CORN HIGHLIGHTS:

• A buying tone in the grain markets helped lift the corn market higher on the day. Even as harvest pressure limited gains, December corn futures gained 3 cents on the session.
• The soybean market and soybean meal led the grain markets higher, as some weather concerns are adding weather premium into prices. Key northern and central areas of Brazil are experiencing hot and dry weather, which is slowing the soybean planting pace. A slow soybean planting pace narrows the window for the second crop of Brazil corn, which could tighten longer-term global supplies.
• Weekly ethanol production rose to a 5-year high last week at 1.035 million barrels/day; this was slightly higher than the previous week’s total. Ethanol stocks slipped to a 9-year low at 21.1 million barrels for the week ending October 13. Ethanol producers used 100.1 mb of corn last week as the yearly pace is 3.9% ahead of last year’s levels.
• US weather is supporting harvest pace in some regions, but longer-term forecasts may add concern for the corn market in the northern Corn Belt. A potential series of storms going into the end of October could limit the harvest pace and possibly damage the mature crop.
• The USDA will release the export sales report on Thursday morning. Expectations are for the 23/24 marketing year sales to range from 500,000-1,100,000 mt as corn export demand has improved with freshly harvested supplies.

SOYBEAN HIGHLIGHTS:

• After trading on both sides of unchanged, soybeans surged higher to close out the day 14 ¼ cents in the green. This is the first close above 1300 since the end of September, as dryness continues in Argentina and the northern and central parts of Brazil.
• Soybean meal traded sharply higher, gaining 14 dollars in the December, as technical buying ensued once the 400 level held after being tested midday. Soybean oil was the weak link of the complex that failed to successfully trade through its 20-day moving average, which brought out selling and profit taking from last week’s rally.
• Northern and central Brazil are expected to remain dry for the rest of October, while the southernmost region continues to be wet. Argentina, the world’s largest soybean meal exporter, is expected to see some much needed rain in the next two weeks, but the totals aren’t expected to break the current dryness.
• This morning the USDA reported a flash sale to China for the 23/24 marketing year totaling 132,000 mt.
• Abiove came out with its first estimate for Brazil’s 23/24 soybean crop and put it at a record 164.7 mmt, 7 mmt higher than the 22/23 crop. The group also estimated that Brazil would crush 54 mt and export 100 mt of soybeans in 2024.
• Despite the robust harvest pace, basis levels have been seen rising at river terminals and processors due to slow farmer selling. Strong demand from crushers to maintain their vigorous processing pace and rising river levels on some regional rivers have helped to underpin basis.

WHEAT HIGHLIGHTS:

• More war premium is being factored into the grain markets, especially wheat, as the tensions rise in the Middle East. President Biden is in Israel to meet with foreign leaders, but following an attack on a hospital in Gaza, his meetings were cancelled.
• So far in Australia, wheat yields are coming in a little better than what the USDA was estimating despite their drought issues. However, the impact may be minimal, with many analysts still looking for a decline in production of 40% or more. Argentina is also facing the implications of drought that may curb their production. They are expected to get some showers soon, but it will not be enough to reverse the current dry pattern.
• Paris milling wheat futures closed higher for the fourth time in the past five sessions, with the front month December gaining 4.5 Euros to 240.50 per mt. This may indicate that they are finally breaking out of the sideways pattern, which should also lend support to the US market. Both US and French wheat are on an even playing field, in terms of export price for Nov – Jan, and there are rumors that China may be looking to purchase more US wheat. This is supported by the fact that China’s wheat imports this year so far are at 10.2 mmt, which is up 54% from last year.
• Wheat harvest in southern Brazil, including the states of Rio Grande do Sul and Parana, has begun to ramp up. However, the southern regions have received too much rain, which has led to quality and disease concerns. According to CONAB, they are looking for Brazilian wheat output at 10.46 mmt. That is down 3.3% from the September projection, as well as down 0.9% from last year.
• According to China’s National Bureau of Statistics, this year’s grain production may be a record due to rainfall received in the north. Additionally, China’s GDP data came out 0.5% better than expected at 4.9%. This may indicate that their economic situation is improving and that they will import more commodities – this may be in part why US grains rallied today. Conversely, there was also news that China approved new GMO corn and soybean seeds in an effort to become more self-sufficient, which may mean fewer imports in the future.

DAIRY HIGHLIGHTS:

• The Class III market saw aggressive buying action on Wednesday as the December contract added 75c to $18.59.
• The reason for the rally can be attributed to a steady day of cheese buying on the spot trade.
• Block cheese added 5.75c to $1.76/lb while barrels added 3.75c to $1.6825/lb. This is the highest close since September 19th.
• Several 2024 Class III contracts finished the session at or above the $19.00 threshold.
• The market will now watch for the release of the September milk production report tomorrow.

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Author

John Heinberg