CORN HIGHLIGHTS:

• The corn market saw some price recovery after Thursday’s risk off trade. December corn gained 2 cents on the session but found enough strength to turn 1 cent higher for the week, closing 9 ½ cents off the contract low from Tuesday morning.
• Corn harvest continues to ramp up with early yield results being extremely variable based on the weather for the past growing season. Harvest pressure will likely affect the cash basis. Corn harvest was 9% complete last week and has advanced this week, despite some areas receiving rain.
• Concerns regarding barge traffic on the Mississippi River due to low water levels will limit the corn market and likely pressure basis. Grain barge traffic on the Mississippi River last week was down 38% year-over-year and 76% below the 3-year average.
• Corn demand will stay a focus in the weeks ahead. Ethanol margins are good, but higher gas prices could limit ethanol demand. Current corn export sales commitments for the marketing year are at 462 mb, which is down 6% year-over-year. The USDA is forecasting a 23% rise in US corn exports for the marketing year.
• Corn futures are trying to carve out a bottom, and overall price action was improved this week.  The corn market will need additional short covering and follow through next week to mark a possible turn higher in the near term.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day slightly higher but backed off from higher gains earlier in the day. Soybean meal started the day higher but ended lower, and soybean oil ended higher. Trade is quiet to lower with harvest beginning.
• Argentina plans to plant the same number of acres this season as last but is anticipating a much higher production as drought should not be as much a factor this season. Brazil’s crop is forecast to grow significantly to 162.4 mmt, which is much bigger than the previous record crop.
• Basis is expected to erode further into harvest as low water levels on the Mississippi River once again affect barge traffic. Heavy rains are expected from the northwestern Plains through Texas and Arkansas over the week which could help improve water levels.
• There were no soybean sales reported today, and yesterday’s export sales report was far below expectations, but there were large soybean meal sales recorded with some being record large. It seems that the US is picking up some soymeal business from Argentina after the drought cut their production.

WHEAT HIGHLIGHTS:

• Wheat stopped the bleeding today with a positive close, however, it still remains near contract lows as exports weigh on the market. Additionally, the fact that the Federal Reserve may issue interest rate increases for a longer timeframe pressured commodities yesterday, and may continue to do so in the near future.
• News outlets have reported that another vessel has left Ukraine and is destined for Egypt, carrying 18,000 tons of wheat. Additionally, three new vessels are headed for Ukrainian ports to be loaded with grain and iron ore that will be shipped to China and Egypt.
• The International Grains Council increased their estimates of world wheat and corn stocks. According to the IGC, the 23/24 stockpiles are projected at 588 mmt of grain, with 263 mmt of that being wheat. That is a 2 mmt increase in the wheat estimate; the decline in production may be offset by less demand.
• Ukraine’s grain harvest is now 14% complete, totaling 29.8 mmt so far. That total includes 22.19 mmt of wheat (which is up 16% year on year).
• Due to falling water levels, barge traffic on the Mississippi River is decreasing, while shipping rates are on the rise. According to the USDA, total shipments have declined to 130k tons of grain through September 16th. This compares to 173k tons the previous week. This is also a concern for the availability and cost of fertilizer for those areas that rely on river shipments.
• According to the USDA, as of September 19th, about 59% of the US spring wheat production area remains in drought conditions. Additionally, 47% of the winter wheat area is also in drought.

DAIRY HIGHLIGHTS:

• The Class IV second month contract gained $1.24 per CWT during trade this week.
• The Class III second month contract ended a 5 day losing streak on Friday, for the week the contract was still down $0.89 per CWT.
• US milk production was down 0.20% YoY in August; herd was unchanged from July to August of this year but down 16k head YoY.
• US dairy cow culling for the week ending 9/9 was down 4.5% YoY.
• Fundamentals next week:  Cold Storage and Crop Progress on Monday.

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Author

John Heinberg