TFM Midday Update 8-26-2024

CORN

December corn broke to another new contract low, trading down to 385 ½ so far this session before climbing back slightly. A close below 390 today would look technically weak, despite already being technically oversold.
Both the 6-10 and 8-14 day weather forecasts both show cooler temperatures for the corn belt. Some storms may also roll into the northern Midwest this week, primarily in Wisconsin and South Dakota.
Last week’s Pro Farmer crop tour found an average corn yield potential of 181.1 bpa. This is about 2 bpa below the current USDA estimate but would still be a record yield.
According to the Buenos Aires Grain Exchange, Argentina’s corn harvest is 98.7% complete; about 46 mmt of corn has been collected. The exchange is still estimating total harvest at 46.5 mmt.

Crude oil is up sharply this morning as more war premium is being factored in. Israel is said to have launched a preemptive strike against Hezbollah. This, along with higher palm oil, may be lending some support to soybean oil and soybeans.
Indonesia’s president-elect has proposed raising the biodiesel blend to 50% next year. Currently, the expectation is for an increase from 35% to 40% in January. If the blend is raised further, Indonesia’s palm oil usage could jump from 11 million metric tons to 18 million metric tons, which would be supportive of global vegetable oil markets.
Last week’s Pro Farmer crop tour found a record soybean yield potential of 54.9 bpa. This compares to the USDA estimate of 53.2 bpa.
Total US new crop soybean sales are still running behind the usual pace. However, demand may be picking up at these lower price levels. Last week there were announced sales to Mexico, China, and unknown destinations.

On Friday the US Dollar Index hit the lowest level in about 13 months. In theory this should be supportive to wheat prices, but wheat (and the grain complex as a whole) is under pressure this morning.
The Federal Reserve may issue a 25 basis point interest rate cut in September, supported by dovish comments made during the Jackson Hole meeting on Friday. This potential cut could further pressure the U.S. Dollar, making U.S. exports more competitive globally.
Paris milling wheat futures have reached a new contract low so far this session on the September contract at 189.50 (Euros per mt). Currently they are trading just a little bit above that level, but this continues to weigh on US values.
Managed funds bought back around 20,000 contracts of Chicago wheat, likely as a profit-taking move. Despite this, they remain net short about 53,000 Chicago contracts, along with short positions of approximately 35,000 contracts in Kansas City and 25,000 contracts in Minneapolis.

Brandon Doherty