10 minute read
Marketing
by The Land
Grain Outlook High dollar index hurts corn exports
The following marketing analysis is for the week ending Sept. 23. CORN — News and action were slow to start this week; but that changed as news from Russia and Ukraine shook the market. Prices edged higher through the middle of the week on uncertainty in that region, but a pre-weekend sell-off ensued when macro elements took charge and spilled into the agricultural sector. The U.S. dollar hit fresh 20-year highs and crude oil traded below $80 per barrel for the first time since mid-January and to pre-invasion levels. Technically, December corn has been unable to punch through $7.00 per bushel, but the 100-day moving average support level has held as support. PHYLLIS NYSTROM CHS Hedging inC. St. Paul
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Ukraine went on the offensive a week ago and reclaimed territory that was held by Russia. President Putin, in response, announced four regions of Ukraine that Russia holds will vote on annexation by Russia. Voting is to take place from Sept. 23-27. The land involved equates to 15 percent of Ukraine. The areas include Donetsk and Luhansk which Russia recognized as independent at the start of all this. The other two partially-controlled regions are Kherson and Zaporizhia. Most other nations are calling these “sham” referendums which will not be recognized as legitimate.
President Putin also authorized the first military mobilization in Russia since World War II. Reportedly, 300,000 reservists will be activated of the 25 million available. If the annexations pass, any fighting in those areas will be considered an attack against Russia. He also did not rule out using nuclear weapons to protect Russia.
China made statements that Russia should move to negotiate — their first solid comments on the invasion. Just when we thought it was safe to go back into the water…
What this situation will mean for the Black Sea safe grain corridor is uncertain. Trade chatter believes the agreement will remain in place through the Nov. 22 end date, but will likely not be extended.
The 75-basis point interest rate increase announced by the Federal Reserve at mid-week was expected. The benchmark federal fund rate rises to 3 to 3.25 percent and is the highest since 2008. Another
Cash Grain Markets
corn/change* soybeans/change*
Stewartville $6.80 -.16 $13.32 -1.86 Edgerton $6.98 -.85 $13.73 -.71 Jackson $6.32 -.26 $13.59 -.71 Hope $6.34 -.94 $13.43 -1.30 Cannon Falls $6.67 -.27 $13.38 -1.51 Sleepy Eye $6.67 -.56 $13.68 -1.11 St. Cloud $6.28 -.25 $13.58 -.66 Madison $6.43 -.70 $13.74 -.70 Redwood Falls $6.78 -.55 $13.70 -1.08 Fergus Falls $6.28 -.54 $13.53 -.91 Morris $6.32 -.51 $13.68 -.81 Tracy
$6.43 -.87 $13.60 -.71 Average: $6.53 $13.58 Year Ago Average: $5.11 $12.38
Grain prices are effective cash close on Sept. 27. *Cash grain price change represents a two-week period.
increase in November is anticipated with rates by the end of the year expected to reach 4.4 percent and 4.6 percent in 2023. Federal Reserve Chair Powell indicated they will continue to take steps to get inflation down to its 2 percent target, even if it leads to economic recession.
Traders are keeping their eyes peeled on social media for any harvest pictures, but it’s too early to draw any conclusions. The U.S. corn harvest was 7 percent complete as of Sept. 18 vs. 8 percent on average; 87 percent dented vs. 88 percent on average; and 40 percent mature vs. 45 percent on average.
The International Grain Council cut world corn production by 11 million metric tons to 1168 mmt — mostly on a smaller U.S. crop. Brazil’s first corn crop is 22 percent planted and 3 percent ahead of the average. The Buenos Aires Grain Exchange put Argentina’s corn planting at 3 percent complete and 5 percent behind the average. The Rosario Grains Exchange cut Argentina’s corn crop by 2 mmt to 56 mmt with the switching of acres from corn to beans. The U.S. Department of Agriculture’s last Argentine forecast was 55 mmt.
Weekly export sales are back on their regular schedule. Corn sales for the week ended Sept. 15 were a measly 7.2 million bushels and well below the lowest trade estimate. Cumulative sales at 491.5 million bushels are running 50 percent behind last year. We need to average 34.8 million bushels of weekly sales to ring the USDA bell of 2.275 billion bushels. China only has 122 million bushels of purchases on the books vs. 464.5 million bushels a year ago. At just 122 million bushels sold, this is the fifthlowest figure in the last 14 years by this date in the marketing year. China reported they imported 20.4 mmt of corn from all origins from October 2021 through August 2022 vs. 26 mmt the previous year. Cumulative sales for the 2023-24 marketing year are a lowly 3.6 million bushels compared to 13.1 million bushels last year.
Weekly ethanol production was down 62,000 barrels per day to 901,000 bpd which was a larger decline than expected and the lowest production since February 2020. On a same-week basis, it was the lowest in eight years. Ethanol stocks fell 342,000 barrels to 22.5 million barrels. This was also a larger-than-expected drop and the lowest stocks number of the year. Net margins fell 18 cents to 4 cents per gallon. Gasoline demand at 8.3 million bpd is down 6.5 percent from a year ago. On a four-week average basis, demand is the smallest since 1998.
Where are we with the railroad strike possibility? While the railroad strike was averted on Sept. 16, unions still need to ratify the agreement. One union has already rejected it, but put strike plans on hold until the end of the month to allow other unions a chance to vote on it. The can has been kicked down the road with nothing settled. Outlook: December corn once again failed to test the $7.00 per bushel level. It missed it by one-half cent in post-World Agriculture Supply and Demand Estimates trading and it missed it by 1.5 cents this week. The U.S. dollar index soared to fresh 20-year highs on a couple of days this week, which is not helpful for our exports. Gains into harvest may be limited by the high dollar, harvest pressure, recessionary worries, and a lack of new export demand. Losses, however, will be limited by uncertainty in the Black Sea region and what early U.S. corn yield estimates say. Volatility will stay high and big swings may become more common.
For the week, December corn declined a modest half-cent at $6.76.75 per bushel and March corn fell 1.25 cents to $6.81.75 per bushel. The next support in the December contract is the 100-day moving average at $6.66 per bushel as of the close on Sept. 23.
The Grain Stocks as of Sept. 1 report will be released on Sept. 30 at 11:00 a.m. Trade estimates have not yet been reported.
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. vs. the current 1:45 p.m. closing time. SOYBEANS — Soybeans were without headlines of their own in what turned out to be a soft week. Harvest is quickly approaching and a lack of export demand kept a lid on the upside. Argentine farmers have taken advantage of the special soybean exchange rate with sales of this year’s crop estimated at 66 percent compared to 65 percent sold last year by this date. China has been the big buyer. It’s estimated China has purchased 3 mmt of Argentine soybeans since the special exchange rate went into effect compared to buying 3.75 mmt of Argentine soybeans all of last year. This situation narrows the
See NYSTROM, pg. 21
Favorable harvest weather keeping soybean price in check
NYSTROM, from pg. 20
window for U.S. exports, but it’s difficult to put a number on it, and it’s not likely we’ll be able to recapture those bushels later. November soybeans have been stymied at the $15.00 per bushel level and this week couldn’t get past $14.90 per bushel. Selling into the weekend pressured prices to tease the 50-day moving average at $14.15.25 per bushel.
Weekly export sales were a disappointment at 16.4 million bushels. Total commitments are up 11 percent from last year at 945.3 million bushels. China so far has purchased 493.7 million bushels of U.S. soybeans for 202223 (including 5 million bushels announced this week) compared to 404.2 million bushels last year. We need to average 23.6 million bushels of weekly sales to achieve the USDA target of 2.085 billion bushels. China’s August soybean imports from Brazil were 6.25 mmt vs. 9 mmt last year with total August bean imports the lowest since 2014 at 7.2 mmt. From January through August, China imported 40.9 mmt of Brazilian soybeans and 18.2 mmt of U.S. soybeans. The International Grains Council lowered its world soybean estimate by 2 mmt to 387 mmt; but it’s still a record crop.
Brazil has begun soybean planting under mostly favorable conditions. A 149 mmt plus crop on the low side is expected in the coming year. Argentina
needs rain. The Rosario Grains Exchange increased Argentina’s soybean production outlook by 1 mmt to 48 mmt. The USDA is at 51 mmt. The Climate Prediction Center is giving the chances of La Niña through January at 80 percent and Argentina will be the first to feel the effects. U.S. soybean harvest was 3 percent complete as of Sept. 18 compared to 5 percent on average. Soybeans dropping leaves was 42 percent vs. 47 percent on average. Outlook: November soybeans topped out the week at $14.88.75 per bushel. New contract highs were set in meal contracts this week but late week pressure from macroeconomics and favorable harvest weather cut the gains. Early yield results and world events including economics will be closely watched as we move into harvest. For the week, November soybeans were down 22.75 cents at $14.25.75 per bushel as macroeconomics beat a tight balance sheet. The January soybeans fell 23.5 cents at $14.31.75 per bushel. First support in the November contract moves down to the 50-day moving average at $14.15.25 per bushel as of the close on Sept. 23, then the low for the month at $13.73 per bushel. Weekly price changes in December wheat for the week ended Sept. 23: Chicago wheat gained 20.75 cents at $8.80.5, Kansas City rallied 15.25 cents to $9.50.5 and Minneapolis was 10.5 cents higher at $9.49.25 per bushel. v Calendar of Events
Visit www.TheLandOnline.com to view our complete calendar and enter your own events, or send an e-mail with your event’s details to editor@thelandonline.com.
Oct. 4 — Dairy Grazing Apprenticeship Walk — Canton, Minn. — Late fall and early winter feeding strategies for a dairy herd. Harvesting Kura clover seed. Contact Cynthia Olmstead at http://www.kickapoograzinginitiative.com
Oct. 8 — Creating a Diverse Silvopasture Farm — Clemons, Iowa
— Learn how farmer is turning 11 acres of tilled land into newly-established tree and shrub silvopasture system to support fruit and nut production and provide grazing space for goats. Contact Debra at debra@practicalfarmers.org or (515) 232-5661
Oct. 11-12 — National AgriMarketing Association Fall Conference — Minneapolis, Minn.
— Learn the latest and most effective ways to connect with customers, build your brand and grow revenue at informative educational sessions. Contact the National Agri-Marketing Association at info@nama.org or (913) 491-6500.
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