CORN HIGHLIGHTS:

• The Wednesday price action in corn futures matched Tuesday’s as prices consolidated with a relatively quiet 6 ¼ cent trading range. May corn slipped ½ cent on the session.
• The weekly ethanol report saw production slip last week to 1.024 million barrels/day, down slightly from the week prior. There were 102.6 million bushels of corn used in last week’s ethanol grind which is still slightly ahead of the pace needed to reach USDA corn usage targets. Ethanol stocks slipped to 25.8 million barrels.
• With the recent price rally, the market will be watching if the higher prices impact export sales totals. The USDA will release weekly export sales on Thursday morning. Expectations for new sales to range from 800,000 mt – 1.4 mmt for the current marketing year. Last week, corn export sales reached 1.109 mmt.
• Brazil’s weather will stay a focus in the corn market. Forecasts for Brazil corn growing regions trending warmer and drier into April help support Brazilian and US corn prices. If weather conditions become less favorable, additional weather premium may be added into the corn market.
• Managed funds are still holding a large short position in the corn market. The recent price strength has funds covering some of those short positions to take risk off the table with questionable weather forecasts for Brazil and in anticipation of the US planting of this year’s crop.

SOYBEAN HIGHLIGHTS:

• Soybeans finished the day mixed with the May and July contracts closing slightly higher while the deferred months were lower. Soybeans were significantly lower earlier in the day and rallied thanks to gains in soybean oil. Soybean meal closed lower.
• The rally off today’s lows in soybeans can be mainly attributed to the support in soybean oil which is a result of reduced palm oil production in recent forecasts. Stats Canada has also cut its estimates for canola production which has been bullish for all edible oils.
• As the Brazilian harvest presses on, soybean premiums have trended higher since January due to a lack of farmer selling at those low prices. Higher Brazilian premiums have been bullish for US prices, but they could also spark farmer selling which may bring prices back down.
• Brazil’s soybean harvest is over 55% completed but in the main growing area of Mato Grasso, harvest is 84% complete. The nearby forecast is calling for little rain in Brazil which should see harvest continuing without issue.

WHEAT HIGHLIGHTS:

• All three US wheat classes closed with losses in tandem with Paris milling wheat futures. A lack of fresh fundamental news, along with rumors that there may be more Chinese cancellations led to a weaker trade. So far, China has cancelled 18.5 mb of US SRW wheat purchases, but some analysts think there could be an additional 10-15 mb cancelled soon.
• According to the USDA as of March 5, about 14% of the US winter wheat area is experiencing drought. Additionally, 30% of the spring wheat crop is in drought. As spring approaches in the northern hemisphere, dry pockets in the US may become more of an issue that, if they persist, may lead to higher commodity prices. However, cheap Russian wheat exports may limit upside potential for now.
• On a bullish note, Indian wheat stocks have hit a seven-year low, which may make them a net importer. They are the world’s third largest wheat producer behind China and the EU. But due to weather problems and increased domestic demand they may no longer be a net exporter.
• House democrats are attempting to circumvent the House Speaker’s control to vote on a $95.3 billion aid package for Ukraine and Israel. Of that total, $60 billion is said to be allocated for Ukraine’s military defense. As both wars rage on, the impact on the wheat market appears to be minimal at this time; Ukraine has been very successful at exporting ag goods even without the approval of Russia.

DAIRY HIGHLIGHTS:

• An extremely oversold market along with the fact that some contracts had been down $2 over the past two weeks caused the dairy trade to catch a rally on Wednesday.
• The move higher happened during the overnight trade, when pretty steady volume came in and nearby futures were up anywhere from 20-30c. Buying continued throughout the day.
• By close, April ’24 Class III added 42c to $16.19, May was up 45c to $16.77, and June gained 47c to $17.51. Nearby Class IV was up as much as 17c.
• The dairy spot trade was relatively quiet, despite the fact that futures were aggressively being bid higher. The block/barrel average added 0.50c, butter added 0.75c, and whey was up a penny.
• It’s possible today’s rally was short covering, profit taking, or end users stepping in to buy with contracts into new lows.

Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency. A customer may have relationships with all three companies. TFM Market Updates is a service of Stewart-Peterson Inc. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.

Author

John Heinberg