CORN HIGHLIGHTS:

• Corn futures pushed to a new nearby low on Friday and additional selling pressure fueled by hedge pressure and lack of overall bullish news weighed on the market. December corn futures lost 4 cents and was down 13 ¼ cents on the week. December corn closed at its lowest level since September of 2021.
• Hedge pressure stays a major influence on corn prices as the last 20% of harvest gets complete. Talk of producers handling extra supplies is likely pressuring the market as the corn crop is trending larger than expected in certain areas.
• Thursday’s Crop Production report and corn yield increase of 1.9 bushels/acre reflects the strong end to the harvest this fall. The increase in demand by the USDA was questioned by market analysts as the USDA added 50 mb to export demand, 25 mb to ethanol demand, and 50 mb to feed usage. The new export target for the marketing year is 2.075 billion bushels, a 400+ mb increase over last year. The large supply picture limits any near-term rallies.
• The USDA data on Thursday showed that global stocks/use is expected to reach 12.5%, matching a 4-year high. Globally, stocks/use ratios of major corn exporters could reach a 6-year high, fueled by record large Brazil and US corn harvests this past growing season. The large supplies will limit price gains due to strong global competition.
• South American weather stays in focus. Current weather models lean toward warm and dry conditions continuing into the end of the year. Forecasts for Brazil and Argentina will likely be the main driver of corn and soybean markets over the next few months.

SOYBEAN HIGHLIGHTS:

• Soybeans ended the day higher after yesterday’s selloff following the USDA report and this morning’s lower open from the overnight session. Soybean meal ended slightly lower but remains near its contract highs. Soybean oil ended higher with support from crude oil and palm oil.
• The USDA increased the national soybean yield slightly to 49.9 bpa from 49.6 bpa which caused a negative reaction because estimates called for yields to be unchanged, but it was not a large adjustment and increased ending stocks only slightly to a still tight 245 mb.
• South American soybean production was updated in yesterday’s report with Argentina’s 22/23 production unchanged at 25 mmt, but Brazil’s increased to 158 mmt from 156 mmt. For 23/24, Argentina’s production estimate was unchanged at 48 mmt, but Brazil’s was increased to 163 mmt despite the hot and dry planting conditions that are persisting due to El Nino.
• While there were no reported flash sales today, flash sales yesterday were reported totaling 1,044,000 mt of soybeans to China for 23/24, and 662,500 mt were reported for delivery to unknown destinations. Export demand has picked up in this window where Brazil is planting soybeans.

WHEAT HIGHLIGHTS:

• Today wheat failed to recover, posting a negative close on follow through from yesterday’s WASDE report. At one point in this session, there was a small amount of green on the board but not enough friendly news to keep wheat in positive territory. Traders are likely focused on the fact that Russia’s crop was revised higher and that they continue to dominate the export market.
• The USDA also raised Ukraine’s exports yesterday. And though they remain below year-ago levels, it remains clear that Ukraine continues to do everything in their power to ship grain. Despite a Russian missile said to having hit a merchant ship in the Black Sea earlier this week, there are still said to be about 30 vessels in Ukraine ports waiting to load out.
• On a bullish note, despite some of the negativity yesterday, global wheat ending stocks (excluding China) at 4.58 bb are the lowest in 15 years. Managed funds also remain short a sizeable amount of wheat, so any spark in the form of friendly news could ignite a fire under the wheat market and force them to cover that short position.
• One piece of news hindering the wheat market today was that a French vessel loaded with 35,000 mt of wheat is headed for New York. US imports of wheat are expected to rise, according to the USDA, to 145 mb – the highest level in six years. With US wheat exports struggling and imports rising, some friendly news will be needed to help futures break out of the sideways to lower pattern.
• Yesterday Fed Chairman Powell made comments that seemed to contrast with those after the last FOMC meeting. He now seemed to indicate that the Federal Reserve may in fact remain aggressive with interest rate increases to help curb inflation. This may keep the equity markets volatile for the time being. At the time of writing, the Dow is up over 300 points, taking back yesterday’s losses and more. This uncertainty may spill over into the grain complex as well.

DAIRY HIGHLIGHTS:

• The Class III board was red again to end the week with December futures down 15 cents to $16.89. For the week, that contract lost 46 cents.
• Spot cheese dropped another 2.00 cents today to close the week 2.75 cents lower at 1.6250/lb. Barrels are now at a 5.00 cent premium to blocks, a 20-cent swing this week.
• Class IV action was mixed today. The second month December contract dropped 28 cents on the week to close at $19.19.
• Spot butter dropped another 10.00 cents on Friday for a total loss of 50.75 cents this week. Powder finished the week 1.50 cents higher at $1.20/lb.

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Author

Brandon Doherty