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Grain Comments: 08.28.23

Overnight trade mixed with corn 2-4 cents higher, soybeans 6-12 cents higher, and wheat 4-5 lower. The US dollar remains on an upward trend and is higher this morning, and energies are unchanged. Equities are higher this morning trying to build off Friday’s positive day.

 

Today’s Reports: Export Inspections, Crop Progress

 

  • Crop conditions likely deteriorated
  • Rain still sparse in much of the Midwest
  • Worst of the heat behind us

 

The weather story remains front and center, especially for the soybean market. The worst of the intense Midwest heat is behind us but the forecast remains dry. Pro Farmer finished their crop tour indicating a national soybean yield at 49.7 – a full bushel below USDA. If this kind of yield comes to fruition the soybean balance sheet will tighten further. Corn yields could fall further from current projections and remain well supplied, so the weather is largely a soybean story. On the macro front, Jerome Powell confirmed the 2% inflation target last week in the Jackson Hole gathering. Some have called for raising the inflation target in order to ease monetary policy sooner to give relief to some areas of the economy, notably housing where 30-year mortgage rates are the highest in 20 years. The Fed remains committed to lowering inflation and if anything the interest rate environment is more hawkish now than in previous weeks as many data points the Fed watches point to a strong economy where the risk of inflation remains.

 

 

Highlights

* Stats Canada to update production Aug 29th

* Smaller Canadian crops expected

* A second Ukrainian ship sailed from Odessa to Romania without incident

* Powell reaffirms 2% inflation target

* US consumer data sending mixed signals on health of US consumer

* Loading delays continue to Brazil ports

* Panama Canal wait times remain at 20+ days

* Low water starting to impact US export outlook

* Unemployment data set for release this Friday

 

Corn

* Pro Farmer US yield estimate at 172 bu/acre

* USDA US yield estimate at 175.1

* Updated crop ratings released today likely showed crop conditions falling

* Producers have little new crop sold

* High variability seen in US crop

* Brazil corn 83% harvested versus 89% last year

* Funds get more short corn futures, net short at -106k lots

 

Soybeans

* Pro Farmer US yield estimate at 49.7 bu/acre

* USDA US yield estimate at 50.9

* 2023 US board crush above $2

* Friday board crush values moved into new highs

* Updated crop ratings released likely show a decline

* Soybean futures firm on weather concerns

* Worst of the Midwest heat behind us

* US carry-out remains small

* Funds get less long bean futures, net long at 58K

 

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