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Grain Comments: 01-16-2024

Good morning.

Ag futures are attempting to stabilize following Friday’s bearish lashing. USDA did the markets no favors in offering bullish S&D data, as the stage is now set for a bearish price year without a US summer weather problem, further productions cuts in South America, or the further expansion of Middle East tension. Corn/wheat futures are mixed to slightly lower, while the soybean complex is higher to start the week’s overnight trade. Soybean futures are up 7-8 cents, meal is up $2-4, and soybean oil is up around 30 points. Outside markets are mostly quiet with the exception of the US$ index, which is around 75 points higher. Crude oil futures are up 10-20 cents/bbl, and the Dow Jones index is down 115 points.

The USDA on Friday gave traders a bearish supply shock by increasing 2023 US corn and soybean production to record levels. This despite less than ideal weather for most of the US in May/June.

Without supply disruption in a key global production region in 2024, stocks for corn and soybeans are likely to grow, while prices are likely to decline.

Tensions in the Middle East continued to boil over the weekend, with the US striking more Houthi targets near the Red Sea on Saturday. In response, the group announced it would now be targeting US vessels transiting the waterway.

Iran’s Revolutionary Guards announced overnight that they had destroyed Israel’s spy headquarters, while also striking targets with ballistic missiles in Syria.

Donald Trump won the Iowa caucus over the weekend, in the first Republican Presidential contest of 2024. This further solidifying the former US President as the front runner on the GOP 2024 ballot.

Friday’s COT report showed managed money continued to pile into their corn short position, now estimated to be short some 230,723 contracts. This is an increase of nearly 33,000 contracts from the previous week.

Managed money estimated be short 31,248 contracts of soybeans, vs 11,629 the week prior. The wheat position was estimated at 57,988, compared to 60,277 the week prior.

Managed money now estimated to be net short 357,000 contracts of CBOT grains, the largest combined position since 2019.

Today’s monthly NOPA crush report is expected to show soybean crush for December at 193.120 million bushels. This would be the largest monthly total on record.

Safras & Mercado announced Brazil soybean harvest is 2.1% complete as of January 12th. This compares with a 5-year average of 1.7%, as early harvest continues to run ahead of normal.

Ag ministry data out of Ukraine showed grain exports rising to 2.1 mmt’s in January, vs 1.7 mmt’s on same day 2023. Season total exports, however, have so far fallen to around 20.6 mmt’s, vs nearly 25 mmt’s the year prior.

Isolated showers fell in North/Central Brazil over the weekend. A slow-moving front looks to produce scattered showers in the South later this week.

Argentina saw scattered showers over the weekend as well, as conditions continue to be mostly favorable. Weather maps do show a return to more arid conditions in the coming 2 weeks, which will need to be monitored.

Most in the US Midwest experienced an artic blast over the weekend, with temperatures plunging to well below 0, and snowfall totals ranging anywhere from an inch or two, to foot or two. Local schools are closed today due to frigid temps and howling winds in central IL.

Have a great day!

 

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