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Prices as of September 11th, 2024 – 20:00CDT
In this edition:
Harvest Headlines: Corn and soybeans slide, while wheat gain a little after.
Market Actions: No new triggers.
Weather Update: Global weather conditions are keeping supply high and crop prices low despite some mild climate events overseas.
The information provided in this newsletter is for informational purposes only and should not be considered financial advice. We recommend consulting with a commodities broker and financial advisor before making any commodities decisions.
Harvest Headlines
Grain markets saw modest gains on September 11, 2024, ahead of the USDA's upcoming supply and demand report. Traders were adjusting positions in anticipation of potential revisions in crop production and ending stocks, particularly for corn, soybeans, and wheat. The report, scheduled for September 12, is expected to shape market directions, especially with harvests underway in the U.S. and weather conditions becoming more favorable in key regions.
Corn
Since hitting a market low in late August, the corn market has rebounded, primarily driven by short covering from funds as the influx of old crop bushels has slowed and demand has risen. Although the expectedly large upcoming harvest may keep upward potential in check, it's encouraging that buyers are seeing value at these multi-year low prices. Any unforeseen reduction in supply or surge in demand could prompt funds to cover more of their significant short positions and push prices higher. However, a prolonged rally is unlikely until after the harvest is complete.
December corn futures closed slightly higher at $4.04 ¾ per bushel, supported by technical buying.
Traders are anticipating the USDA's report to project corn production at 15.076 billion bushels with yields of 182.4 bu/acre.
U.S. exports have been sluggish, contributing to limited price gains, but domestic demand remains stable.
Global corn stocks are projected to reach 309.39 MMT for the 2024-25 season, maintaining pressure on prices.
Speculative trading kept prices in a narrow range as market participants await clearer production data.
Soybeans
Since late May, the soybean market has steadily dropped due to weak demand for the new crop, favorable growing conditions, and expectations of a large harvest. Weather forecasts have generally supported crop growth, and the market has already priced in the likelihood of higher yields. As the weather has turned drier during the crop's final development phase, funds have covered some of their significant short positions, leading to a price rally. Although the market still expects a large harvest that could pressure prices, if yields fall short of expectations, the recent rise in demand could prompt further short covering by funds.
Soybeans closed higher today but have been in a consistent downtrend since last Friday, when prices broke lower. With uncertainty surrounding tomorrow's WASDE report, funds are likely covering some of their short positions. Soybean meal also ended the day higher, while soybean oil finished lower, despite gains in both crude oil and palm oil.
Speculators are closely watching the impact of hot and dry weather during pod fill, which could trim yields in some areas.
USDA's upcoming report is expected to peg soybean production at 4.589 billion bushels with a yield of 53.2 bu/acre.
Chinese purchases have been a supportive factor, but overall U.S. export demand remains below average for this time of year.
Domestic demand for soybean meal and oil has been robust, providing underlying support to prices.
Wheat
December wheat futures climbed 5 cents to settle at $5.79 ¼ per bushel, aided by technical buying.
U.S. wheat remains less competitive on the global market due to higher prices compared to other feed grains like corn and barley.
Traders are cautious, awaiting the USDA report, which may reveal lower U.S. and global wheat ending stocks.
Weather-related concerns in major wheat-growing regions like Canada have eased somewhat, but production remains a concern.
Globally, wheat carryover stocks are forecasted at 255.31 MMT for 2024-25, reflecting tight supply conditions.
Weather Update
It is critical to keep an eye on the global weather, as about 70% of grain production comes from outside of the US – so, climate events overseas can have a huge impact on our crop prices. Overall conditions are remaining pretty good around the globe. This is putting upward pressure on supply and is one of the main forces that is holding crop prices down.
Corn
Brazil: Harvest is nearly complete with favorable conditions, except in the southeast due to earlier hot, dry weather.
USA: Exceptional conditions across the Corn Belt, but earlier heat impacted the East Coast. Sown area reduced.
EU & Ukraine: Hot, dry weather severely impacted yields in southeastern Europe, southern Russia, and Ukraine.
Soybeans
USA: Exceptional conditions, with increased sown area compared to last year.
Canada: Favorable, but heat in Saskatchewan could reduce yields.
Ukraine: Drought in the south and east has worsened, but western regions remain favorable.
Wheat
USA: Spring wheat harvest is ongoing with above-average yields.
EU: Poor yields in parts of France and Italy, but exceptional in Bulgaria and Romania.
Ukraine: Mixed conditions, with good yields in the west but poor in the east due to war and dry weather.
Extended Commentary
As we wrap up another eventful week in the grain markets, prices have modestly bounced back. Corn and soybeans are making small gains, while wheat continues to face mixed results. Traders are closely monitoring the USDA’s upcoming supply and demand report, which will be crucial in shaping the market outlook for the remainder of the year.
Corn prices have managed to climb slightly from the lows seen in late August, driven primarily by short covering as the influx of old crop bushels has eased and demand has increased. While the upcoming large harvest may cap any significant upward potential, the fact that buyers are finding value at these multi-year lows is encouraging. The USDA’s report is expected to project corn production at 15.076 billion bushels, with 182.4 bu/acre yields. However, weak export demand and sluggish ethanol margins keep a lid on prices.
Soybeans also closed higher, with support from recent short covering and domestic demand for soybean meal and oil. Despite this, the market remains under pressure due to favorable growing conditions and expectations of a large harvest. Traders are now focusing on the USDA’s report, which is projected to show soybean production at 4.589 billion bushels. If the report confirms these expectations, prices could remain constrained. However, any reduction in yield estimates due to the recent hot and dry weather could lead to further price rallies.
Wheat futures have shown some resilience, particularly in the Chicago market, with December contracts settling at $5.79. The wheat market has been buoyed by technical buying and concerns about global supply, especially with mixed weather conditions affecting key wheat-growing regions in Europe and Canada. However, U.S. wheat remains less competitive globally, and export demand has been lackluster. Traders will be watching closely to see if the USDA’s report projects lower U.S. and global wheat ending stocks, which could provide additional support to prices.
Global conditions have remained primarily favorable on the weather front, with only a few regions facing significant climate challenges. This has kept global grain supplies stable and prevented any significant price spikes. However, we cannot overlook that approximately 70% of global grain production comes from outside the U.S., meaning that any significant climate event overseas could significantly impact prices.
The upcoming USDA report will be critical in determining the next steps for corn, soybeans, and wheat. In the meantime, volatility will likely persist, and market participants should stay vigilant as the harvest season progresses.
