yesterday’s rally.
Crop ratings for US winter wheat mostly improved as of January 28 with Kansas rated at 54% good to excellent compared to 43% the week before, but Oklahoma was lowered slightly at 63% vs 67% the previous week.
The USDA attaché in Ukraine has increased their export estimates for 23/24 with increased activity on the Black Sea and the Odesa port.
Wheat exports out of Brazil are expected to grow by 5.2% compared to the previous year which would mark to highest monthly volume in over a year.

Amanda Brill