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Marketing
Grain Outlook Corn market keeps inching higher
The following marketing analysis is for the week ending Sept. 9.
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CORN — News was thin for traders when they returned from the Labor Day holiday. The U.S. dollar soared to fresh 20-year highs, the soy complex tanked, and corn and wheat struggled to hold early gains.
Corn extended gains into Sept. 6 after Russian President Putin announced he wants to renegotiate the safe corridor deal for grain to ship through the Black Sea. He feels Russia was misled on where the grain would go. Russia says the grain is not headed to the “poorest” countries for which the deal was PHYLLIS NYSTROM intended to supply to avoid star- CHS Hedging inC. vation. President Putin also said St. Paul sanctions are impeding its grain and fertilizer exports. The statement propelled wheat and corn prices higher with soybeans following. President Putin and the President of Turkey are scheduled to meet face to face in the coming week to discuss the situation. This puts the continuation of the safe corridor in doubt, but it may be used by Russia to push for sanction cuts imposed on it when they invaded Ukraine.
December corn continued to tease its 100-day MA technical resistance throughout the week before posting a strong technical close into the weekend.
The U.S. Department of Agriculture announced it will include an acreage review for corn, soybean, and other crops in the September report. Any updates are usually held for the October World Agriculture Supply and Demand Estimates report; but this year the USDA said they have data that is “sufficiently complete” to update the numbers in September. The September WASDE report is the first objective yield sample of the year for corn and soybeans.
The average trade estimates for the Sept. 12 WASDE report include: yield 172.5 bushels per acre, production at 14.088 billion bushels, and harvested acres at 81.686 million acres. 2021-22 U.S. ending stocks are expected to be 1.547 billion bushels and for 2022-23 ending stocks are estimated at 1.217 billion bushels. The 1.217 billion bushel ending stocks would be a 10-year low. 2022-23 world ending corn stocks are forecast at 302.29 million metric tons. Conab this
Cash Grain Markets
corn/change* soybeans/change*
Stewartville $6.96 .00 $15.18 +.52 Edgerton $7.83 +.31 $14.44 +.31 Jackson $6.58 -1.24 $14.30 +.21 Hope $7.28 -.09 $14.73 +.47 Cannon Falls $6.94 -.02 $14.89 +.19 Sleepy Eye $7.23 -.04 $14.79 +.57 St. Cloud $6.53 -.34 $14.24 -.74 Madison $7.13 -.12 $14.44 +.41 Redwood Falls $7.33 +.09 $14.78 +.40 Fergus Falls $6.82 -.14 $14.44 +.57 Morris $6.83 +.01 $14.49 +.52 Tracy
$7.30 +.03 $14.31 +.24 Average: $7.07 $14.59 Year Ago Average: $5.27 $12.38
Grain prices are effective cash close on Sept. 13. *Cash grain price change represents a two-week period.
week cut its Brazilian corn production estimate to 113.3 mmt from 114.7 mmt and vs. the USDA’s August estimate of 116 mmt. The September USDA corn yield hasn’t been below the trade estimate since 2011.
Rising fertilizer prices in the United States should help support deferred corn prices. Soaring natural gas prices have cut Europe’s ammonia production by two-thirds. Despite the higher fertilizer prices, Brazil’s corn production this coming year is expected to climb 13 percent to its highest in seven years, and soybean production to increase 24 percent to nearly 154 mmt.
Gazprom has halted natural gas supplies through the Nord Stream pipeline to the EU until the West eases Russian sanctions and/or repairs are made to a leak that Gazprom says Siemens Energy must fix. For whatever reason, Europe’s energy costs are skyrocketing, and consumers are trying to navigate how to absorb the extreme costs.
The National Mediation Board has ordered railroads and unions back to the bargaining table to avoid a possible Sept. 16 strike. Only seven of the 12 unions have reached voluntary agreements with the railroads. With harvest upon us, added disruptions to rail movement are not what we need or want.
In late harvesting years (and it looks like we’ll be in that category this year) the December/March corn carry tends to trade its widest level in early September. If it does trade wider in October, it’s by just a couple of cents. If you intend to carry hedged corn, you may want to consider moving your short hedges to the March between 6 and 8 cents. The U.S. Climate Prediction Center is giving the chance of La Niña to persist through January-March at 54 percent. This could set up a less-than-ideal growing season for South America.
The weekly ethanol report showed production up 19,000 barrels per day to 989,000 bpd and 7 percent higher than a year ago. Stocks were down 400,000 barrels at 23.1 million barrels and the largest oneweek decline since June. Net margins fell by 15 cents to 6 cents per gallon.
The USDA announced they will update four weeks’ worth of export data on Sept. 15 after technical problems prohibited the release of the weekly export report since Aug. 25. Data for Aug. 18 and 25 will be on one report and data from Sept. 1 and 8 on another report.
Outlook: Corn closed higher for the third consecutive week. The December contract closed the week at its highest level since June. It was up 19.25 cents for the week at $6.85 and the March corn gained 18 cents this week at $6.89.25 per bushel. We’ll have to wait and see if the USDA sends us any curveballs on the 12th. Outside macro markets, U.S. harvest, and South American planting weather will be the focus moving forward; but with lots of empty storage to fill and shrinking ending stocks, the downside may be limited.
The Chicago Mercantile Exchange is changing the trading hours for mini contracts beginning Oct. 2. The mini contract’s new closing time will be 1:20 p.m. (central time) vs. the current 1:45 p.m. closing time.
SOYBEANS — The big news in the soy complex to begin the holiday-shortened week was the new “soybean dollar” exchange rate in Argentina. In its effort to raise hard currency reserves, farmers will be offered an exchange rate of $AR200 through Sept. 30 vs. the official rate of $AR140. This is intended to make soybean sales more attractive to growers. Through August, Argentina farmers were estimated to have sold only 52 percent of this year’s soybean production. The new rate did what it was intended to do. Argentine farmers sold a reported 114 million bushels of soybeans in the first three days after the announcement which was about five times the sales of the previous week. China was there to collect the windfall, buying soybeans at a supposedly 45-cent discount to U.S. soybeans.
And to add to the push for Argentine farmers to sell, their central bank announced farmers of a certain size who hold more than 5 percent of their production will be subject to higher financing costs of 120 percent of the latest Monetary Policy rate. The current rate is 69.3 percent, so the penalty rate would start at 83.4 percent. Both programs are aimed at increasing government revenues through the collection of export taxes.
The average trade estimates for the 2022-23 balance sheet include 51.5 bu./acre, 4.496 billion bushels of production, and harvested acres at 87.288 million acres. The U.S. ending stocks for 2021-22 are estimated at 236 million bushels and 247 million bushels for 2022-23. World ending stocks are pegged at
