- Corn futures saw some short covering after bouncing off the low on Tuesday following the USDA report. Buying strength in the wheat market supported corn futures on the session as December corn added 5 ¾ cents.
- Tuesday’s USDA report failed to provide any true positive news as the addition of nearly 800,000 corn acres kept the balance sheet heavy for corn, limiting any price rally. Even with a forecasted lower yield, carry out projections of 2.221 billion bushels for the marketing year were above expectations.
- Cash basis levels will likely be under pressure as corn harvest begins. Harvest was 5% complete last week, and weather forecasts overall are likely to support an ongoing harvest.
- Price action was firm on Wednesday, and that could trigger additional buying strength and short covering. Strong resistance at $4.85 over the December contract could limit buying strength.
- The USDA will release weekly export sales on Thursday morning. Marketing year sales are disappointing, which has limited the upside in the market, and expectation are for last week’s export sales totals to stay soft overall.
- Soybeans ended the day higher after a rocky lower start, and yesterday’s selloff following the USDA report. Soybean meal ended lower, but soybean oil was able to gain some traction and closed 3% higher in the October contract.
- Yesterday’s WASDE report was not particularly bearish, but elicited a negative market reaction as trade was possibly expecting friendlier numbers. Final production was pegged at 4.146 bb compared to 4.205 bb in August, while the new crop carryout was called at 220 mb, which was 7 mb higher than the Dow Jones average trade guess. World ending stocks were increased slightly, which added pressure.
- Chinese imports were raised to a record large 102 mmt for old crop and 100 mmt for new crop, which has shown up in more active export sales in the U.S. While the Chinese economy may be sluggish, their demand for Ag products has remained firm.
- Brazil’s total soy exports are expected to reach 99 mmt in 2023, up significantly from a month ago, and soymeal exports are expected to reach 2.16 mmt in September versus 2.06 mmt the previous week.
- After yesterday’s report, wheat may be finding support at these lower levels, with a positive close in all three U.S. futures classes, as well as Paris milling wheat futures.
- Ukrainian attacks on the Sebastopol port in Crimea, which is controlled by Russia, lent support to wheat today. The war premium may be acting as a catalyst for short covering by the funds, who still hold a large speculative net short position. Additionally, yesterday’s USDA data showed a large 7 mmt reduction in global production as well, which is likely adding fuel to the fire.
- This Friday, September 15, the current EU ban on Ukraine grain imports will expire. Several European nations including Hungary, Romania, Slovakia, Bulgaria, and Poland have indicated that they will issue their own bans if the EU does not extend theirs. The concern of these nations is that a flood of Ukrainian supply could cause their domestic prices to fall. Currently, grain is allowed to flow through these countries on its way to other destinations; at this time, it is not known how that flow of grain may be impacted by any new bans.
- According to the European Commission, EU soft wheat exports since July 1 have reached 5.84 mmt as of September 8, and represents a 27% decline from 8.02 mmt in the same timeframe last year. Also, while Ukraine’s July 1 – September 13 grain exports were down overall, wheat exports totaling 2.5 mmt, were up 36.5% year on year.
- December Chicago wheat stochastics are showing a crossover signal in oversold territory, indicating a potential buying opportunity. Additionally, when looking at historical patterns, wheat tends to establish a seasonal low around this time frame.
- The dairy trade caught a bid again on Wednesday as each spot product except for whey was bid higher during the session.
- Spot butter added 5c, spot cheese rallied 2.25c, powder was up a penny, and whey held unchanged.
- Market conditions in the dairy trade continue to be choppy as bullish and bearish fundamentals push and pull the market at this time.
- Each Class IV contract from April through August 2024 rose at least 25c on Wednesday.
- After the recent sell-off in Class III, the Class IV market now holds the edge over III.
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