Corn
Friday's WASDE reports are raising expectations for increased fundamental price support in the markets. Recent gains are linked to a robust wheat market and sustained momentum in soybeans. Traders are closely monitoring Brazilian forecasts for potential heat stress, given its status as the world's largest corn and soybean exporter. Late market strength is also fueled by rumors of China canceling up to 10 cargoes of corn purchased from Brazil, leading to speculation that demand might shift to the U.S., especially with prices below South Africa's until at least February or March 2024. The CEO of ALC Agricola, the largest publicly traded farming company in Brazil, anticipates a 7.5% decline in its second crop corn acres due to soybean planting delays, which could favorably impact U.S. prices.

Soybeans
Market optimism is driving upward movement in anticipation of potential downgrades to Brazil's 2023/24 soybean crop in Thursday’s CONAB production forecast and Friday's WASDE report from the USDA. Despite scattered rains in dryer Brazilian regions, they seem sufficient for crop needs over the next week to 10 days. AgRural estimates a rise in Brazil's soybean crop planting to 85%, up from 74% last week but down from 91% a year ago. While it's expected that the U.S. soybean ending stocks will remain largely unchanged in Friday's report, there might be a shift from exports to crush, supporting the renewable diesel expansion.

Wheat
The USDA's Tuesday report highlighted another substantial daily flash sale of soft red winter wheat to China, propelling the U.S. wheat market upward. In the last two weeks alone, China has secured orders for 27.5 million bushels of U.S. soft red winter wheat, slated for shipment within the next six months. This surge has driven the nearby March 2024 Chicago soft red winter wheat futures contracts to a three-month high as of Wednesday morning, marking a significant turnaround from wheat prices hitting a three-year low just over a week ago. Despite U.S. wheat exports being on track for their smallest recorded volume since the pre-Soviet Grain Robbery in 1971/72, the recent increase in Chinese purchases may counterbalance the trend, especially considering the substantial net short positions taken by money managers on U.S. wheat contracts amidst Black Sea supply dominance in the global balance sheet.

Rice
Following a peak on Nov. 24, nearby rice prices have experienced a downward trend. Traders are currently evaluating the potential for heightened supply from Indonesia, a significant rice producer. It's worth noting that while Indonesia may contribute to increased availability, concerns arise from the anticipation of reduced production in the first quarter for two key players in the global rice market — India, the world's largest rice exporter, and Thailand, the second-largest supplier. Both countries are expected to witness a decline in production during their off-season crops, adding complexity to the dynamics influencing rice prices.

Cotton
The March cotton contract recently dipped below last week's consolidation, marking its lowest point since Nov. 10. Concerns arise that without an improvement in the demand outlook, it might regress to the November low. Additionally, worries linger regarding the potential revision of higher U.S. 2023/24 production in Friday's supply-demand report, mirroring adjustments made in November. Compounding the challenges, the December Dollar Index surged to its highest level since Nov. 23 on Tuesday, a factor perceived as unfavorable for U.S. cotton exports. The trade anticipates minimal changes in this month's USDA Crop Production and supply/demand reports.

Livestock and Poultry
Livestock futures have experienced varied performances, with lean hog futures anticipated to face pressure from technically driven selling and ongoing seasonal weakness in cash hog prices, given the abundance of hog supplies. Persistently low Chinese hog prices further contribute to the negative market sentiment. In response to industry oversupply, Smithfield Foods announced on Tuesday the termination of grower contracts with 26 hog farms in Utah, underscoring the challenges faced by the world's largest pork processor. Amid an excess of chicken and tightening cattle supplies due to drought, U.S. meat companies grapple with complex market dynamics. However, there's potential early support for live cattle and feeder cattle futures driven by technical follow-through. Beef prices were recently hit after the USDA raised production estimates roughly 2% from the last estimates due to higher cattle on feed numbers this fall. According to global production updates from Rabobank, poultry and aquaculture are the only two species groups expected to witness production growth in 2024, albeit at a slower pace than in 2023. The analysis also forecasts a continued decline in beef production, while pork production is anticipated to contract modestly.