- Corn futures used a friendly USDA report and a strong soybean market to post moderate gains on the session. December corn gained 8 cents to $4.96 but failed to push through overhead resistance at $4.98 ¾ from last week.
- The USDA lowered expected corn yield to 173.0 bushels/acre, down 0.8 bushels from last month and below market expectations. Yield losses from last year were noted in many corn producing states, but Missouri (-12.4%), Minnesota (-8.2%) and Illinois (-6.5%) were key states impacted by this season’s overall hot and dry weather.
- The reduced yield lowered overall production by 70 mb versus last month. The combination of lower production and lower than expected grain stocks on September 29th, lowered corn carryout to 2.111 bb. This was down 210 mb from last month and 27 mb below expectations. In order to reach the final carryout total, the USDA lowered feed usage and export demand by 25 MB for each category.
- Corn harvest pace moved to 34% complete on the weekly crop progress numbers. The weather forecasts have kept the harvest pace strong for the first half of the week, but projected moisture in the 2nd half of the week, and into the weekend, may likely slow harvest progress going into next week for north and central areas of the Corn Belt
- The USDA will release weekly export sales on Friday morning. Corn export sales for the last week are expected to range from 600,000 – 900,000 mt for new crop and up to 150,000 mt for the 24/25 marketing year. Weekly ethanol demand saw good production as corn used for ethanol grind is trending 5.1% above last year’s levels.
- Soybeans posted a significantly higher close today, fueled by a bullish WASDE report and big gains in soybean meal. Soybean oil was higher too, but larger gains may have been held back by lower crude oil and continued weakness in world veg oil prices. November soybeans had a sharp reversal and closed at the 20-day moving average.
- Today’s WASDE report featured several bullish surprises for soybeans. Yield was pegged at 49.6 bpa, below trade expectations and far below the most recent guess of 50.1 bpa. Production was lowered, and soybean ending stocks were held steady from September at a very tight 220 mb, below trade expectations. World ending stocks were also lowered to 115.62 mmt from last month’s guess of 119.25 mmt.
- With U.S. soybean ending stocks so tight at 220 mb, further increases in demand could add more bullish fuel to the market. China has already been a more active buyer of soybeans out of the PNW as Brazilian supplies dwindle.
- In South America, Argentina remains very dry from last season and this trend is not expected to improve. Northern Brazil is also too dry, while the southern regions are too wet, and this comes as planting is underway. It may be too early to focus on South American weather, but it will come into focus in the coming months and could drive prices higher if the weather pattern doesn’t improve.
- Today’s USDA report elicited a bullish reaction after some of the numbers came in below expectations. Wheat was more of a mixed bag but still was able to partake in the upswing. U.S. 23/24 wheat carryout came in at 669 mb, above expectations of 646 mb and 615 mb in September. World 23/24 ending stocks were reduced slightly from 258.6 mmt in September to 258.1 mmt. However, the USDA did lower global wheat production by almost 4 mmt to 783.43 mmt.
- With today’s data out of the way the question is, can this rally be sustained? Often the market has a kneejerk reaction on report day but may set back once the dust settles. One thing that could continue to weigh on the market is continued high inflation. Today’s CPI data came in at 3.7%, a little more than expected. In turn, the U.S. Dollar Index jumped higher today and if it continues the trend higher, it will add more pressure to wheat.
- Rumors that China is asking for U.S. SRW wheat pricing out of the Gulf is an encouraging sign that the recent low prices may have stimulated some buying interest. It remains to be seen if this rumor will be confirmed or not, but the export side of the market could use a boost. The USDA left their wheat export estimate unchanged in the report at 700 mb.
- The developing war in the Middle East, and the uncertainty between Russia and Ukraine, are both factors that could continue to affect commodity markets, especially wheat. Russia continues to overshadow other exporters, with reports that private offers are as low as $235 per metric ton, despite their government’s preferred $270 floor.
- Although they raised their corn harvest estimate to 12.1 mmt from 11.5 mmt, France kept their soft wheat production estimate unchanged at 35.1 mmt, which compares to last year’s 33.7 mmt.
- All Class III contracts that traded were green today, ranging from 7 to 24 cents higher.
- Spot cheese was 1.25 cents higher to $1.6725/lb thanks to a 2.75 cent jump for barrels. Blocks are now at just a 5.50 cent premium.
- Class IV action was mixed on very light volume. This came despite a 8.50 cent drop in spot butter.
- Spot powder was up a half cent as the upswing that started in late August continues to hold strength.
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