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Grain Comments: 02-05-2024

Good morning.

USDA report week. Ag markets have started the new week quiet/weaker in anticipation of another supply and demand update from the USDA on Friday. CONAB, or Brazil’s equivalent to the USDA, will also give its monthly update on Thursday. Corn futures are 1-2 cents lower, soybean futures are mixed, and the Chicago wheat market is 5-6 cents lower. Products are mixed, soybean meal is down $1-2/ton, and soybean oil is up around 15 points. Outside markets are mostly lower, crude oil futures are down 20-30 cents, the stock market is marginally lower, and the US$ index is up 35 points.

Choppy trade is expected this week ahead of the government supply updates Thursday/Friday. Most expect both CONAB and USDA to further cut South American corn and soy production, but it is how much that is the million-dollar question.

Unexpected rain showers popped up in Western Argentina over the weekend, and a front is seen moving through most of the main growing region Wednesday.

This front will bring good moisture, as well as a respite to the 100+ degree temps seen in the last week to 10 days. However, weekly crop ratings likely decline for another week, before stabilizing the next week.

Brazil saw scattered showers across the North and Central growing regions over the weekend, while the South remained short-changed. The best moisture for the South is forecast for the end of the week.

As of Friday, Brazil soybean harvest had reached 16% complete, compared with 9% last week and 10% on average. Safrinha corn planting had reached 22%, up from 11% a week ago and ahead of the average pace of 14%.

Friday night, the US military launched retaliatory attacks on more than 85 targets in Iraq and Syria that were linked to Iran’s Revolutionary Guard and the militias it backs.

These strikes were followed by another round on Saturday, in which US and British forces struck an additional 36 targets in Yemen. The white House says more strikes are to come, while the Houthis have again vowed retaliation.

Intense fighting continued in both the North and South of Gaza over the weekend, as a ceasefire has yet to be agreed upon by Hamas and the Israelis.

Friday’s COT report showed managed money continued to add to short positions in the week ending Jan 30th. Funds were sellers of 14,866 contracts of corn and sellers of 16,405 contracts of soybeans on the week.

Managed money is now estimated to be short 280,151 contracts of corn, 108,247 contracts of soybeans, and 64,818 contracts of wheat. This second largest combined fund grain/oilseed short all time.

Also, of note on the COT report, funds were sellers of soybean meal for the 10th straight week. This coincides with spot futures trading their lowest levels in nearly three years as of the end of January.

In auxiliary news, China begins its Lunar New Year Holiday this week; and Punxsutawney Phil did not see his shadow on Friday, signaling a potential early US spring.

Markets this week are all about CONAB/USDA numbers on Thursday and Friday. Traders will also be keeping a close eye on amounts and coverage of the Argentine rainfall Wednesday into weekend.

Have a great day!

 

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