CORN HIGHLIGHTS:

• Additional short-covering and technical buying supported the corn market as the December contract closed 6 cents higher on the session. The friendly price action was a good follow-through from yesterday’s reversal higher in trade.
• Ethanol production last week slipped to 94.7 million barrels, down from 100.4 million barrels the previous week, though still well above last year’s production at 88.8 million barrels. Corn used for ethanol productions in the first 15 days of the marketing year totaled 209 million bushels, relatively steady with last year’s usage levels.
• Corn harvest continues to ramp up, with early yield results being extremely variable based on the weather for the past growing season. Harvest pressure will likely affect the cash basis. The long-range forecast should support harvest activity overall as rainfall totals will be variable, but temperature trend above average for the next two weeks.
• Though extremely early, Brazil weather could be triggering some weather premium into the grain markets. Forecast are staying on the hot and drier side for large portions of Brazil and could impact planting pace or germination in some regions.
• The strong price action sets the corn market up for some potential bullish follow through. Managed money is holding a large short position in the corn market, and the turn higher could trigger additional short covering and technical buying.

SOYBEAN HIGHLIGHTS:

• Soybeans began the day lower but ended the day higher after finding support again at the 100-day moving average. Soybean meal also ended higher while soybean oil moved lower. Technical buying likely kicked in with soybean futures sharply oversold.
• This morning, the USDA confirmed a sale of 120,000 tonnes of US soybeans for delivery to unknown destinations for the 23/24 marketing year. This is the second sale of the week as US exports pick up slightly but remain overshadowed by Brazil’s exports.
• Yesterday, Brazil’s CONAB estimated that the soybean crop for 23/24 would increase to a new record large production of 162.8 mmt, as planted acres expand by 2.8%. Many of those acres are coming from a decrease in corn acres, but dry weather from the El Nino weather pattern could hinder Brazil’s production.
• Low water levels on the Mississippi River are negatively impacting basis for many producers, but rains forecast in the northwestern Plains and Midwest through Saturday could make their way to the river and raise water levels in the next two weeks.

WHEAT HIGHLIGHTS:

• Today the Federal Reserve issued a pause in interest rate hikes but did indicate that rates may stay higher for longer. This pause may have gotten the grain bulls interested, with higher closes in corn, soybeans, and Chicago wheat.
• The US Dollar Index was marginally lower today and as of writing, still negative but much closer to neutral. The dollar is also overbought and may be due for more downside.
• In addition to the lower US dollar and steady interest rates, Paris milling wheat futures rallied about 0.5% in today’s trade and lent additional support to US wheat prices.
• Russia continues to be the anchor that keeps the US wheat market dragging along. Their total grain harvest is expected to reach 130 mmt (with 123 mmt harvested so far). According to their agriculture minister, they also expect to export 60 mmt of grain this season.
• The EU’s soft wheat exports as of September 17, have totaled 6.32 mmt since the season began on July 1, representing a 27% decrease from last year’s totals of 8.7 mmt for the same time frame.
• Egypt will reportedly source almost one-half million tonnes of wheat from France and Bulgaria. Originally, they were going to purchase from Russia, but apparently Moscow blocked the deal due to a pricing disagreement which fell below the Russian floor of $270 per ton.

DAIRY HIGHLIGHTS:

• So far this week, spot cheese is down 14c while spot butter is up 12.25c. A drastic shift in price action for those two products. 
• A lot of cheese inventory has been hitting the market as the recent rally ran out of buying strength. 
• Spot butter once again moved into a new high of year, adding a penny to $2.84/lb today.
• Each Class IV contract from October ’23 through December ’24 is above the $19.00 threshold.
• The cheese weakness kept class III on the defensive. October fell 42c to $17.12 while November was down 40c to $17.25.

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

John Heinberg