CORN HIGHLIGHTS:

• Corn prices pushed through technical resistance at the $5.00 level, which triggered additional short covering as the December futures gained 13 cents and closed at its highest price point since July 31.
• An improved demand tone and cash market basis helped support the front month contract as bull spreading pulled the entire market higher.
• The USDA released weekly export sales Thursday morning.  Sales for the 2023-24 marketing year were 881,300 mt (34.7 mb). Corn sales commitments now total 637 mb for 23/24 and are up 17% from a year ago, but still lag the overall demand pace needed to reach USDA export targets.
• Ethanol margins remain strong, and processors are looking for corn, supporting the cash market.  Strong gasoline demand and tight energy supplies have helped support the ethanol market.
• Some weather concerns in South America 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.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day higher and were bull spread, with the majority of gains landing in the front month, which was supported by higher front month soybean meal. Soybean oil closed lower despite higher crude oil and the lowest soybean oil stocks since 2014.
• Today’s export sales report was friendly and showed increases of 50.4 mb for 23/24, which was up 30% from the previous week and 92% from the prior 4-week average. Last week’s export shipments of 73.1 mb were well above the 34.6 mb needed each week to meet the USDA’s estimates. Primary destinations were to China, Mexico, and Spain.
• Weather in South America remains a concern as Argentina and northern Brazil deal with very hot and dry conditions over the next 10 days during planting, and only light rain chances next week. Brazil’s main growing area, Mato Grosso, hit temperatures of 105 degrees yesterday. Due to the heat and drought, only 19% of the crop has been planted, rather than the average of 22%.
• In the US, this week has been mostly dry giving producers an opportunity to get a good chunk of harvest complete before more rains fall again in the coming week. Despite some reports of “better than expected” yields, a prominent crop scout has called the final bean yield at just 49.3 bpa, below the USDA’s last estimate of 49.6 bpa.

WHEAT HIGHLIGHTS:

• After trading both sides of unchanged throughout the session, US wheat futures had a strong close, with double-digit gains in the Chicago front months. This is in the face of a lower close for Paris milling wheat futures, but may have been helped by today’s dip in the US Dollar Index below the 106 level.
• The USDA reported an increase of 23.3 mb of wheat export sales for 23/24 and an increase of 1.1 mb for 24/25. Additionally, shipments last week at 14.1 mb were above the 13.9 mb pace per week necessary to hit the USDA’s 700 mb export estimate.
• The rally in the grain markets was a pleasant surprise, given today’s lack of fresh news. However, it may be reflective of new volatility being added back into the market and uncertainty with several global factors. First and foremost, the potential for the war in Israel to develop into a more significant conflict is on the minds of many traders. Tonight, President Biden will give an address in which he is expected to make the case for providing monetary aid for military assistance in both Israel and Ukraine.
• The International Grains Council increased the world wheat supply by 2 mmt to 785 mmt, though still below 803 mmt last year. This is apparently a result of higher output in the US, Russia, and Ukraine; Australia was lower.
• There are continued rumors that China has interest in purchasing more US SRW wheat, though none have been reported over the 100,000 mt minimum required for the USDA to report. Apparently, China may also be looking for US corn. Both things are interesting, considering that according to China’s National Bureau of Statistics, they are looking at record grain production this year. It is possible that their economy is on the mend, which could mean more commodity imports are needed.

DAIRY HIGHLIGHTS:

• Spot cheese jumped 3.50 cents today to $1.75625/lb, its highest level in exactly a month. Spot whey gained a quarter-cent to hit a new 8-month high.
• Despite this, Class III futures were lower on the day with November dropping 8 cents to $18.46. This was off the low of $18.29, however.
• Class IV futures saw large gains in November and December futures while the early 2024 contracts faded slightly.
• This came on a day when spot butter fell 2 cents and powder gained 1.50 cents. Spot powder is also at an 8-month high.
• September Milk Production for all 50 states was 18.210 billion lbs, down 0.2% YoY. Cow numbers were 9.370 million head vs. 9.406 million head in September 2022.

Total Farm Marketing and TFM refer to Stewart-Peterson Group Inc., Stewart-Peterson Inc., and SP Risk Services LLC. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of the National Futures Association. Stewart-Peterson Inc. is a publishing company. SP Risk Services LLC is an insurance agency. A customer may have relationships with all three companies. TFM Market Updates is a service of Stewart-Peterson Inc. Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.

Author

Amanda Brill