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Grain Comments: 09.20.23

futures firmed overnight with corn steady to +1, soybeans 1-2 cents higher, and wheat up 8-10 cents as technical support prevented additional selling. The US dollar and energies were weak while equities were higher.

 

Today’s Reports: Fed Meeting, Weekly Ethanol Data

 

  • Crude oil +39% from summer lows
  • CONAB trims 23/24 corn production, raises soybeans
  • Brazil dry into early October

 

A considerable amount of attention will fall on the outside markets today, mainly the results from the Federal Reserve meeting on their interest rate decision. The Fed had earlier indicated it may pause with rate hikes, and much of the recent economic data we have received would support this decision. At the same time consumer spending has not slowed as much as the Fed has hoped for, and the labor market remains strong, both of which would support another rate hike. If the Fed raises rates there is little doubt the markets will react accordingly, but trade has the possibility of a rate increase at 40% which may limit the reaction. The real impact of an interest rate hike may be on the export market, especially with a strong US dollar. The combination of these two will make our offers even more expensive for an importer and gives the edge in the marketplace to other sources. Trade is also closely monitoring the Chinese economy. China has recently lowered its reserve requirements for banks to make loans in an effort to spur consumer demand. So far this has offered little improvement and gives the global market the indication China’s commodity demand is currently overstated.

 

Highlights

* Fed rate decision today

* US consumer spending starting to slow

* US govt/Ukraine to meet this week

* US to see better rains

* Rains may benefit low river levels

* Precip too late for corn, soybean crops

* Russia raises export taxes

* Domestic commodity demand rising

* Domestic demand will help offset export losses

* US dollar grinds higher

 

Corn

* Fast harvest expected

* Farmers not selling new crop bushels

* Sellers wait for post-harvest rally

* Weekly Dec corn chart lowest since Sep 2021

* Larger Argentine acreage forecast

 

Soybeans

* Reports of quick ship incentives ahead of harvest

* Importers focused on SAM offers

* Global oilseed trade slowing

* US soy oil stocks -20% from last year

* Crush maintenance to slow demand

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