CORN HIGHLIGHTS:

• Corn futures lost momentum on Tuesday, retreating from their highest levels since June 2024. Producer selling and weakness in other markets likely limited the upside. With the turn lower, the corn market posted a bearish hook reversal on the daily charts, which could lead to additional selling pressure of this weak technical signal.
• Managed hedge funds added to their length in the corn market on last week’s Commitment of trader’s report.  Funds were a net long approximately 253,000 contracts as of Jan 7. Estimates have the funds holding a net long of 280,000-300,000 contracts going into today’s trade. If realized, this would be the largest net long position since 2022 for this time frame.
• Crude oil prices faced selling pressure on Tuesday after reaching $79 per barrel early in the session — the highest price since July. This weakness likely weighed on the corn and soybean markets.
• In the cash market, basis levels have widened as producer selling has ramped up in response to recent price increases. While futures have rallied strongly since the USDA report, the cash market in some areas has not fully mirrored these gains.

SOYBEAN HIGHLIGHTS:

• Soybeans ultimately ended the day with a lower close but briefly traded as much as 10 cents higher this morning before fading. The fundamentals are bullish overall with a dry Argentine forecast and a lower national US soybean yield, but fund profit taking and farmer selling may have added pressure today.
• Soybean meal finished higher, while soybean oil declined slightly. However, soybean oil has rallied sharply this year due to the potential removal of foreign-used cooking oil from renewable diesel production, which would boost demand. The Biden administration’s progress on the 45Z tax credit could further support soybean oil, though uncertainties remain regarding qualification criteria.
• Yesterday’s CFTC report showed funds as buyers of 13,835 contracts of soybeans as of January 7 which reduced their net short position to 28,612 contracts. Funds are estimated to have bought back over 27,000 contracts in just the last two days, which would likely establish them with a new net long position.
• The USDA initially announced a 198,000 MT soybean sale to China, which was later corrected to a corn sale. Near-term soybean demand concerns persist, as Brazilian export prices range $0.90 to $1.20 per bushel below U.S. soybeans.
• CONAB raised its soybean production forecast for the current crop year to 166.33 MMT, up slightly from last month.  Most analyst have the Brazil soybean crop above 170 MMT for their estimates.

WHEAT HIGHLIGHTS:

• Wheat futures closed mixed, with Chicago posting modest gains, while Kansas City and Minneapolis saw neutral to slight losses. Wheat’s resilience, despite weaker corn and soybean markets, can be attributed to a sharply lower US Dollar Index.
• According to CFTC data, managed funds were net sellers of around 1,900 Chicago and 2,200 Minneapolis wheat contracts. However, they were net buyers of around 2,000 Kansas City contracts. The combined net short position for all three classes sits at nearly 150,000 contracts, compared to the record short of over 198,000 contracts in December 2023.
• The Russian Grain Union reported total grain exports of 34.3 mmt from July to December 2024, a 5.4% decline from the same period a year earlier. However, wheat exports increased slightly by 0.7% to 30 mmt.
• According to Secex, Brazil imported 520.9 mmt of wheat in December, bringing 2024 total imports to 6.65 mmt, significantly surpassing 2023 imports of 4.18 mmt. December imports were the highest for any month since 2019, and 2024 marked the largest annual total since 2018.

DAIRY HIGHLIGHTS:

• Nearby Class III futures fell hard today with the second month February contract closing down 75 cents at $19.85.
• The spot trade did not reflect the heavy fall in milk futures with spot cheese down a penny and spot whey giving back a quarter cent.
• Class IV contracts were mixed, but February fell 10 cents and March gave up a nickel.
• Spot butter fell 3.75 cents today to close at $2.5750/lb. Spot powder was up 0.25 cents to move to $1.3675.lb.

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Author

John Heinberg