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Prices as of September 12th, 2024 – 20:00CDT
In this edition:
Harvest Headlines: Corn and soybeans slide, while wheat gain a little after.
Market Actions: No new triggers.
AI Models: Our artificial intelligence corn models continue to predict that prices of corn, soybeans, and wheat will stay steady for the next four weeks.
Global Stock-to-Use Reports: Our models factor in a lot more data than the USDA reports do, and our models are showing significant stock-to-use discrepancies with the USDA models.
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
Market Overview
Grain markets closed with mixed outcomes following the release of the USDA's WASDE report. Corn and soybeans saw an increase, while wheat experienced a more mixed reaction. Key factors influencing prices include updated USDA crop estimates, weather conditions, and global demand fluctuations. Soybeans were supported by lower-than-expected yield forecasts, while wheat continues to face pressure from global supply and demand dynamics.
Corn
Corn futures were up after the release of the WASDE report, reflecting tighter-than-expected global supplies.
Rising exports and increased ethanol usage for 2023/24 (55 million bushels) more than made up for a slight increase in the projected yield for 2024/25 (186.3 bushels per acre), resulting in U.S. corn ending stocks of 2.1 billion bushels, a decrease of 16 million from last month’s WASDE report. Corn prices closed slightly higher today due to the mixed news.
USDA slightly lowered U.S. corn yield estimates to 173.8 bushels per acre, providing upward momentum to prices.
Global corn production estimates were reduced due to dry weather in major producing regions, including Argentina.
Strong demand from the ethanol sector has helped support corn prices.
Export demand remains uncertain due to competition from Brazilian corn, which could limit further price gains.
China's corn imports are expected to rise, supporting global demand for U.S. corn.
Soybeans
Soybean futures rallied on the day due to lower yield estimates in the WASDE report, which revised U.S. soybean yields down to 49.6 bushels per acre.
The reduction in yield forecast was more significant than traders expected, contributing to bullish market sentiment.
Global soybean ending stocks were lowered by the USDA, reflecting tighter supplies in the international market.
Dry weather in Brazil has raised concerns about potential planting delays for the next crop, adding to supply worries.
Chinese demand for U.S. soybeans remains strong, with recent export sales supporting prices.
Increased crush margins for biodiesel production have further supported soybean prices.
Wheat
Wheat futures saw mixed reactions, with Chicago wheat closing slightly higher while Kansas City and Minneapolis contracts faced downward pressure.
Wheat futures saw mixed reactions, with Chicago wheat closing slightly higher while Kansas City and Minneapolis contracts faced downward pressure.
USDA raised U.S. wheat ending stocks, putting pressure on prices, especially in the winter wheat varieties.
Global wheat production estimates were increased, with higher forecasts for Australia and Canada.
Russia continues to dominate wheat exports, adding to global supply pressure and keeping a lid on prices.
Drought concerns in Argentina and Brazil remain factors that could limit downside potential for wheat prices.
The wheat market faces challenges from weak export demand, particularly in competition with cheaper Russian supplies.
8-Month Artificial Intelligence Models
One Month Price Predictions
Here are our five AI models for corn, soybeans:
Productions/Exports/Imports; USDA Starting Stocks; +0.32% YoY World Consumption and latest spot market rates/indicators.
Productions/Exports/Imports; USDA Starting Stocks; +0.32% YoY World Consumption and latest spot market rates/indicators.
Productions/Exports/Imports; USDA Starting Stocks; +1.32% YoY World Consumption and latest spot market rates/indicators.
Productions/Exports/Imports; USDA Starting Stocks; +2.32% YoY World Consumption and latest spot market rates/indicators.
Productions/Exports/Imports; USDA Starting Stocks; +3.32% YoY World Consumption and latest spot market rates/indicators.
Corn
Soybeans
Wheat
Global Stock-to-Use
Corn - USDA
Corn - Our Estimates
Soybeans - USDA
Soybeans - Our Estimates
Wheat - USDA
Wheat - Our Estimates
Extended Commentary
The USDA’s latest WASDE report has injected fresh energy into the grain markets. Corn, soybeans, and wheat had mixed days. The report brought several critical updates helping shape market sentiment as the harvest season progresses.
The report showed a slight decrease in ending stocks for corn, reflecting a combination of higher ethanol demand and strong exports. Despite slightly higher yields, this tightening of supplies provided some support to corn prices. December corn futures closed slightly higher, indicating that while global stocks remain ample, the U.S. market faces enough domestic demand to keep prices steady. However, global competition, particularly from Brazil, continues to keep a lid on price gains, and traders will closely monitor the next phase of the harvest for any signs of stronger upward momentum.
Soybeans rallied following a more significant reduction in yield forecasts than expected. The USDA revised U.S. soybean yields to 49.6 bushels per acre, sending futures higher as traders reacted to the tightening supply outlook. Demand from China has remained strong, and concerns over dry weather in Brazil have also lent support to prices. However, global stocks remain relatively comfortable so that any upward movement may be tempered by ongoing export competition from Brazil and Argentina. Domestic crush margins, driven by biodiesel demand, also continue to provide underlying support for soybean prices.
Wheat markets were more muted, with mixed reactions across the different classes. Chicago wheat posted slight gains, but Kansas City and Minneapolis contracts faced downward pressure as global wheat stocks remained ample. The USDA’s increase in global wheat production estimates, particularly for Australia and Canada, added bearish pressure to prices. Meanwhile, Russia’s continued dominance in the export market keeps a cap on significant rallies. That said, traders remain cautious, especially concerning potential drought impacts in South America.
On a global level, our AI models continue to highlight discrepancies between the USDA’s stock-to-use ratios and our independent estimates. Our data suggests slightly tighter global corn and soybean stocks than the USDA is projecting, particularly in key regions like Ukraine and Argentina. These discrepancies could point to potential price volatility in the months ahead, as any unexpected changes in supply or demand could have an outsized impact on prices. For now, our models predict steady prices for corn, soybeans, and wheat over the next four weeks, though weather conditions and geopolitical factors could shift that outlook rapidly.
As we move deeper into harvest, we must monitor domestic demand trends and global supply conditions. The mixed market reaction to the WASDE report reflects the ongoing uncertainty in the grain markets, with traders continuing to weigh weather impacts, demand fluctuations, and the broader global economic outlook. Prices appear stable now, but volatility remains crucial in the weeks ahead.
