TFM Midday Update 10-26-2023

CORN

The USDA reported an increase of 53.2 mb of corn export sales for 23/24 and an increase of 0.6 mb for 24/25.
Ethanol margins remain strong, and production was up to 1.040 million barrels per day, higher than the previous week and last year. Also, stocks are 4% below last year.
China’s hog herd is said to be down 0.5% year on year, and 2.8% down on the sow herd. This could reduce their feed demand and potentially affect import demand.
December corn on China’s Dalian Exchange lost about eight cents overnight, but still remains expensive, around the equivalent of $8.68 per bushel.

In today’s weekly export sales report, the USDA reported an increase of 50.6 mb of soybean export sales for 23/24.
Private exporters reported sales of 110,000 mt of soybean for delivery to China during the 23/24 marketing year.
Brazil’s weather forecast is dry until the second week, however, rains may continue to get pushed back. Rainfall may remain limited as long as the Amazon basin is dry.
China’s signing of a framework contract to buy US soybeans has so far had little impact on the market. This type of agreement is generally seen as political in nature, but does allow them to purchase 3-5 mmt of soybeans down the road.

The USDA reported an increase of 13.4 mb of wheat export sales for 23/24 and an increase of 0.6 mb for 24/25.
Ukraine announced overnight that they would be suspending their humanitarian corridor temporarily. This is apparently due to Russian threats. Since its inception, the corridor has allowed for about 40 grain cargoes to be transported via the Black Sea. However, Ukraine’s grain shipments are still down roughly 30% from last year.
December KC wheat made a new contract low yesterday at 6.44. A combination of poor export demand and speculative selling has caused recent weakness. However, wheat may be finding support at these lower levels, with all three US futures classes trading higher this morning.
Managed funds still hold a net short of over 100,000 contracts of Chicago wheat, but so far traders have not seen the catalyst needed to trigger a short covering rally.

Brandon Doherty