2/7/2024

A very defensive trading session just ahead of tomorrow's fresh CONAB and USDA WASDE and reports. Corn shot to fresh lows overnight and soybeans traded down 20 cents before recovering slightly. Trade cited significant rainfall that materialized in Argentina on Tuesday night was perfectly timed behind some extremely hot temperatures last week. This was enough for the funds to pile on some more short positions. The market has given us some solid looks and setups for a turn-around but there just has not been anything to spark a rally. Weekly ethanol production was up 42,000 barrels/day to 1.033 mln bbls. Ethanol stocks also increased by 500k barrels last week. There is some good coming out of the lower trending markets as it appears the supply/demand relationship is doing its job for corn. Corn use for ethanol is currently exceeding the pace needed to meet the USDA forecast by 65 million bushels and an on-going bull market in cattle continues to encourage the feeding of corn. Along with that, export volume is okay. The USDA corn balance sheet will need time to reflect this but there is real potential that our current ending stocks of 2.162 bln bu could erode below 2.0.

Tomorrow’s report could create an important move for soybeans. The market has a chance to right the ship and get a foothold above $12 or break out lower to test the contract lows from June.