CORN HIGHLIGHTS:

• Grain markets traded lower on the session, pressuring corn futures to 4-5 cent losses as prices pulled back from the $5.00 a bushel resistance level. December corn lost 5 ½ cents on the day, but remained 15 ¼ cents higher on the week, posting its highest weekly close since August.
• Grain markets were pressured by a surge higher in the U.S. dollar and interest rates after the September Jobs report was released, showing better job growth than expected. This could possibly lead to longer-term interest rate hikes and tighter monetary policy.
• U.S. harvest was 23% complete last week, and the pace should reflect strong progress this week. The forecast still looks friendly overall to keep harvest moving along at a good pace. Harvest pressure will limit the corn market as fresh supplies pressure basis and the cash market. The National Corn Index is trading nearly 23 cents under the December futures price.
• The recent drop in crude oil and gasoline prices have tightened ethanol margins. Ethanol production started out the marketing year relatively strong, but a tighter margin could slow that pace.
• The corn market rally may still be limited, as premiums for Brazilian corn have slipped recently, still keeping Brazilian corn cheaper than U.S. bushels on the export market. As planting is beginning for this year’s South American corn, some weather issues may pose more challenging conditions in portions of Argentina and Brazil, which could limit production.

SOYBEAN HIGHLIGHTS:

• Soybeans opened the day higher, but ended with a lower close following the Jobs report this morning, which saw higher employment growth than expected and sparked concerns that the Federal Reserve would keep interest rates higher for a longer period. Soybean meal ended lower and soybean oil was higher.
• For the week, November soybeans lost 9 cents, December meal lost 9.10 dollars, and December soybean oil lost 0.48 cents. As soy products fall, crush margins have fallen as well and given up some incentive for soybean processors to crush beans in large numbers.
• Prices found support yesterday after the export sales report showed better numbers than expected, and soybean meal exports were reportedly up 32% from a year ago, with limited Argentinian supplies following their drought. Argentina remains in drought conditions, which will be something to pay attention to as they begin planting.
• The northern region of Brazil is currently too dry, but in the South, it is far too wet to plant with floods occurring and 4 to 9 inches of rain forecast over the next 10 days. With U.S. ending stocks slated to be tight, any weather impact on Brazil’s soybean crop could be friendly for prices.

WHEAT HIGHLIGHTS:

• The Labor Department’s report indicated that 336,000 jobs were added in the month of September, which exceeded expectations and caused an increase in the U.S. Dollar Index. That may have opened the floodgates for lower wheat, even though the index was actually negative on the day at the grain market close.
• More details have emerged about yesterday’s reports of a ship hitting a Russian mine. Reportedly, it was a Turkish cargo ship called the Kafkametler that struck a mine in the Black Sea. Damage was minor and the crew was safe. The location of the mine was near Romania, and according to one Ukrainian official, it may have been there from last year (not a new mine placed by Russia). However, there are concerns that Russia could plant their own mines to target cargo ships.
• Ukraine’s grain harvest as of October 6^th is 22% above last year, at 32.3 mmt of grain collected. Of that total, 22.2 mmt is wheat which represents a 16% year on year increase.
• Australia had the driest September on record with at, or near, record temperatures across the country. Their wheat crop production is likely to suffer greatly, especially because the El Nino pattern is expected to keep them warm and dry.
• Wheat is also struggling in Argentina. According to the Buenos Aires Grain Exchange, 33% of their wheat crop is poor to very poor, up from 27% last week. Some southern areas did receive rain that is certainly welcomed, but more widespread coverage will be needed.

DAIRY HIGHLIGHTS:

• Cheese, powder, butter, and whey were all in the green on Friday, all but powder were higher on the week as well.
• With the spot markets mainly positive this week, both Class III and Class IV second month contracts found gains of 49c and 4c, respectively.
• The cattle market found heavy selling pressure at the beginning of the week, but found support $185 on the front month contract and rebounded $1.30 on Friday.
• Regional cheese reports emphasize that holiday purchasing has yet to fully materialize and expect an “inevitable bullish correction.”
• A last second agreement was made on government funding last week Saturday, extending out funding an additional 45 days.

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Author

Brandon Doherty