CORN HIGHLIGHTS:

• Corn futures finished mixed on the day as soft export inspections total and weakness in the wheat market limited gains. March corn was unchanged on the day as prices saw a two-sided trade.
• The US Dollar Index traded at its highest levels since November on Monday, limiting gains in the commodity markets. The dollar has been trending higher since the start of the year and has been a limiting factor for both corn and wheat markets in global trade.
• Weekly US export inspections were soft for corn on Monday. Last week, the US exported only 24.6 mb (624,000 Mt) of corn, and below market expectations for the report. For the marketing year, corn inspections are at 641 mb, up 30% from last year.
• The USDA announced a flash export sale of corn to Mexico totaling 6.1 mb (155,000 mt) for the current marketing year. This was the first reported corn export sales since January 16.
• Argentina weather is a market driver in the near term. Crop growing regions in Argentina are experiencing above-normal temperature, but weather models look to bring some relief going into the end of the week. The rain coverage and totals may be key to grain market prices.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day higher, along with both soybean meal and oil, after a lower start. The release of the export inspections report was very friendly, and prices began to move higher after that. Improved weather in South America could be a bearish factor this week.
• For the week ending February 1, the USDA reported total soybean inspections at 52.4 mb which was sharply higher than even the highest trade estimate. Total inspections for 23/24 are now at 1,070 mb, which is 24% lower than the previous year, but this was encouraging given last week’s abysmal export sales report.
• Funds have been increasing their net short positions in grains at a rapid pace and now hold the largest net short position in four years totaling about 610,000 contracts. Last week in soybeans, they were sellers of 16,405 contracts which increased their net short position to 108,247 contracts.
• This Thursday, the USDA will release its February WASDE report, but the extent of changes they will make is unknown considering their shocking jump in US yield estimates in the last report. US ending stocks for soybeans are estimated to rise slightly by 5 mb to 285 mb while exports are expected to fall by 13 mb to 1,742. Argentinian production is expected to increase slightly to 50.8 mb and Brazil is expected to fall to 153.7 mb. World ending stocks are expected to decline slightly.

WHEAT HIGHLIGHTS:

• Wheat closed lower in all three US classes today. The sharp rise in the US Dollar after the jobs report last week continued during today’s session. The index broke above the 100-day moving average to levels not seen since mid-November. Along with a lower close in Paris Milling wheat futures, this is adding weight onto the shoulders of the wheat market.
• Weekly wheat inspections at 9.8 mb were disappointing but brought the 23/24 total to 414 mb. Inspections are running below the USDA’s estimated pace, which adds to negativity in the market. In addition, the fact that Russian wheat FOB values are said to have declined again to $229-$231 per ton is pressuring exports and limiting any upside rallies.
• Flooding rains in California are expected to move into the central part of the US this week. This will bring more moisture to the winter wheat growing regions, benefiting soil moisture levels and crop conditions at a time when the wheat in that area is already in much better shape compared to last year.
• Alongside the USDA report this Thursday, Stats Canada will also release estimates of their crop stocks as of December 31. The average estimate for all Canadian wheat comes in at 20.7 mmt, with a range of 19.5 to 21.9. For reference, December 2022 stocks came in at 23.037 mmt.
• China will reportedly increase the minimum purchasing price for wheat, to entice farmers to grow a larger amount and to increase their national food security. As China works toward becoming less dependent on grain imports, they are also said to be focused on improving yields to increase their overall grain production.
• Agriculture exports out of the Odesa region in Ukraine are said to have reached 14.3 mmt since they opened their own shipping corridor in August. The 6.3 mmt of goods shipped in January are said to be almost at prewar levels. This is impressive given the hostility in the region, and news that tensions are on the rise after Ukraine targeted an oil refinery deep within the Russian border.

DAIRY HIGHLIGHTS:

• Spot barrels were the only mover within the spot trade day, gaining 4 cents on two loads traded.
• That cut the premium in blocks over barrels from a dime to 6 cents. The average closed at $1.62/lb today after jumping 9.625 cents last week.
• Class III futures were solidly higher with the March contract pushing to $17.77 at the close. The 2024 Class III average finished at $17.91.
• Despite a quiet spot trade, Class IV futures were green as well. Second month March closed right at $20.00 as the calendar year average sits at $20.45.

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Author

John Heinberg