TFM Morning Update 08-16-2023

CORN

The corn market is trading higher this morning with the forecast showing warm and dry conditions for the next two weeks.
While weather conditions for the end of August will warm up, the improved crop conditions have some analysts thinking the current USDA yield estimate of 175.1 bpa may be too low and could rise in subsequent reports, adding to the already comfortable 23/24 ending stocks.
Dalian corn futures traded sharply lower on increased concerns about the Chinese economy.
There are reports that ethanol stocks in Brazil are piling up on weakening demand as gasoline prices have gotten cheaper and more competitive with ethanol.

Oversold conditions and a change in the forecast to warm and dry for the next two weeks have soybeans trading higher this morning along with higher soybean meal and oil.
Yesterday’s U.S. NOPA crush report showed that NOPA members crushed 173.3 mb of soybeans last month, an increase of 1.8% from year-ago levels and above expectations.
Despite the increase in crush, soybean oil stocks were only 1,527 mil. lbs, a 10-month low, which highlights the increased use for domestic biofuel demand.
Soybean oil prices are also getting a boost from higher palm oil on talk of increased imports from India, helping to firm soybean oil’s percent of crush value to 6-month highs, while also adding support to soybeans.
Demand for soybean meal continues to be strong in China as prices remain firm despite the county’s weak economic data.

Chicago and Minneapolis wheat futures are firmer this morning while K.C. futures are mixed, as the market recovers somewhat on oversold conditions.
Reports of increased Russian drone attacks on a Danube River port may be adding support to the market.
The Wall Street Journal reported that the U.S. is in negotiations with Ukraine, Turkey and Romania with the goal to increase Ukraine’s grain export capacity to 4 mmt/month through alternative routes including using the Danube River.
Currently, following the recent decline, U.S. Soft Red Winter wheat export prices are below EU offers and $13/mt below Russia and could add support to the market and increase export sales.
There are thoughts in the market that U.S. wheat buyers are covered through the end of the year and may be staying out of the market for now.

Amanda Brill