Written Commentary
CORN
Prices rebounded to close $.07 – $.08 higher in heavy volume. New contract lows in early trade for March and May with new lows in spreads as well. Dec-24 did have an outside day higher. While nearby contracts barely missed out on forming a key reversal, today’s action may cause large shorts in the market to reconsider their ability to profit staying short. Talk that China purchased between 8–10 cargoes of corn from Ukraine for Spring delivery may have sparked the price surge. Ukrainian corn was priced roughly $40/mt FOB below the US as of late last week. Export inspections at 49 mil. bu. were a MY high and above the pace needed to reach the USDA export forecast. Last week’s inspections were revised up 5 mil. bu. bringing YTD inspections to 767 mil. up 36% from YA, vs. the USDA forecast of up 26%. Last week, Money managers were net sellers of just over 26k contracts extending their short position to a record 341k contracts. AgRural estimates Brazil’s 2nd crop corn plantings have reached 73%, above the historical average.
SOYBEANS
The soybean complex was mostly higher today. Beans were $.03 – $.04 higher in old crop, mixed in new crop futures. Same story in meal while oil was 35 – 40 higher across the board. Mch-24 beans slipped to a new contract lows and the lowest spot price since Nov-2020. An inside day from Mch-24 meal with next support on the weekly chart is at $323. Resistance for Mch-24 oil is at last week’s high of 45.80. Spot board crush margins firmed $.07 ½ today to $.88 bu. with meal PV holding steady at just over 60%. Key biofuel capacity and production data this week on Thursday with census crush data from Jan-24 after the close on Friday. South American weather remains non-threatening. Most Brazilian growing areas remain adequately watered, the exception being SW areas in Mato Grosso do Sul, western Sao Paulo and NW Parana. Net drying thru the first week of March will promote soybean harvest and safrinha plantings, however follow up moisture will be needed by mid-March to maintain above trend yield potential. Conditions across Argentina are favorable however a dryer than normal outlook for southern growing areas over the next week to 10 days will also require additional moisture by mid-March. Export inspections at 36 mil. bu. were in line with expectations. Last week’s inspections were revised up by 4 mil. bringing YTD inspections to 1.214 bil. down 22% from YA, vs. the USDA forecast of down 14%. Last week MM’s were net sellers across the soybean complex having sold 2k beans, 3k meal and over 17k oil. MM’s have been net sellers across the soybean complex for a record 13 consecutive weeks, extending their combined short position to just over 220k contracts, the largest since May-2019. AgRural estimates Brazilian soybean harvest has reached 40% while also lowering their production forecast 2.4 mmt to 147.7 mmt, near the midpoint of most private estimates. The USDA Feb-24 forecast is the largest at 156 mmt. Operations resumed at the Southern Brazilian port of Paranagua on Sunday, after a fire late last week temporarily suspended operations. China’s sow herd slipped another 1.8% in January, to 40.7 mil. and is down 7% from YA.
WHEAT
Prices were higher across all three classes today KC leading the way up $.09 – $.15, while MGEX and Chicago were $.04 – $.07 higher. Chicago Mch-24 inverse to May-24 to $.02 today to $.02 ½. Mch-24 KC gained $.11 ¼ on Mch-24 Chicago today, trading back to a $.06 ½ premium while also carving out a key reversal. While the US Midwest will experience day-to-day temperature volatility this week, an overall above normal pattern remains intact. Rainfall over the next 5 days to favor the ECB. Export inspections at 18 mil. bu. were above expectations and were a 7 week high. YTD inspections at 463 mil. down 18% from YA, vs. the USDA forecast of down 4.5%. Last week MM’s were net sellers of nearly 13k Chicago wheat and 5,500 KC, while being net buyers of less than 1k in MGEX. Their combined short position in all 3 classes expanded to nearly 135k contracts. IKAR notes the export price for Russian wheat fell $4/mt last week to $215/mt on a FOB basis. SovEcon estimates Russian grain exports last week were just over 1 mmt, down from 1.2 mmt the previous week. Wheat exports of 870k mt were down 22% from the previous week.
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