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Grain Comments: 01-02-2024

Good morning.

Happy New Year. The first trading session of 2024 in the ag markets starts at 8:30 central this morning. Calls are steady to higher as weekend rainfall in South America was generally disappointing. Weather in the southern hemisphere continues to be the main driving force for corn and bean markets. Outside markets have started the week mixed, as crude oil futures are higher, and the stock market is lower. The US$ index is sharply higher to start the week, currently up 70-75 points.

Crude oil futures are again adding premium due to tensions in the Red Sea, trading roughly $1.50/bbl higher in overnight trade.

Over the weekend, Iran-backed Houthi militants attempted to board a Maersk container vessel, resulting in the dispatch of US helicopters and the deaths of 10 militants. 3 Houthi botas were also sunk in the skirmish. In response, Iran dispatched a warship to the region, further ratcheting up tensions.

Shipping company Maersk again suspended operations in the region following the attacks, with a review set for today on whether that would continue this week. German company Hapag-Lloyd still has not resumed sending vessels through the area.

Russia continued its volley of drone and missile attacks overnight, marking the third consecutive day of increased bombardment of the Ukrainian capital.

Also reported overnight was that the Ukrainian Black Sea Port of Odesa had been targeted in a drone attack on Monday. A fire was reported in one of the terminals but was quickly extinguished.

The stock market has started 2024 in the red, with most major indices trading around a percent lower in overnight trade.

Friday’s COT report showed fund positions that were mostly unchanged on the week, as managed money continues to be heavily short corn futures. Wheat shorts have decreased in recent weeks, and the soybean position is close to even.

The Goias Agricultural Defense Agency extended the deadline for soybean planting to January the 12th over the weekend, from the previous date of January 2nd, due to delayed plantings caused by drought.

South American rainfall over the weekend was again spotty in nature, yet forecasts continue to advertise an imminent pattern shift that would bring needed rainfall this week and continue into the middle of January. Totals ranging from 1″ to 3.5″ were seen in SE Mato Grosso, northern Mato Grosso do Sul, and much of Goias and Bahia.

Next market maker in CBOT futures will be the monthly WASDE report for January, as well as the quarterly grain stocks report, both released January 12th. CONAB will have its next production estimates that week also, with those out on the 10th.

Volatility appears to remain elevated to start 2024, as geopolitical tensions, mixed with a relatively extreme global climate, keeps traders on edge to begin the new year.

Have a great day!

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