Agri- Commodities: 9-13/12/24

US wheat futures began the week on a positive note but struggled to maintain gains as MATIF wheat remained unresponsive. Corn saw slight upward movement, while soybeans softened ahead of Tuesday’s USDA report. The Russian wheat market showed resilience, with FOB prices for 12.5% protein wheat climbing to $228/ton, up $2 from the previous week. Concerns about the poor condition of Russian winter grains were tempered by IKAR analysts suggesting the reality may be less dire. Meanwhile, China’s Politburo announced aggressive economic stimulus measures, signaling a shift in fiscal and monetary policies, but these had minimal impact on grains. U.S. export inspections highlighted weak performance in wheat, with only 227k tons inspected, significantly below the previous week’s 299k tons.

On Tuesday, the USDA report delivered a bullish surprise for corn, driving prices to their highest levels in over two months. U.S. ending stocks were sharply reduced due to higher export and ethanol use projections, creating a more optimistic supply-demand outlook. Wheat saw modest adjustments, with U.S. carryout lowered by 20 million bushels and global production revised down slightly. However, world ending stocks for wheat rose marginally. Soybean estimates remained largely unchanged, with global stocks only slightly below expectations. Funds reacted to the bullish corn outlook, initiating significant buying activity, which also lent support to wheat and soybeans despite neutral fundamentals.

Middle of the week, follow-through buying propelled prices higher early in the session, but momentum waned as traders digested the USDA’s data. Outside the U.S., Argentina’s wheat yields exceeded expectations, prompting the Rosario Grains Exchange to raise its production estimate to 19.3 mmt, well above the USDA’s 17.5 mmt forecast. India tightened wheat stock limits for traders and processors, raising questions about its ability to meet demand without imports before the new crop arrives in April. Meanwhile, Russian farmers were reported to be shifting away from wheat to more profitable oilseeds, potentially altering future planting dynamics. Fund positioning showed a reduction in net short positions for MATIF milling wheat.

On Thursday, the Corn and wheat futures retreated as corn prices fell from technically overbought levels, exacerbated by disappointing U.S. weekly export sales. Wheat sales totaled a meager 290k tons, and corn and soybean sales also underperformed expectations. Despite the bearish tone, soybeans avoided losses, buoyed by a private export sale of 334k tons to unknown destinations. Brazil’s CONAB slightly revised its crop estimates, with minor reductions for corn and increases for soybeans, aligning closely with USDA forecasts. The European Central Bank’s interest rate cut signaled a weaker economic outlook, but its impact on the grain market was muted.

The week concluded with mixed performance across grain markets. CBOT futures ended lower, while Euronext saw gains. Ukraine raised its 2024 crop estimate to 55 mmt, with an exportable surplus of 40.3 mmt, reflecting improved production prospects. Fund positions highlighted the bullish tone in corn, with a sharp increase in net long positions to 165.9k contracts, the highest since February 2023.