Both locations closing at 7pm today 

Sep 18, 2024   

Good afternoon. Soybeans started the morning with good gains on a bit of technical short covering, but spent the rest of the day working backwards before the 1pm Fed decision caused a late-day rally. Quiet day in corn and wheat futures, with corn having a less than 5 cent range, and Chicago wheat having a less than 10 cent range. The US farmer is busy getting harvest started, while the financial side of the ag space today was subdued for all but the last 20 minutes due to this afternoon's Fed decision; this led to rather lackluster price action after the 8:30am central re-open.

CZ closed Wednesday at 4.12 3/4, up 1/4 of a cent. CH was unchanged at 4.30 3/4. SX closed at 10.14, up 8 cents. SF was up 7 1/4 at 10.32. 50-day moving average on SX at 10.14 5/8. WZ closed unchanged at 5.75 3/4. Products were mixed, October soybean meal closed at 317.90, down 10 cents/ton, and October soybean oil closed at 40.99, up 44 points. Outside day lower for meal. Livestock markets were also mixed, October live cattle closed at 178.30, down 50 cents, October feeders were down 80 cents at 239.95, and October hogs closed at 82.05, up 27 cents. Inside days for both live cattle and feeders. Outside markets are mixed as well, crude oil futures are down 50-70 cents/bbl, the Dow Jones index is down 75 points, and the US$ index is down 20 points. The S&P500 is up 10 points, and the NASDAQ is up 50 points. Outside days higher for the Dow and the NASDAQ.

Spreads were mixed/higher, corn spreads closed down a quarter cent to up 3/4 of a cent, and soybean spreads were up 3/4 of a cent to up 2 1/4. CZ/CH closed at -18, up 1/4 of a cent, and SX/SF closed at -18, up 3/4 of a cent.

The much anticipated 50-point interest rate cut was the main story in the commodity space on Wednesday. Eleven of twelve Fed members voted in favor of the cut, in a move that was the first since Covid in 2020. While the trim in rates was widely anticipated, the size of the cut had come into question in recent days with traders seeing better odds at a 50 basis-point cut, while economists saw better odds at a 25 basis-point cut. The Fed said in a statement that "The committee has has gained greater confidence that inflations is moving sustainably towards 2%, and judges that the risks to achieving its employment and inflation goals are roughly in balance." Stock index futures initially traded higher before falling lower into the end of the day, while the $ index did the opposite and traded lower initially before closing the day higher.

This morning's weekly ethanol production report for the week ending September 13th showed daily production at 1.049 mil bbls, which was down 2.9% from last week but up 7.0% from the same week last year. Stocks for the week were seen at 23.785 mil bbls, which was up 0.3% from last week and up 9.7% form the same week last year. This was also a new record high stocks level for this particular week, topping 2019's 23.238 mil bbls. Production this week was the lowest since the week of June 21st, while stocks were the highest since the week of July 26th. We estimate corn use in the week at 103.64 mil bu's, which would be the lowest since the week of June 21st also. Cumulative corn use through two weeks in the marketing year has reached 201.3 mil bu, which is up 2.9% from last year.

The EIA report also showed crude oil stocks in the week were down 1.63 mil bbls at 417.513 mil bbls; the trade had expected a decrease of just 500k bbls. Of note, this was the lowest crude oil stocks level since September of 2023. Gasoline stocks were up 69k bbls on the week to 221.621 mil bbls, and distillate stocks were up 125k bbls on the week to 125.148 mil bbls. Implied gasoline demand was estimated at 8.776 mil bpd, compared to 8.478 mil last week and 8.410 mil in the same week last year.

Other news on Wednesday came from the Middle East; for the second consecutive day, handheld communication devices held by members of militant group Hezbollah detonated across Lebanon, injuring more than 100 people while 1 person had been reported killed. Sources say walkie-talkie devices purchased by the group months ago simultaneously detonated in what one Hezbollah official calls the "biggest security breach" in the group's history. On Tuesday, pagers belonging to members of the group similarly detonated, wounding nearly 3,000 people and killing twelve. It is believed that Israel's Mossad spy agency planted explosives inside the devices months before the last two days' explosions according to Lebanese security officials. The Israeli military declined to comment, while Hezbollah said it attacked Israeli artillery positions with rockets in response to the explosions.

The 12Z GFS run was unchanged from the overnight solution, as it still sees improved rainfall chances for the Corn Belt into the early part of next week. The development of another tropical system in the Gulf also provides additional moisture in the southeast towards the end of next week. No update on the temp side, as a low pressure system produces a cold front that will lower temps from the west to the east starting on Sunday. Highs return to the 70's for most of the Corn Belt by the middle of next week. Week-two forecasts continue to see a wet pattern for the southeastern third of the US, but the presence of Tropical activity keeps confidence beyond a week low.

Forecasts for South America continue to show scattered showers in southern areas of Brazil over the next week, while better precip continues to be seen further north into the first week of October. Northern Argentina also looks to pick up scattered showers over the next week. Temps will stay hot through the next 10 days; beyond here, temps will stay above average will be closer to normal than what will be seen over the next week