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Limit Up

By Tori Uhland

February 9, 2024

Last Thursday, February 8, the USDA released their February World Agricultural Supply and Demand Estimates (WASDE) report. This took the focus off South American weather for a little while as analysts pondered what numbers the government would come out with.

Prior to the report, commodities traded mostly flat while the trade awaited new estimates. Wheat saw some big losses due to strength in the US Dollar (a higher USD makes our products less competitive in the world market. Estimated 2023-24 ending stocks were nearly unchanged from the January report. The estimate for world wheat ending stocks was 260.48 million tons, which was also very similar to the USDA number in the January report. February’s number came in at 259.4. Conditions in the US are improving with rains across Oklahoma and Texas. There isn’t much of a bullish story in wheat at all. For as long as prices in the Black Sea stay low, US wheat won’t be able to sustain a rally in prices. The one item to watch will be weather – the market will be keeping an eye on the North African drought as well as any possibly cold snaps in the US or Black Sea regions.

Corn made new contract lows last week and felt very bearish ahead of the WASDE report. Argentina has received beneficial rains and more on the way. The US Delta has also seen helpful moisture. The market needs some bullish news in order to stop the trend lower. We have now reached levels not seen since December 2020, and the next level of support is in the area of $4.24. The new contract lows that were made came in on strong volume. The average guess for US 2023-24 ending stocks before the report was 2.146 billion bushels, down from 2.162 in January. The USDA came in at 2.172 this month. World corn ending stocks were expected at 324 million tons. This number came in at 322.1 in February.

Soybeans have seen some weakness with the critical rains coming into Argentina. While it’s still a little dry, if the Argentine crop comes in as currently expected, it could be close to double what their production was last year. Bean harvest in Brazil is ongoing. Going into the report, the average trade guess for 2023-34 US ending stocks was 284 million bushels, up from 280 in the January report. This number was increased due to a larger South American crop – the USDA came in at 315 million bushels.

I know I keep saying this, but we are in interesting times. We are having a fairly mild winter, and most areas of the country will probably see green grass sooner because of it. Texas has had a ton of rain, so there should be a lot of grass. This doesn’t do anything to help the feed demand in the US – it just shows that there isn’t much of anything to stop the prices from continuing to grind lower.

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