TFM Midday Update 10-18-2023

CORN

Grain markets opened higher this morning as more war premium was factored in following an attack on a hospital in Gaza that increased tension in the Middle East. President Biden is in Israel to offer support, but due to the attack, some of his meetings were cancelled.
The US weather forecast two weeks out, is calling for rain in the Midwest. Though it will not be enough to help with the navigation issues on the Mississippi River, rain will still likely cause some harvest delays.
As of this writing, crude oil futures are up over a dollar per barrel due to the uncertainty in the Middle East, which is supporting corn and soybean futures. Iran has reportedly proposed an embargo of oil shipments to Israel.
ANEC is estimating that Brazil’s October corn shipments will total 8.5 mmt, as compared to 6.2 mmt last year.

Private exporters reported sales of 132,000 mt of soybeans for delivery to China during the 23/24 marketing year.
Chinese GDP data for the third quarter came in at 4.9%, 0.5% higher than expected. This is bolstering Asian markets and may be in part why US grain futures opened higher this morning.
Despite the record September crush shown in this week’s NOPA report, stocks of soybean oil were much lower than anticipated, indicating strong biofuel demand.
As Argentina is struggling with drought, US soybean meal exports have risen to a 20-year high at 10.7 mmt. However, soybean export sales are still down 32% from a year ago, leaving some room for improvement.

Despite the drought in western Australia, wheat yields so far are coming in slightly better than what the USDA is forecasting. In any case, most analysts are looking for a drop in their production by 40% or more.
India’s domestic wheat prices have reached an eight-month high. With their food inflation on the rise, some analysts think India will be forced to eliminate import taxes in order to tame prices.
This morning, Paris milling wheat futures are higher for the fourth out of the past five sessions. But with French and US wheat priced the same in the export market for Nov – Jan, there is talk that China may be looking to buy more US wheat. This year so far, China’s wheat imports are up 54% from last year, at 10.2 mmt.

Brandon Doherty