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Grain Markets Slide as Wheat Leads Decline, Corn and Soybeans Follow

Market Insights and Forecasts - September 20

September 20, 2024

 

Ag Market Insights is dedicated to bringing you timely information to help you consistently get the most money for your crops. Our team painstakingly goes through mountains of information and data and distills insights into a format that you can consume in a few minutes.

In this edition:

  • Harvest Headlines: Relatively movement or significant events.

  • Market Actions: No new market triggers. An unexpected drop in projected supply or a rise in demand could prompt managed funds to cover more of their large short positions, driving prices higher. However, a sustained rally for corn, soybeans, or wheat is unlikely to occur before the harvest is completed.

  • AI Forecast: Our artificial intelligence model shows prices of corn, soybeans, and wheat will stay steady for the next four weeks.

Market Overview

Grain markets saw declines across the board with wheat leading the way down, pressured by easing tensions in the Black Sea region. Corn and soybeans also faced downward pressure despite supportive export data. All three markets are dealing with variable supply and demand factors as harvest season progresses.

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.

Prices as of September 19th, 2024 – 20:00CDT

Harvest Headlines

Corn Price Events

  • Wheat market pressure led to declines in corn prices.

  • The USDA released its weekly export sales report today, indicating new net sales of 33.36 million bushels (847,400 metric tons) for the 2024/2025 season. This figure meets expectations and surpasses last week's total of 666,500 metric tons. Notably, China remains absent from the U.S. corn export market, with the last recorded flash sale of corn to China occurring on April 14, 2023.26% of US corn acres are in drought, affecting crop quality.

  • Brazilian dry weather slightly supported US corn but forecast turns wetter.

  • Corn harvest ramping up, adding pressure to prices.

  • Approximately 26% of U.S. corn acres are currently experiencing drought, a situation that has worsened as warm and dry conditions have persisted in recent weeks. The lack of rain may have impacted the yield potential of late-planted crops. However, the dry weather has also accelerated harvest progress, leading to increased hedging pressure in the market.

  • Technical momentum faded after failing to break recent highs.

Soybean Price Events

  • Strong export sales initially supported prices but were offset by declines in corn and wheat.

  • Argentina canceled a recent purchase of US soybeans.

  • 64.2 mb of soybean sales reported, above trade estimates.

  • Soybean meal prices ended the day mixed, with front-month contracts rising while deferred months declined. Meanwhile, soybean oil gained support from strong export sales and followed the upward trend in crude oil and other vegetable oils. Last week, Argentina, the leading exporter of soybean meal, bought over 88,000 metric tons of U.S. soybeans—the first purchase since 2019. However, today’s export sales report showed that this sale was cancelled. Despite U.S. soybeans being cheaper than those from Brazil, the cancellation is noteworthy.

  • US soybean prices remain competitive versus Brazil.

  • South American dry conditions could tighten global supply.

  • Key growing regions in Brazil facing extended dry spell, potential price support.

Wheat Price Events

  • Wheat prices dropped amid easing Black Sea tensions and weak export sales.

  • USDA reported 9.0 mb of wheat export sales, below weekly targets.

  • 58% of US wheat acres in drought, but some rain expected.

  • Technical indicators show downward momentum for Chicago wheat.

  • International Grains Council cut global production estimates to 798 mmt.

  • FranceAgriMer lowered French soft wheat export estimates due to reduced sales outside the EU.

Market Actions

  • No new major market action triggers. 

  • Volatility continues to be problematic and is making it very difficult to make market decisions. The volatility seems as though it is likely to continue.

  • Our artificial intelligence (AI) models are showing to be accurate; high volatility; corn, soybean, and wheat prices gradually climbing. See models below.

Artificial Intelligence Model 2

One Month Price Predictions

This is the prediction from our main artificial intelligence (A)I model. This model assumes Our AI models ingest and process billions of data points to create models that have accuracy of 95%+. Our models are as accurate as any model you can find. Just like with any model, they are not always completely accurate, especially in times of high volatility. The models are informational and not to be construed as advice.

Corn

Soybeans

Wheat

Extended Commentary

Grain markets continued to experience pressure, led by a sharp decline in wheat prices. Easing tensions in the Black Sea region and weak export sales contributed to the downward momentum for wheat, despite 58% of U.S. wheat acres still being affected by drought conditions. These factors, combined with global oversupply concerns and easing geopolitical tensions, weighed heavily on prices. The USDA's latest report indicated only 9.0 million bushels of wheat were sold, falling below weekly targets and further suppressing price strength.

Corn markets faced pressure as well following wheat’s decline. Despite drought affecting 26% of U.S. corn acres, the USDA’s export sales report indicated net sales of 33.36 million bushels for the 2024/25 season, which exceeded expectations. However, the absence of China from U.S. corn exports remains notable, contributing to the limited upward momentum as the corn harvest ramps up; increased supply will likely continue weighing on prices in the short term.

Soybean markets saw slight gains but remained largely muted amid strong export sales offset by the influence of declining corn and wheat prices. A critical development was the cancellation of Argentina’s purchase of U.S. soybeans after initially securing over 88,000 metric tons. U.S. soybean prices remain competitive globally, particularly against Brazil, but traders are keeping a close eye on South American weather conditions, as extended dry spells in Brazil could tighten global supply and provide support for prices moving forward.

With the harvest season in full swing, traders are bracing for continued volatility, driven by various factors, including export demand, unpredictable weather patterns, and fluctuating ethanol production. Wheat, corn, and soybean markets are expected to be pressured, mainly as managed funds maintain their short positions. The Federal Reserve's recent 50 basis point rate cut has provided little immediate relief but may influence future demand in the coming months.

Looking ahead, AI models indicate relative stability in prices for corn, soybeans, and wheat over the next four weeks. While short-term gains may occur, particularly for wheat as it rebounds from recent lows, traders are advised to remain cautious due to the ongoing volatility in the markets, the unpredictability of geopolitical factors, and weather-related challenges.