Written Commentary
CORN
Prices were up $.02 – $.03 for the day with minimal change for the week. Fresh news was limited ahead of the weekend and next Friday’s USDA quarterly stocks and wheat production reports. There were no USDA export announcements today. Today’s CFTC report will likely show the Money manager short position in corn has swelled to its largest level in 3 years. Harvest is expected to have reached 14-16% vs. the 5-year Ave. of 13%. The BAGE estimate Argentina’s corn plantings have reached 5% while holding their planted area steady at 7.3 mil. HA, up from 7.1 mil. HA YA. Ukraine’s Ag. Ministry reports grain harvest has reached 29.8 mmt as of Sept 22nd, up 14% from YA. Corn harvest at 182.5k tons is double the volume from YA. Ukraine’s exports since July 1st at only 2.5 mmt are down 39% from YA. Cattle on feed as of Sept 1st at 98% were exactly in line with expectations. Placements at 95% and marketing at 94% were also in line with estimates. Upside price potential appears limited with ending stocks well over 2 bil. bu. while exports are nowhere near the pace needed to reach the current USDA forecast.
SOYBEANS
The soybean complex was mixed with beans up $.01 – $.03, meal was down $2 – $3, while oil was 90 – 120 higher. Prices were moderately lower for the week as speculative traders lightened up on long positions. Support for Nov-23 is at the Aug-23 low of $12.82 ¼. The 100 day MA now serves as resistance at $13.05 ½. Oct-23 meal traded to a new monthly low, next support is the Aug low at $383.10. Oct-23 oil held support above the Aug-23 low at 59.40 before rallying. Domestically, not much change in weather as wet conditions will limit harvest progress across the nation’s midsection this weekend and into next week. Fewer delays are expected in the eastern and far western corn belt. Much above normal temperatures remain locked in across Central Brazil, however better prospects for rain arrive in late next week into early Oct. That said however no widespread soaking rains are expected. Ukraine’s oilseed harvest has reached 7.6 mmt which includes 4 mmt of rapeseed, 2.4 mmt of sunflower seed, and 1.2 mmt of soybeans. US imports of used cooking oil from China have surged to 384k mt in the first 8 months of 2023. No YOY comparisons were available, however imports from China accounted for 65% of the total UCO imports. The surge in imports is driven by the Biden Administrations Inflation Reduction Act, IRA, which provides a $1 per gallon tax credit for biodiesel, and $1.75 per gallon for sustainable aviation fuel. As of Feb-23 there were 72 US plants that can produce biofuels using UCO as a feedstock. Updated biodiesel and renewable diesel monthly production, capacity and feedstocks usage data will be released at the end of next week. Weak demand and speculative selling this week more than offset the risk of lower production. As US production prospects become a little clearer, SA weather will take over as the dominate factor in price discovery in the ag. space.
WHEAT
Prices were $.03 – $.06 higher across all 3 classes in 2 sided trade. Chicago Dec-23 held support above its contract low of $5.70. Dec-23 KC made a new contract low before rebounding. Ukrainian cruise missiles struck the headquarters of Russia’s Black Sea fleet in the occupied city of Sevastopol overnight causing significant structural damage. Pres. Biden has reportedly told Ukrainian Pres. Zelensky the US will provide them with advanced long-range surface-to-surface missiles to aid in their war efforts against Russia. A 2nd vessel has left the Ukrainian port city of Chornomorsk filled with nearly 18k mt of wheat destined for Egypt. An additional 3 ships are heading toward Ukrainian ports along the Black Sea scheduled to load 127k of ag products and iron ore. The US sold just over 93k mt of milling wheat to a Taiwan flour miller. Ukraine’s wheat harvest has reached 22.2 mmt as of Sept 22, up 16% from YA. Exports since July 1st have only reached 2.9 mmt, down 19% from YA. Russia lowered their wheat export tax for the period ending Oct. 3rd to 4,527.50 rouble/mt, down from 4,528.70. The USDA will update their 2023 US winter wheat production forecast next Fri. Rarely does the USDA raise their production forecast in Sept. Since 2000 production was increased only 4 times, reduced 18 times (including the last 6 years), and left unchanged 1 time.
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