- Despite strength in other grain markets and reduced crop ratings, corn futures faded off session highs, with December corn finishing ¼ cent lower on the session.
- Front-end futures are still supported by the lack of deliveries versus the September contract, reflecting a tight overall corn supply.
- Price action was relatively neutral on the session as corn prices consolidated at the top of yesterday’s strength. The lack of follow-through given slightly more bullish news and strength in other grains was disappointing overall.
- USDA crop ratings saw the corn crop drop to 53% good/excellent, down 3% from last week. Key states of Illinois and South Dakota lost 10% week over week. At 53% good/excellent, this is the lowest rating for U.S. corn crop since 2012, which was significantly lower at 22% good/excellent. Warm weather has pushed maturity with 18% of the crop now mature, 2% above the 5-year average.
- Brazil corn harvest continues to pressure the market. AgRural estimates Brazil’s 2nd crop harvest has reached 88% as of August 31st, vs. 98% last year. They also estimate the 1st season crop for 23/24 is 13% planted, vs. 9% last year.
- Soybeans ended the day higher along with soybean meal, while soybean oil closed lower. Yesterday’s crop ratings were bullish for soybean prices, but the recent decline in Malaysian palm oil has put pressure on soybean oil.
- Yesterday’s crop ratings showed the good to excellent rating for soybeans falling sharply by 5% to 53%. The poor to very poor rating also increased by 3% to 17%. These are the worst ratings since 2012.
- Palm oil futures fell for the third consecutive day which pressured soybean oil, but India is set to import 10 mmt of palm oil which is a 26% increase from last year, and global palm oil production is expected to fall by 10% due to poor production.
- The Argentinian government has once again introduced a “soybean dollar” program to incentivize producer selling. This program is a new version which allows exporters to keep 25% of the foreign currency received from their sales abroad instead of having to fully sell it in the official exchange market.
- The addition of war premium on oversold conditions likely led to the market’s strength, as all three classes of wheat closed higher on the day with follow-through buying from Tuesday’s bullish reversals.
- There were renewed drone attacks on Kyiv and Ukraine’s Ag facilities in the Danube River port of Ismail that damaged grain elevators and killed one worker. Additionally, according to Romania’s President, one of the attacks came within a half mile of their border with Ukraine, and with Romania being a NATO member, the risk of escalation is heightened.
- SovEcon raised its 23/24 estimate for Russia’s wheat exports to a record 48.6 mmt, up from 48.1 mmt. The agency cited “increases in production, high export pace, and record-breaking sales early in the season,” for its reasoning. The high export numbers further show Russia’s recent dominance of the world wheat export market.
- As for the Southern Hemisphere, Conab revised its estimate of Brazil’s wheat crop to 10.2 mmt, down 0.2 mmt from its last report. The revised estimate is in line with the USDA’s most recent forecast of 10.3 mmt.
- The USDA reported that Spring wheat harvest is 74% complete as of Sunday, September 3, 3% behind the average for this date, but a 20% jump from last week. Winter wheat planting has also begun, with the crop estimated to be 1% planted versus 3% on average.
- Some $19.00 prices popped back up onto the 2023 Class IV strip on Wednesday as November rose 48c and December added 60c.
- The sudden demand may have come from seeing the spot powder trade get bid 3.25c higher to $1.09/lb. Spot butter was also up again and has now rallied 6c over the last two sessions.
- The cheese trade remains quiet and choppy. This is keeping nearby Class III futures near the $19.00 level.
- The positive up auction for GDT this week may be helping support a higher milk trade this week.
- Several powder futures finished the day limit up (+$0.04/lb).
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