Corn

  • March corn finished the week at $4.1225 per bushel, up 12.5 cents on the week. Rainfall in Argentina and Brazil is applying pressure as market participants contemplate the potential for an already heavy ending stocks situation to get even weightier. The funds continue to add short positions at a steady pace across the grain complex.
  • USDA established the reference price for crop insurance by using November soybean and December corn futures average prices throughout February. For corn, the price is $4.66 per bushel, down 27% on the year, and for soybeans $6.85, 30% lower.
  • As the calendar turns to March, southern US corn planting picks up. Farmers in southern Texas have corn out of the ground.
  • For the week ending February 10, ethanol production reached its highest level in seven weeks. At the same time, ethanol stocks totaled 25.8 million barrels, a record for week six of the year.
  • USDA’s Weekly Export Sales report shows corn sales totaled 1.14 million metric tons, nearing the high end of trade expectations. Mexico, Japan and Columbia were the biggest buyers. At the same time, reports indicate companies in Brazil and Argentina are shipping more corn and soybeans to Mexico.

CORN COMMENTARY BY VERL PRATHER

  • The corn market has finally put together a string of days closing positive, beginning at the start of the week. Fundamentally, very little has changed compared to this same time last week. The US continued to have steady exports and ethanol demand. However, neither of those factors are new developments.
  • From the technical standpoint, the corn market had become severely oversold. Other than a small push higher in mid-January, the majority of the first part of 2024 has been spent in the red. Managed money traders certainly had a role in the price action, accumulating what was estimated to be a record net-short position in corn. I would also argue that producer selling was also to blame for the steep decline, especially as we look at the price action in the month of February. Now that the basis contract pricing period is behind us and producers should have met the bulk of their near-term cash flow needs, the biggest question becomes what price points trigger additional rounds of natural resistance.
  • Looking ahead, producers are watching eagerly to see just how much value corn will be able to regain. Meanwhile, traders are ever more focused on South American developments as planting of the safrinha corn crop is well underway. Additionally, we are getting closer and closer to US weather becoming a main part of the conversation.

Soybeans

  • March soybean futures reversed the recent downward trend, settling at $11.4300 per bushel, a dime higher versus the Friday before.
  • Soybean export sales totaled 159,725 metric tons, up from the previous week, down 30% from the prior four-week average. China, Mexico, and South Korea were the biggest buyers.
  • Weekly soymeal exports totaled 456,200 metric tons of old crop, up 54% from the previous four-week average. The Philippines, Mexico, and Canada were the biggest buyers. New-crop soymeal sales totaled 6,400 metric tons.
  • The soybean harvest in Brazil is now 50% complete, with forecasts showing just isolated showers for the rest of the week. Weekend rain events are forecast to be frequent.
  • One analyst now has Brazil’s soybean production at 153.8 million tons, down 1.5% from the previous estimate at the beginning of February according to the industry group Abiove. Brazil’s soybean exports in February reached 8.50 million tons, up from 7.3 million in January.

SOY COMMENTARY BY LORI NELSEN

  • The minor upside momentum seen earlier this week has faded. At this time of the year, before the US spring crop gets planted, daily bullish news is needed to offset the ongoing Brazilian harvest as their supply grows daily.
  • Brazil’s soybean exports for February reached 8.50 million tons, above 7.3 million in January. Brazil soybean prices are still a discount to US soybean prices.
  • The global 2024 soybean crop is estimated near 414 million metric tons versus 397 in 2023. Both the US and Brazil are forecasted higher. World crush rates are at record-high levels. Funds are around 150,000-160,000 soybean contracts short.
  • China’s sow herd is falling. A new report from China’s Ministry of Agriculture shows China had 40.67 million sows at the end of January, down 6.9% from a year ago. That could have a negative impact on demand.
  • The US Midwest could use some moisture as we enter the month of March. For Brazil, showers are forecast to be more sporadic and shifting next week, but widespread. As long as Argentina keeps getting regular rain, crop conditions should remain stable in the overall good ratings.

Wheat

  • Nearby wheat futures settled at $5.6000 per bushel, down 13.5 cents week-over-week.
  • US wheat exports are running 18% below year-ago levels. For perspective, US wheat prices at the port are $2.53 per bushel.
  • Weekly export sales totaled 322,122 metric tons. The majority of that total included old-crop sales. That category was up 40% from the previous week. Japan, the Philippines, and South Korea were the biggest buyers.

WHEAT COMMENTARY BY JIM MATTHEWS

  • May Chicago wheat futures (soft red winter) continue to provide some notable trading ranges at the Board, with an impressive swing from the $5.60 per bushel low on Monday to the near-$5.90 high on Tuesday. Despite the
  • 30-cent rally across Monday and Tuesday, the rest of the week featured a gradual decline in wheat back toward last week’s close, with repeated failures to push beyond the bearish channels of the last three months. From a technical perspective, the 20-day moving average has provided continued resistance to futures since early January. This week was no different with Tuesday’s high being a direct test of that key indicator.
  • Fundamentally, global wheat pricing continues to shift lower. Russian, European, and Argentine wheat products have all trended towards $200 per ton, leaving US soft red winter pricing at a premium. This would be construed as bearish for US futures, but the market has noted recent sales and shipments to China, following a strong trend this fall. This will need to strengthen further in order to offset declining domestic usage and increasing domestic production over the last two years.
  • From a macro perspective, managed money has remained somewhat steady in its stance towards wheat, maintaining a consistent net-short position in recent weeks. This sentiment is a stark contrast to the increasingly record-bearish position they have created in corn, where the market is wondering just how low corn can go. Wheat, on the other hand, has clear downside potential from managed money. Its current net-short position is just under half of what it was at Thanksgiving, suggesting that a return to strong selling could drive May futures back towards its February lows near $5.50.

Futures and options on futures trading involves significant risk and is not suitable for every investor. Information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended for informational purposes. Information is obtained from sources believed reliable but is in no way guaranteed. Opinions, market data and recommendations are subject to change at any time. Past results are not indicative of future results. Jon Spainhour, Lori Nelsen and Jim Matthews maintain financial interest in the commodity contracts mentioned within this research report at the time it is published. Phil Plourd, Tracy Mobley, Mark Majoros and Verl Prather do not maintain financial interest in the commodity contracts mentioned within this the research report at the time of publication. This report is in the nature of a solicitation.