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Grain Comments: 08.30.23

Month end short covering supported overnight trade with corn 3-5 cents higher, soybeans up 4-6 cents, and wheat gaining 5-7 cents. The US dollar was steady, energies are mixed, and equities are softer.

 

 

Today’s Reports: Weekly Ethanol Data, GDP

 

  • Hurricane Idalia makes landfall as category 4 storm
  • Weekly ethanol production expected to be down
  • Global grain trade is slowing

 

 

Month end positioning will increase during today’s session. Tomorrow is first notice day on the September contracts which will elevate this activity. Funds have again started to build short positions in the grains so to see some buying surface would not come as a surprise. To see liquidation in the soy complex would also not come as a shock to the market. While this activity will be happening over the next two sessions, we are starting to see more interest on the US harvest activity. Early yield data from the fringe areas remains very good on corn. There are thoughts this will change as harvest progresses into areas where more drought stress was seen this year. That said, even in some of the hardest hit areas with drought stress still claim the crop will be at least as good as last year, and potentially still better. This is supporting the latest corn yield estimate from the USDA at 175.1 bushels an acre. As it should be more interest is falling on soybean production where stress is thought to have lowered yield potential to an average 50 bushels an acre for the US. This would put total production at 4.1 billion bu, 100 million bu less than our forecasted demand.

 

Highlights

* China’s economic growth est 5%

* China’s growth has been below targets

* United Kingdom PMI drops in August

* Brazil ethanol production +16% in August

* Brazil sugar production +31% in August

* US manufacturing data poorest since start of Covid

* June orders for durable goods -5.2%

* US natural gas values lowest in 10 weeks

* No word on Ukraine corridor being approved

* 60% of Ukraine exports leaving by river

 

Corn

* US processors still need coverage

* Brazil cheaper than US

* Argentine 23/24 acres est +2.8%

* Argentine 23/24 crop est 56 mmt

* Canada crop est 14.73 mmt

 

Soybeans

* Chinese 23 import est 100 mmt

* USDA has China imports at 98 mmt

* US export market picking up

* Market becoming comfortable with balance sheets

* Canada canola crop est 17.56 mmt

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