TFM Midday Update 8-27-2024

CORN

After a weaker start, the grain complex has turned higher by midday. With little fresh news to drive the market, this rally appears to be largely technical in nature.
According to the USDA, 65% of the corn crop is rated 65% good to excellent, down 2% from last week. In addition, 84% of the crop is in the dough stage, 46% is dented, and 11% is mature.
The Rosario Grain Exchange reports that Argentina is expected to reduce corn planting by 21% due to the leaf hopper plague that affected last year’s crop. Approximately 4.9 million acres may be shifted to soybean cultivation.
In general, the downtrend for grains remains intact. December corn in particular did close below 390 yesterday. With a lot of corn still in farmers’ hands, any rallies are likely to be sold, which may limit upside price movement.

The USDA reported in its weekly crop progress report that 67% of the soybean crop is rated good to excellent, down 1% from last week. Additionally, 89% of the crop is setting pods, while 6% of the crop is dropping leaves.
The forecast for the next seven days has put a little more rain into the eastern corn belt compared to previous forecasts, which should help with pod fill and to keep yield prospects high.
After a strong move higher over the past few sessions, crude oil is taking a breather today, and is down over a dollar per barrel at the time of writing. This is keeping pressure on soybean oil, which is currently trading near unchanged, despite the gains in the rest of the grain complex.

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