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Grain Comments: 1-08-2024

Good morning.

USDA report week. Markets have started the new week mixed/lower at the CBOT, as the trade largely awaits the arrival of the USDA January supply & demand numbers, due out at 11am central time Friday morning. CONAB also came out with crop production estimates on Wednesday this week. Corn futures are mixed/unchanged, soybean futures are 3-5 cents lower, and the Chi wheat market is down 10-11 cents. Products are mostly lower, meal is down 20-30 cents and soybean oil are down around 30 points. Outside markets mostly lower, led by crude oil, which is down around $2/bbl. The Dow Jones index is 125 points lower, and the US$ index is up 5 points.

Weekend weather across South America saw soaking rainfall over North and Central Brazil, while areas in the South remained dry. Southern areas are forecast to see increased shower activity this week as a system makes its way North from Argentina.

Most of the US Midwest saw its first snowfall of the season over the weekend, with another large storm moving through Monday into Wednesday this week. Following this, yet another system is forecast for January 12, 13 and 14.

Grain moving logistics likely worsen in the coming days/weeks, following a relatively benign start to winter. A little cash activity has begun to pick up in the Western markets, as some feel farmers are switching from an attitude of anger/denial, to one of more acceptance that 2024 will likely be tougher than the previous few years.

Central/Eastern markets remain quiet, with little activity reported. Farmers continue to wait for better days ahead on either flat price or basis in this part of the world.

Friday’s COT report showed managed money in the week ending January 2nd was short 197,326 contracts of corn (up 11.1% week to week), short 11,629 contracts of soybeans (vs long roughly 4,700 contracts last week), and short 60,277 contracts of Chicago wheat (up 1.2%)

Fund managers are now likely the heaviest combined grain short since the height of the COVID-19 pandemic in 2020. Fund managers now also notably short soybeans, and nearing record large short in soybean oil.

This morning’s weekly export inspections report is expected to show relatively modest totals for corn, soybeans and wheat, as the market is still working its way through holiday-week reporting.

No new news out of the Red Sea over the weekend; US Secretary of State Antony Blinken is in the UAE today discussing possible peace efforts that he says are needed to avoid a wider conflict in the Gaza Strip. Hapag-Lloyd, as well as Maersk, are continuing to divert vessels away from the disputed area this week as of Monday morning.

German farmers have kicked off a week-long protest over plans to phase out ag subsidies by creating a tractor blockade, creating logistics problems in multiple cities Monday morning.

Crude oil futures are under pressure to start the new week following weekend news from OPEC+ that they would be lowering oil prices into Asia to the lowest levels in some 27 months. This has trumped middle east tension so far to start the week, at least as price determination is concerned.

Have a great day!

 

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