Harvest Hours- Weather permitting

  7a-7p Monday-Saturday & 12p-5p Sunday

Sep 29, 2023

It was no surprise that trade was mixed and choppy ahead of the USDA quarterly stocks data today. Month and quarter end fund positioning was also a factor behind the volatile trade. We also had more consolidation ahead of the potential government shut down that looks likely. If an agreement cannot be released the federal government will shutter Saturday night at midnight. This will stall the release of government reports, including weekly USDA reports. News that buyers are both passing on current US offers and cancelling previous purchases weighed on trade today. Elevated values compared to the world market was the primary reason. The US dollar was under moderate pressure to start today, and gold reached a nine-month low to limit managed money interest in commodities. We did see some positive economic news in that inflation over the past quarter came in at 2.2%, very close to the Federal Reserve’s target. The greatest concern for inflation right now is elevated energy costs. Weather conditions in South America are warmer and drier than ideal but nobody in that region seems overly concerned at this time. If conditions persist into December this will become more of a market factor. A sizable decrease in the US drought area in the weekly update applied additional market pressure today as did technical resistance. 

Corn futures were pressured early in today’s trade by reports of additional import business being lost to other sources in the global market. The main one of these is South America, but we are also hearing that China booked corn from Ukraine. That said we did see combined sales of 223,540 metric tons to Mexico for both this marketing year and next. Current US corn sales stand at 495 million bu (mbu) which is just 3% under last year’s sales pace. The USDA is projecting a year to year increase in corn sales of 23% though, and until this level is reached, trade will show limited reaction to daily sales. Cumulative Us corn exports are also 24% of the yearly forecast with the normal pace being 34%. Brazil’s corn exports are up 40% on the year which is where most importers are currently sourcing coverage from. Dry soils have not impacted corn planting in Argentina as 7% of the crop is now seeded. December corn hit resistance at the upper Bollinger Band to cap advances. December corn futures finished the week with a ¾ cent loss. 

Soybean futures struggled early in today’s session as more reports of current US sales being washed out of surfaced. Given the logistical issues on US rivers and the price spread between the US and South America we may see more of this take place. Chinese meal demand has started to decrease, and this is impacting the world oilseed complex. Year to date US soybean sales currently total 652 mbu. This is 34% behind last year’s sales pace with just a 10% reduction being expected. Cumulative sales are also 36% of the yearly forecast which is 12% behind the normal pace. This is already giving the indication that current soybean demand estimates may be too high. The US will soon see elevated competition in the global market from Brazil, and importers are willing to wait to cover needs with these bushels. The complex was also pressured by the Safras Brazilian crop estimate for a 169 million metric ton (mmt) soybean crop this year, well above the 163 mmt estimate from the USDA. Safras is also projecting larger Brazilian soybean exports at 99 mmt compared to the USDA estimate of 97 mmt. While not a much larger forecast, both are well above the 78 mmt of exports from the last crop. Canada is reporting a 31% increase to canola crush as well, which will add more product to the world market. The November contract found technical resistance at the 100-day moving average which further pressured early trade. November soybean futures were down 21 ¼ cents on the week.  

Wheat values struggled today as buying interest in the complex was extremely light. The area of US wheat production in drought declined considerably last week which will help ease crop stress. Better than expected rains have fallen in Australia to alleviate crop stress there as well. Drought is still impacting the Argentine crop though as this is now rated 27% Poor/Very poor, an increase of 5% from last week. Year to date export sales are better for wheat than corn or soybeans with cumulative bookings of 336 mbu. This is 14% under last year, but just 6% less than predicted. The European Union trimmed its production forecast today to 125.3 mmt, which is still a large crop. Technical resistance at the 9-day moving average also weighed on wheat trade. December wheat in Chicago finished the week down 38 cents. 

The big story in today’s session was the release of the quarterly stocks data, which was more negative than trade expected. The US corn inventory on September 1st totaled 1.361 billion bu (bbu), a 1% decline from last year and near the bottom of trade estimates. Of this, on farm stocks are up 19% on the year and off farm are down 13%. The September 1st soybean inventory came in at the top of trade guesses at 268 mbu, a 2% decline on the year. Of these soybeans, on farm reserves are up 14% and off farm is down 7%. The wheat inventory was close to trade estimates at 1.78 bbu. 

In addition to this data, the USDA released updated production numbers today as well. The most attention was on the 2023/24 wheat production figure of 1.81 bbu, a 10% increase from the 2022/23 crop. This was also 76 mbu more than the August estimate and 5 mbu over trade expectations. The USDA also lowered the 2022 soybean crop by 6 mbu and the corn crop by 15 mbu.